SB623: Bill Text

SB623,,1 2023 SENATE BILL 623

November 7, 2023 - Introduced by Senators Feyen, Cabral-Guevara, Knodl, Quinn and Nass, cosponsored by Representatives Armstrong, Hurd, Brandtjen, Dittrich, Edming, Green, Gundrum, Kitchens, Magnafici, Maxey, Michalski, Mursau, Novak, O’Connor, Penterman, Rettinger, Schraa and Snyder. Referred to Committee on Universities and Revenue.

SB623,,2 An Act to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30 (3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2) (et), 71.05 (6) (a) 30., 71.07 (8s), 71.21 (8), 71.26 (3) (hi), 71.28 (8s), 71.45 (2) (a) 25. and 71.47 (8s) of the statutes; relating to: creating a tax credit for employer child care programs and making an appropriation.

SB623,,3 Analysis by the Legislative Reference Bureau

This bill creates an income and franchise tax credit for businesses that operate a child care program for their employees’ children. The credit is equal to the amount of capital expenditures incurred in establishing an employee child care program, the amount of certain organization and administration expenses incurred, and the amount of contributions made to a charitable organization for the purpose of establishing an employee child care program. The maximum total credit that may be claimed in a taxable year based on those capital expenditures, organization and administration expenses, and contributions is $100,000. A person may also claim as a credit the amount of operating expenses of an employer child care program, the amount of payments made directly to a child care program in the name of and for the benefit of an employee, and the amount of certain administrative costs. The maximum total credit that may be claimed in a taxable year based on those operating expenses, direct payments, and administrative costs is $3,000 for each child of an employee participating in the child care program. The credit under the bill is refundable, which means that if the credit exceeds the claimant’s tax liability, the claimant will receive the difference as a refund check.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

SB623,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

SB623,1 Section 1. 20.835 (2) (et) of the statutes is created to read:

SB623,,6 20.835 (2) (et) Employer child care program credit. A sum sufficient to make the payments under ss. 71.07 (8s) (d) 2., 71.28 (8s) (d) 2., and 71.47 (8s) (d) 2.

SB623,2 Section 2. 71.05 (6) (a) 15. of the statutes is amended to read:

SB623,,8 71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g).

SB623,3 Section 3. 71.05 (6) (a) 30. of the statutes is created to read:

SB623,,10 71.05 (6) (a) 30. The amount contributed to a nonprofit entity that is deducted under the Internal Revenue Code as a charitable contribution and that is used to calculate a credit under s. 71.07 (8s).

SB623,4 Section 4. 71.07 (8s) of the statutes is created to read:

SB623,,12 71.07 (8s) Employer child care program credit. (a) Definitions. In this subsection:

SB623,,13 1. “Child care program” means a program in which child care services are provided to the children of an employer’s employees during the working hours of the employees.

SB623,,14 2. “Claimant” means an employer who operates a child care program and who files a claim under this subsection.

SB623,,15 3. “Qualifying capital expenditures” means capital expenditures incurred in establishing a child care program, including mortgage or lease payments and expenditures for playground and classroom equipment, kitchen appliances, cooking equipment, and real property, including improvements, located in this state.

SB623,,16 (b) Filing claims. For taxable years beginning after December 31, 2022, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.02, up to the amount of those taxes, all of the following:

SB623,,17 1. An amount equal to the qualifying capital expenditures incurred by the claimant and the expenses incurred in organizing and administering direct payments to a child care program not operated by the claimant during the first taxable year those expenses are incurred. The total amount that the claimant may claim as a credit under this subdivision and subd. 2. for a taxable year may not exceed $100,000.

SB623,,18 2. An amount equal to the contributions made by the claimant to a nonprofit entity described in section 501 (c) 3 of the Internal Revenue Code for the purpose of establishing a child care program. The total amount that the claimant may claim as a credit under this subdivision and subd. 1. for a taxable year may not exceed $100,000.

