Wisconsin 2023-2024 Regular Session

Wisconsin Assembly Bill AB1033 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 ASSEMBLY BILL 1033
5	5	January 30, 2024 - Introduced by Representatives MOSES, SUMMERFIELD, ALLEN,
6	6	O'CONNOR, RETTINGER, SCHMIDT, SCHRAA and TITTL, cosponsored by Senator
7	7	TESTIN. Referred to Committee on Ways and Means.
8	8	*AUTHORS SUBJECT TO CHANGE*
9	9	AN ACT to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30
10	10	(3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2)
11	11	(de), 71.07 (11), 71.28 (11), 71.47 (11), 71.748 and 73.03 (78) of the statutes;
12	12	relating to: creating a digital interactive media tax credit, granting
13	13	rule-making authority, and making an appropriation.
14	14	Analysis by the Legislative Reference Bureau
15	15	This bill creates a refundable digital interactive media income and franchise
16	16	tax credit. The credit is equal to the sum of the following 1) 30 percent of the salary
17	17	or wages paid by a claimant to employees residing in this state for producing digital
18	18	interactive media or entertainment; and 2) 30 percent of the eligible expenditures.
19	19	Under the bill, “digital interactive media or entertainment” is generally a product or
20	20	platform intended for commercial use that uses text, sound, fixed images, animated
21	21	images, video, or three-dimensional geometry and that uses a system in which users
22	22	are able to input information or data in response to the information or data provided
23	23	through the system. “Digital interactive media or entertainment” does not include
24	24	largely static Internet sites, social media, and gambling products or services. The
25	25	bill also defines “eligible expenditures” as expenditures related to creating digital
26	26	interactive media or entertainment, such as testing, source code development, and
27	27	leases of facilities and equipment. The credit under the bill is refundable, which
28	28	means that if the credit exceeds the claimant's tax liability, the claimant will receive
29	29	the difference as a refund check.
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36	36	ASSEMBLY BILL 1033
37	37	To claim the credit for a taxable year, a person must file an application with the
38	38	Department of Revenue and receive a certificate of eligibility for the credit. To grant
39	39	a certificate, DOR must determine that the applicant will have at least $25,000 in
40	40	eligible expenditures in the taxable year, and DOR, or an auditor certified by DOR,
41	41	must conduct an audit of the applicant. The bill requires auditors to comply with
42	42	various requirements in conducting the audits, including using sampling methods
43	43	adopted by DOR and verifying each expenditure covered by the audit. Applicants
44	44	must reimburse DOR for its costs related to the audits. DOR must also certify as
45	45	eligible to conduct those audits certified public accountants who submit an
46	46	application and satisfy various requirements under the bill. Every two years, DOR
47	47	must submit a report to the governor and standing committees of the legislature
48	48	related to taxation that includes the number of applications approved for the credit,
49	49	the amount of credits claimed, the number of people employed in the state in the
50	50	industries eligible for the credit, the economic impact of the credit, and the
51	51	community impact of the industries eligible for the credit.
52	52	For further information see the state fiscal estimate, which will be printed as
53	53	an appendix to this bill.
54	54	The people of the state of Wisconsin, represented in senate and assembly, do
55	55	enact as follows:
56	56	SECTION 1. 20.835 (2) (de) of the statutes is created to read:
57	57	20.835 (2) (de) Digital interactive media credit. A sum sufficient to make the
58	58	payments under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
59	59	SECTION 2. 71.05 (6) (a) 15. of the statutes is amended to read:
60	60	71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
61	61	(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j),
62	62	(5k), (5r), (5rm), (6n), and (10), and (11) and not passed through by a partnership,
63	63	limited liability company, or tax-option corporation that has added that amount to
64	64	the partnership's, company's, or tax-option corporation's income under s. 71.21 (4)
65	65	or 71.34 (1k) (g).
66	66	SECTION 3. 71.07 (11) of the statutes is created to read:
67	67	71.07 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
68	68	subsection:
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84	84	SECTION 3
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86	86	1. “Claimant” means a person who engages in qualified activities, owns a
87	87	copyright in digital interactive media or entertainment or has contracted directly
88	88	with the copyright owner or a person acting on behalf of the copyright owner, has a
89	89	viable plan for the commercial distribution of the digital interactive media or
90	90	entertainment, as determined by the department, and files a claim under this
91	91	subsection.
92	92	2. “Digital interactive media or entertainment” means a product or platform
93	93	intended for commercial production, use, or distribution, that has primarily an
94	94	entertainment purpose, and that satisfies all of the following:
95	95	a. Contains at least 2 of the following types of data: text, sound, fixed images,
96	96	animated images, video, or 3-dimensional geometry.
97	97	b. Uses discrete values that are ordinarily symbolized numerically to represent
98	98	information for input, processing, transmission, and storage, including information
99	99	input, processed, transmitted, and stored via the Internet.
100	100	c. Uses a system for inputting, processing, transmitting, or storing information
101	101	or data in which users of the system are able to respond to the system by inputting,
102	102	processing, transmitting, or storing information or data in response to the
103	103	information or data provided to them through the system.
104	104	d. Uses communication tools to store, transmit, distribute, and deliver
105	105	information and data, including distributed networks such as the Internet and
106	106	physical media such as compact discs, CD-ROM, DVD, and other removable storage
107	107	drives or devices.
108	108	3. “Digital interactive media or entertainment” does not include any of the
109	109	following:
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135	135	SECTION 3 ASSEMBLY BILL 1033
136	136	a. Software designed and developed primarily for the internal or operational
137	137	purposes of an entity.
138	138	b. Largely static Internet sites designed primarily to provide information about
139	139	a person, business, company, or firm, including Internet sites that are primarily
140	140	social media, user generated videos, podcasting, interactive advertising, or
141	141	journalism.
142	142	c. Products or services regulated under chs. 562 to 569 or any software or
143	143	application primarily involving gambling or wagering.
144	144	d. Software or applications that contain content in violation of s. 944.21.
145	145	4. “Eligible expenditures” means expenditures in this state directly related to
146	146	qualified activities and that have economic substance and a business purpose,
147	147	including all of the following:
148	148	a. Testing software, source code development, patches, updates, sprites,
149	149	3-dimensional models, engine development and other back-end programming
150	150	activities, performance and motion capture, audio production, tool development,
151	151	original scoring, and level design.
152	152	b. Photography, sound synchronization, lighting, and related services.
153	153	c. Information technology support, data analysis, and activities related to a
154	154	community of users of digital interactive media or entertainment.
155	155	d. Leases of facilities and equipment.
156	156	e. Prepackaged audio files, video files, photographic files, or libraries.
157	157	f. Licenses to use prerecorded audio files, video files, or photographic files.
158	158	g. Development associated with producing audio files and video files used in
159	159	the production of end products of digital interactive media or entertainment.
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188	188	h. Accountants and lawyers whose work is directly related to qualified
189	189	activities and who are licensed or otherwise authorized to practice in this state.
190	190	5. “Eligible expenditures” does not include any of the following:
191	191	a. Expenditures related to marketing, promotion, or distribution.
192	192	b. Administrative, payroll, or management services that are not directly
193	193	related to management of qualified activities.
194	194	c. Any expenditure that is later reimbursed by the state.
195	195	d. Costs related to the transfer of tax credits.
196	196	e. Amounts that are paid to persons as a result of their participation in profits
197	197	from a digital interactive media or entertainment production.
198	198	f. Any reimbursement required under s. 71.748 (2).
199	199	g. Interest expenses for loans.
200	200	h. Any expenditure incurred solely to increase the amount of the credit under
201	201	this subsection and that involves self-dealing or the claimant inflating prices.
202	202	i. Costs incurred for food or entertainment expenses not involved in qualified
203	203	activities.
204	204	6. “Qualified activities” means creating digital interactive media or
205	205	entertainment, including updates, subsequent editions, new seasons, and sequels.
206	206	(b) Filing claims. Subject to the limitations provided in this subsection, for
207	207	taxable years beginning after December 31, 2023, a claimant may claim as a credit
208	208	against the tax imposed under s. 71.02 any of the following amounts:
209	209	1. An amount equal to 30 percent of the salary or wages paid by the claimant
210	210	in the taxable year to the claimant's employees who were residents of this state at
211	211	the time that they were paid for services rendered in this state to produce digital
212	212	interactive media or entertainment.