SB623,,19 3. An amount equal to the expenses incurred by the claimant to operate a child care program. The total amount that the claimant may claim as a credit under this subdivision and subds. 4. and 5. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,20 4. An amount equal to the payments made by the claimant directly to a child care program in the name of and for the benefit of an employee of the claimant, not exceeding the amount charged to other children of like age and abilities of individuals not employed by the claimant. The total amount that the claimant may claim as a credit under this subdivision and subds. 3. and 5. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,21 5. An amount equal to the administrative costs associated with payments described in subd. 4., not exceeding 1 percent of those payments. The total amount that the claimant may claim as a credit under this subdivision and subds. 3. and 4. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,22 (c) Limitations. 1. No credit is allowed under this subsection if the child care program is not in compliance with the requirements under subch. XV of ch. 48.

SB623,,23 2. No credit is allowed under par. (b) 4. unless the total amount of the claimant’s payments to a child care program is greater than or equal to the total amount of the employee’s payments to the child care program.

SB623,,24 3. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on the amounts paid by the entities under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members, and shareholders may claim the credit in proportion to their ownership interests.

SB623,,25 (d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the credit under s. 71.28 (4), applies to the credit under this subsection.

SB623,,26 2. If the allowable amount of the claim under this subsection exceeds the tax otherwise due under s. 71.02, the amount of the claim that is not used to offset those taxes shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation under s. 20.835 (2) (et).

SB623,5 Section 5. 71.10 (4) (i) of the statutes is amended to read:

SB623,,28 71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s. 71.07 (3q), business development credit under s. 71.07 (3y), research credit under s. 71.07 (4k) (e) 2. a., veterans and surviving spouses property tax credit under s. 71.07 (6e), enterprise zone jobs credit under s. 71.07 (3w), electronics and information technology manufacturing zone credit under s. 71.07 (3wm), employer child care program credit under s. 71.07 (8s), earned income tax credit under s. 71.07 (9e), estimated tax payments under s. 71.09, and taxes withheld under subch. X.

SB623,6 Section 6. 71.21 (4) (a) of the statutes is amended to read:

SB623,,30 71.21 (4) (a) The amount of the credits computed by a partnership under s. 71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed through to partners shall be added to the partnership’s income.

SB623,7 Section 7. 71.21 (8) of the statutes is created to read:

SB623,,32 71.21 (8) A charitable deduction under the Internal Revenue Code for an amount contributed to a nonprofit entity for the purpose of establishing a child care program that is used to calculate the credit under s. 71.07 (8s) is not allowed.

SB623,8 Section 8. 71.26 (2) (a) 4. of the statutes is amended to read:

SB623,,34 71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm), (1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, limited liability company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g).

SB623,9 Section 9. 71.26 (3) (hi) of the statutes is created to read:

SB623,,36 71.26 (3) (hi) Section 170 is modified so that an amount contributed to a nonprofit entity for the purpose of establishing a child care program that is used to calculate the credit under s. 71.28 (8s) may not be deducted as provided under the Internal Revenue Code.

SB623,10 Section 10. 71.28 (8s) of the statutes is created to read:

SB623,,38 71.28 (8s) Employer child care program credit. (a) Definitions. In this subsection:

SB623,,39 1. “Child care program” has the meaning given in s. 71.07 (8s) (a) 1.

SB623,,40 2. “Claimant” means an employer who operates a child care program and who files a claim under this subsection.

SB623,,41 3. “Qualifying capital expenditures” has the meaning given in s. 71.07 (8s) (a) 3.

SB623,,42 (b) Filing claims. For taxable years beginning after December 31, 2022, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.23, up to the amount of the tax, all of the following:

SB623,,43 1. An amount equal to the qualifying capital expenditures incurred by the claimant and the expenses incurred in organizing and administering direct payments to a child care program not operated by the claimant during the first taxable year those expenses are incurred. The total amount that the claimant may claim as a credit under this subdivision and subd. 2. for a taxable year may not exceed $100,000.

SB623,,44 2. An amount equal to the contributions made by the claimant to a nonprofit entity described in section 501 (c) 3 of the Internal Revenue Code for the purpose of establishing a child care program. The total amount that the claimant may claim as a credit under this subdivision and subd. 1. for a taxable year may not exceed $100,000.