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240	240	2. An amount equal to 30 percent of the eligible expenditures, other than salary
241	241	or wages described in subd. 1., paid by the claimant in the taxable year.
242	242	(c) Limitations. 1. No credit may be allowed under this subsection unless the
243	243	claimant files an application with the department, at the time and in the manner
244	244	prescribed by the department, and the department approves the application. The
245	245	claimant shall submit a copy of the approved application with the claimant's return.
246	246	2. Partnerships, limited liability companies, and tax-option corporations may
247	247	not claim the credit under this subsection, but the eligibility for, and the amount of,
248	248	the credit are based on their payment of amounts under par. (b). A partnership,
249	249	limited liability company, or tax-option corporation shall compute the amount of
250	250	credit that each of its partners, members, or shareholders may claim and shall
251	251	provide that information to each of them. Partners, members of limited liability
252	252	companies, and shareholders of tax-option corporations may claim the credit in
253	253	proportion to their ownership interest.
254	254	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
255	255	credit under s. 71.28 (4), applies to the credits under this subsection.
256	256	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
257	257	due under this chapter or no tax is due under this chapter, the amount of the claim
258	258	not used to offset the tax due shall be certified by the department of revenue to the
259	259	department of administration for payment by check, share draft, or other draft
260	260	drawn from the appropriation account under s. 20.835 (2) (de).
261	261	SECTION 4. 71.10 (4) (i) of the statutes is amended to read:
262	262	71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland
263	263	preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and
264	264	beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s.
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292	292	SECTION 4
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294	294	71.07 (3q), business development credit under s. 71.07 (3y), research credit under s.
295	295	71.07 (4k) (e) 2. a., veterans and surviving spouses property tax credit under s. 71.07
296	296	(6e), enterprise zone jobs credit under s. 71.07 (3w), electronics and information
297	297	technology manufacturing zone credit under s. 71.07 (3wm), earned income tax
298	298	credit under s. 71.07 (9e), digital interactive media credit under s. 71.07 (11),
299	299	estimated tax payments under s. 71.09, and taxes withheld under subch. X.
300	300	SECTION 5. 71.21 (4) (a) of the statutes is amended to read:
301	301	71.21 (4) (a) The amount of the credits computed by a partnership under s.
302	302	71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n),
303	303	(5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (11) and passed through to
304	304	partners shall be added to the partnership's income.
305	305	SECTION 6. 71.26 (2) (a) 4. of the statutes is amended to read:
306	306	71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
307	307	(1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5g), (5i), (5j), (5k), (5r),
308	308	(5rm), (6n), and (10), and (11) and not passed through by a partnership, limited
309	309	liability company, or tax-option corporation that has added that amount to the
310	310	partnership's, limited liability company's, or tax-option corporation's income under
311	311	s. 71.21 (4) or 71.34 (1k) (g).
312	312	SECTION 7. 71.28 (11) of the statutes is created to read:
313	313	71.28 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
314	314	subsection:
315	315	1. “Claimant” means a person who engages in qualified activities, owns a
316	316	copyright in digital interactive media or entertainment or has contracted directly
317	317	with the copyright owner or a person acting on behalf of the copyright owner, has a
318	318	viable plan for the commercial distribution of the digital interactive media or
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346	346	entertainment, as determined by the department, and files a claim under this
347	347	subsection.
348	348	2. “Digital interactive media or entertainment” means a product or platform
349	349	intended for commercial production, use, or distribution, that has primarily an
350	350	entertainment purpose, and that satisfies all of the following:
351	351	a. Contains at least 2 of the following types of data: text, sound, fixed images,
352	352	animated images, video, or 3-dimensional geometry.
353	353	b. Uses discrete values that are ordinarily symbolized numerically to represent
354	354	information for input, processing, transmission, and storage, including information
355	355	input, processed, transmitted, and stored via the Internet.
356	356	c. Uses a system for inputting, processing, transmitting, or storing information
357	357	or data in which users of the system are able to respond to the system by inputting,
358	358	processing, transmitting, or storing information or data in response to the
359	359	information or data provided to them through the system.
360	360	d. Uses communication tools to store, transmit, distribute, and deliver
361	361	information and data, including distributed networks such as the Internet and
362	362	physical media such as compact discs, CD-ROM, DVD, and other removable storage
363	363	drives or devices.
364	364	3. “Digital interactive media or entertainment” does not include any of the
365	365	following:
366	366	a. Software designed and developed primarily for the internal or operational
367	367	purposes of an entity.
368	368	b. Largely static Internet sites designed primarily to provide information about
369	369	a person, business, company, or firm, including Internet sites that are primarily
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398	398	social media, user generated videos, podcasting, interactive advertising, or
399	399	journalism.
400	400	c. Products or services regulated under chs. 562 to 569 or any software or
401	401	application primarily involving gambling or wagering.
402	402	d. Software or applications that contain content in violation of s. 944.21.
403	403	4. “Eligible expenditures” means expenditures in this state directly related to
404	404	qualified activities and that have economic substance and a business purpose,
405	405	including all of the following:
406	406	a. Testing software, source code development, patches, updates, sprites,
407	407	3-dimensional models, engine development and other back-end programming
408	408	activities, performance and motion capture, audio production, tool development,
409	409	original scoring, and level design.
410	410	b. Photography, sound synchronization, lighting, and related services.
411	411	c. Information technology support, data analysis, and activities related to a
412	412	community of users of digital interactive media or entertainment.
413	413	d. Leases of facilities and equipment.
414	414	e. Prepackaged audio files, video files, photographic files, or libraries.
415	415	f. Licenses to use prerecorded audio files, video files, or photographic files.
416	416	g. Development associated with producing audio files and video files used in
417	417	the production of end products of digital interactive media or entertainment.
418	418	h. Accountants and lawyers whose work is directly related to qualified
419	419	activities and who are licensed or otherwise authorized to practice in this state.
420	420	5. “Eligible expenditures” does not include any of the following:
421	421	a. Expenditures related to marketing, promotion, or distribution.
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448	448	b. Administrative, payroll, or management services that are not directly
449	449	related to management of qualified activities.
450	450	c. Any expenditure that is later reimbursed by the state.
451	451	d. Costs related to the transfer of tax credits.
452	452	e. Amounts that are paid to persons as a result of their participation in profits
453	453	from a digital interactive media or entertainment production.
454	454	f. Any reimbursement required under s. 71.748 (2).
455	455	g. Interest expenses for loans.
456	456	h. Any expenditure incurred solely to increase the amount of the credit under
457	457	this subsection and that involves self-dealing or the claimant inflating prices.
458	458	i. Costs incurred for food or entertainment expenses not involved in qualified
459	459	activities.
460	460	6. “Qualified activities” means creating digital interactive media or
461	461	entertainment, including updates, subsequent editions, new seasons, and sequels.
462	462	(b) Filing claims. Subject to the limitations provided in this subsection, for
463	463	taxable years beginning after December 31, 2023, a claimant may claim as a credit
464	464	against the tax imposed under s. 71.23 any of the following amounts:
465	465	1. An amount equal to 30 percent of the salary or wages paid by the claimant
466	466	in the taxable year to the claimant's employees who were residents of this state at
467	467	the time that they were paid for services rendered in this state to produce digital
468	468	interactive media or entertainment.
469	469	2. An amount equal to 30 percent of the eligible expenditures, other than salary
470	470	or wages described in subd. 1., paid by the claimant in the taxable year.
471	471	(c) Limitations. 1. No credit may be allowed under this subsection unless the
472	472	claimant files an application with the department, at the time and in the manner
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502	502	prescribed by the department, and the department approves the application. The
503	503	claimant shall submit a copy of the approved application with the claimant's return.