SB623,,45 3. An amount equal to the expenses incurred by the claimant to operate a child care program. The total amount that the claimant may claim as a credit under this subdivision and subds. 4. and 5. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,46 4. An amount equal to the payments made by the claimant directly to a child care program in the name of and for the benefit of an employee of the claimant, not exceeding the amount charged to other children of like age and abilities of individuals not employed by the claimant. The total amount that the claimant may claim as a credit under this subdivision and subds. 3. and 5. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,47 5. An amount equal to the administrative costs associated with payments described in subd. 4., not exceeding 1 percent of those payments. The total amount that the claimant may claim as a credit under this subdivision and subds. 3. and 4. for a taxable year may not exceed $3,000 for each child of an employee participating in the child care program.

SB623,,48 (c) Limitations. 1. No credit is allowed under this subsection if the onsite daycare facility is not in compliance with the requirements under subch. XV of ch. 48.

SB623,,49 2. No credit is allowed under par. (b) 4. unless the total amount of the claimant’s payments to a child care program is greater than or equal to the total amount of the employee’s payments to the child care program.

SB623,,50 3. Partnerships, limited liability companies, and tax-option corporations may not claim the credit under this subsection, but the eligibility for, and the amount of, the credit are based on the amounts paid by the entities under par. (b). A partnership, limited liability company, or tax-option corporation shall compute the amount of credit that each of its partners, members, or shareholders may claim and shall provide that information to each of them. Partners, members, and shareholders may claim the credit in proportion to their ownership interests.

SB623,,51 (d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit under sub. (4), applies to the credit under this subsection.

SB623,,52 2. If the allowable amount of the claim under this subsection exceeds the tax otherwise due under s. 71.23, the amount of the claim that is not used to offset those taxes shall be certified by the department of revenue to the department of administration for payment by check, share draft, or other draft drawn from the appropriation under s. 20.835 (2) (et).

SB623,11 Section 11. 71.30 (3) (f) of the statutes is amended to read:

SB623,,54 71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics and information technology manufacturing zone credit under s. 71.28 (3wm), business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k) 1., employer child care program credit under s. 71.28 (8s), and estimated tax payments under s. 71.29.

SB623,12 Section 12. 71.34 (1k) (g) of the statutes is amended to read:

SB623,,56 71.34 (1k) (g) An addition shall be made for credits computed by a tax-option corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (4), (5), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and passed through to shareholders.

SB623,13 Section 13. 71.45 (2) (a) 10. of the statutes is amended to read:

SB623,,58 71.45 (2) (a) 10. By adding to federal taxable income the amount of credit computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), (8s), and (10) and not passed through by a partnership, limited liability company, or tax-option corporation that has added that amount to the partnership’s, limited liability company’s, or tax-option corporation’s income under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47 (3), (3t), (4), (4m), and (5).

SB623,14 Section 14. 71.45 (2) (a) 25. of the statutes is created to read:

SB623,,60 71.45 (2) (a) 25. By adding to federal taxable income any amount used to calculate the credit under s. 71.47 (8s) to the extent that amount is deducted under the Internal Revenue Code as a charitable contribution.

SB623,15 Section 15. 71.47 (8s) of the statutes is created to read:

SB623,,62 71.47 (8s) Employer child care program credit. (a) Definitions. In this subsection:

SB623,,63 1. “Child care program” has the meaning given in s. 71.07 (8s) (a) 1.

SB623,,64 2. “Claimant” means an employer who operates a child care program and who files a claim under this subsection.

SB623,,65 3. “Qualifying capital expenditures” has the meaning given in s. 71.07 (8s) (a) 3.

SB623,,66 (b) Filing claims. For taxable years beginning after December 31, 2022, subject to the limitations provided in this subsection, a claimant may claim as a credit against the tax imposed under s. 71.43, up to the amount of the tax, all of the following:

SB623,,67 1. An amount equal to the qualifying capital expenditures incurred by the claimant and the expenses incurred in organizing and administering direct payments to a child care program not operated by the claimant during the first taxable year those expenses are incurred. The total amount that the claimant may claim as a credit under this subdivision and subd. 2. for a taxable year may not exceed $100,000.

SB623,,68 2. An amount equal to the contributions made by the claimant to a nonprofit entity described in section 501 (c) 3 of the Internal Revenue Code for the purpose of establishing a child care program. The total amount that the claimant may claim as a credit under this subdivision and subd. 1. for a taxable year may not exceed $100,000.