504	504	2. Partnerships, limited liability companies, and tax-option corporations may
505	505	not claim the credit under this subsection, but the eligibility for, and the amount of,
506	506	the credit are based on their payment of amounts under par. (b). A partnership,
507	507	limited liability company, or tax-option corporation shall compute the amount of
508	508	credit that each of its partners, members, or shareholders may claim and shall
509	509	provide that information to each of them. Partners, members of limited liability
510	510	companies, and shareholders of tax-option corporations may claim the credit in
511	511	proportion to their ownership interest.
512	512	(d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
513	513	under sub. (4), applies to the credits under this subsection.
514	514	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
515	515	due under this chapter or no tax is due under this chapter, the amount of the claim
516	516	not used to offset the tax due shall be certified by the department of revenue to the
517	517	department of administration for payment by check, share draft, or other draft
518	518	drawn from the appropriation account under s. 20.835 (2) (de).
519	519	SECTION 8. 71.30 (3) (f) of the statutes is amended to read:
520	520	71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs
521	521	credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics
522	522	and information technology manufacturing zone credit under s. 71.28 (3wm),
523	523	business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k)
524	524	1., digital interactive media credit under s. 71.28 (11), and estimated tax payments
525	525	under s. 71.29.
526	526	SECTION 9. 71.34 (1k) (g) of the statutes is amended to read:
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552	552	KP:amn
553	553	SECTION 9 ASSEMBLY BILL 1033
554	554	71.34 (1k) (g) An addition shall be made for credits computed by a tax-option
555	555	corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w),
556	556	(3wm), (3y), (4), (5), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (11) and
557	557	passed through to shareholders.
558	558	SECTION 10. 71.45 (2) (a) 10. of the statutes is amended to read:
559	559	71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
560	560	computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5g), (5i),
561	561	(5j), (5k), (5r), (5rm), (6n), and (10), and (11) and not passed through by a partnership,
562	562	limited liability company, or tax-option corporation that has added that amount to
563	563	the partnership's, limited liability company's, or tax-option corporation's income
564	564	under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47
565	565	(3), (3t), (4), (4m), and (5).
566	566	SECTION 11. 71.47 (11) of the statutes is created to read:
567	567	71.47 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
568	568	subsection:
569	569	1. “Claimant” means a person who engages in qualified activities, owns a
570	570	copyright in digital interactive media or entertainment or has contracted directly
571	571	with the copyright owner or a person acting on behalf of the copyright owner, has a
572	572	viable plan for the commercial distribution of the digital interactive media or
573	573	entertainment, as determined by the department, and files a claim under this
574	574	subsection.
575	575	2. “Digital interactive media or entertainment” means a product or platform
576	576	intended for commercial production, use, or distribution, that has primarily an
577	577	entertainment purpose, and that satisfies all of the following:
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603	603	KP:amn
604	604	SECTION 11
605	605	ASSEMBLY BILL 1033
606	606	a. Contains at least 2 of the following types of data: text, sound, fixed images,
607	607	animated images, video, or 3-dimensional geometry.
608	608	b. Uses discrete values that are ordinarily symbolized numerically to represent
609	609	information for input, processing, transmission, and storage, including information
610	610	input, processed, transmitted, and stored via the Internet.
611	611	c. Uses a system for inputting, processing, transmitting, or storing information
612	612	or data in which users of the system are able to respond to the system by inputting,
613	613	processing, transmitting, or storing information or data in response to the
614	614	information or data provided to them through the system.
615	615	d. Uses communication tools to store, transmit, distribute, and deliver
616	616	information and data, including distributed networks such as the Internet and
617	617	physical media such as compact discs, CD-ROM, DVD, and other removable storage
618	618	drives or devices.
619	619	3. “Digital interactive media or entertainment” does not include any of the
620	620	following:
621	621	a. Software designed and developed primarily for the internal or operational
622	622	purposes of an entity.
623	623	b. Largely static Internet sites designed primarily to provide information about
624	624	a person, business, company, or firm, including Internet sites that are primarily
625	625	social media, user generated videos, podcasting, interactive advertising, or
626	626	journalism.
627	627	c. Products or services regulated under chs. 562 to 569 or any software or
628	628	application primarily involving gambling or wagering.
629	629	d. Software or applications that contain content in violation of s. 944.21.
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654	654	KP:amn
655	655	SECTION 11 ASSEMBLY BILL 1033
656	656	4. “Eligible expenditures” means expenditures in this state directly related to
657	657	qualified activities and that have economic substance and a business purpose,
658	658	including all of the following:
659	659	a. Testing software, source code development, patches, updates, sprites,
660	660	3-dimensional models, engine development and other back-end programming
661	661	activities, performance and motion capture, audio production, tool development,
662	662	original scoring, and level design.
663	663	b. Photography, sound synchronization, lighting, and related services.
664	664	c. Information technology support, data analysis, and activities related to a
665	665	community of users of digital interactive media or entertainment.
666	666	d. Leases of facilities and equipment.
667	667	e. Prepackaged audio files, video files, photographic files, or libraries.
668	668	f. Licenses to use prerecorded audio files, video files, or photographic files.
669	669	g. Development associated with producing audio files and video files used in
670	670	the production of end products of digital interactive media or entertainment.
671	671	h. Accountants and lawyers whose work is directly related to qualified
672	672	activities and who are licensed or otherwise authorized to practice in this state.
673	673	5. “Eligible expenditures” does not include any of the following:
674	674	a. Expenditures related to marketing, promotion, or distribution.
675	675	b. Administrative, payroll, or management services that are not directly
676	676	related to management of qualified activities.
677	677	c. Any expenditure that is later reimbursed by the state.
678	678	d. Costs related to the transfer of tax credits.
679	679	e. Amounts that are paid to persons as a result of their participation in profits
680	680	from a digital interactive media or entertainment production.
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706	706	LRB-5712/1
707	707	KP:amn
708	708	SECTION 11
709	709	ASSEMBLY BILL 1033
710	710	f. Any reimbursement required under s. 71.748 (2).
711	711	g. Interest expenses for loans.
712	712	h. Any expenditure incurred solely to increase the amount of the credit under
713	713	this subsection and that involves self-dealing or the claimant inflating prices.
714	714	i. Costs incurred for food or entertainment expenses not involved in qualified
715	715	activities.
716	716	6. “Qualified activities” means creating digital interactive media or
717	717	entertainment, including updates, subsequent editions, new seasons, and sequels.
718	718	(b) Filing claims. Subject to the limitations provided in this subsection, for
719	719	taxable years beginning after December 31, 2023, a claimant may claim as a credit
720	720	against the tax imposed under s. 71.43 any of the following amounts:
721	721	1. An amount equal to 30 percent of the salary or wages paid by the claimant
722	722	in the taxable year to the claimant's employees who were residents of this state at
723	723	the time that they were paid for services rendered in this state to produce digital
724	724	interactive media or entertainment.
725	725	2. An amount equal to 30 percent of the eligible expenditures, other than salary
726	726	or wages described in subd. 1., paid by the claimant in the taxable year.
727	727	(c) Limitations. 1. No credit may be allowed under this subsection unless the
728	728	claimant files an application with the department, at the time and in the manner
729	729	prescribed by the department, and the department approves the application. The
730	730	claimant shall submit a copy of the approved application with the claimant's return.
731	731	2. Partnerships, limited liability companies, and tax-option corporations may
732	732	not claim the credit under this subsection, but the eligibility for, and the amount of,
733	733	the credit are based on their payment of amounts under par. (b). A partnership,
734	734	limited liability company, or tax-option corporation shall compute the amount of
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760	760	KP:amn
761	761	SECTION 11 ASSEMBLY BILL 1033
762	762	credit that each of its partners, members, or shareholders may claim and shall
763	763	provide that information to each of them. Partners, members of limited liability
764	764	companies, and shareholders of tax-option corporations may claim the credit in
765	765	proportion to their ownership interest.
766	766	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
767	767	credit under s. 71.28 (4), applies to the credits under this subsection.
768	768	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
769	769	due under this chapter or no tax is due under this chapter, the amount of the claim
770	770	not used to offset the tax due shall be certified by the department of revenue to the
771	771	department of administration for payment by check, share draft, or other draft
772	772	drawn from the appropriation account under s. 20.835 (2) (de).
773	773	SECTION 12. 71.49 (1) (f) of the statutes is amended to read:
774	774	71.49 (1) (f) The total of farmland preservation credit under subch. IX, jobs
775	775	credit under s. 71.47 (3q), enterprise zone jobs credit under s. 71.47 (3w), business
776	776	development credit under s. 71.47 (3y), research credit under s. 71.47 (4) (k) 1., digital
777	777	interactive media credit under s. 71.47 (11), and estimated tax payments under s.
778	778	71.48.
779	779	SECTION 13. 71.748 of the statutes is created to read:
780	780	71.748 Digital interactive media credit audits. (1) In this section,
781	781	“claimant” has the meaning given in s. 71.07 (11) (a) 1., 71.28 (11) (a) 1., or 71.47 (11)
782	782	(a) 1., as the context requires.
783	783	(2) A claimant shall reimburse the department for any audit initiated by the
784	784	department, and for all costs incurred by the department in reviewing an audit
785	785	conducted by an auditor certified under sub. (3) (a), relating to the credits under s.
786	786	71.07 (11), 71.28 (11), or 71.47 (11), including audits required under s. 73.03 (78) (a)
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813	813	KP:amn
814	814	SECTION 13
815	815	ASSEMBLY BILL 1033
816	816	2. This subsection does not apply to routine audits of a claimant's entire return that
817	817	include review of credits claimed under s. 71.07 (11), 71.28 (11), or 71.47 (11).
818	818	(3) (a) The department shall certify as eligible to conduct an audit required
819	819	under s. 73.03 (78) (a) 2. a certified public accountant that submits an application to
820	820	the department in the form and manner prescribed by the department and satisfies
821	821	all of the following:
822	822	1. The applicant is licensed as a certified public accountant under ch. 442.
823	823	2. The applicant is capable of conducting audits required under s. 73.03 (78) (a)
824	824	2. according to the requirements under s. 73.03 (78) (b) and any rules promulgated
825	825	related to the conduct of those audits and agrees to comply with those rules.
826	826	3. The applicant successfully completes any training required by the
827	827	department.
828	828	4. The applicant pays to the department the fee established under par. (c).
829	829	5. The applicant posts and maintains any bond or insurance required by the
830	830	department.
831	831	(b) The department shall revoke the certification of an auditor certified under
832	832	par. (a) if any of the following apply:
833	833	1. The auditor no longer satisfies a requirement under par. (a) 1. or 5.
834	834	2. The auditor violates s. 73.03 (78) (b) or any rules related to the conduct of
835	835	audits required under s. 73.03 (78) (a) 2.
836	836	(c) The department shall do all of the following:
837	837	1. Establish a fee for granting certifications under par. (a).
838	838	2. Publish and regularly update a list of all auditors certified under par. (a).
839	839	3. Publish on its website all of the following:
840	840	a. The application for certification under par. (a).
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867	867	SECTION 13 ASSEMBLY BILL 1033
868	868	b. The requirements for certification under par. (a).
869	869	c. The requirements for audits under s. 73.03 (78) (b).
870	870	d. The amount of the fee established under subd. 1.
871	871	SECTION 14. 73.03 (78) of the statutes is created to read:
872	872	73.03 (78) (a) To implement a program to approve applications for a certificate
873	873	for purposes of ss. 71.07 (11), 71.28 (11), and 71.47 (11). Application shall be made
874	874	to the department in each taxable year for which a certificate is desired. The
875	875	department may not approve an application unless all of the following apply:
876	876	1. The department determines that the applicant's qualified activities, as
877	877	defined in s. 71.47 (11) (a) 6., will result in eligible expenditures, as defined in s. 71.47
878	878	(11) (a) 4., in excess of $25,000 for the taxable year.
879	879	2. The department, or an auditor certified by the department under s. 71.748,
880	880	conducts an audit of the applicant. The department shall review an audit conducted
881	881	by an auditor certified under s. 71.748 and shall conduct any additional audit
882	882	necessary and make necessary adjustments.
883	883	3. The applicant reimburses the department for the cost of the audit conducted
884	884	under subd. 2.
885	885	(b) 1. In conducting an audit required under par. (a) 2., the department or
886	886	auditor certified by the department under s. 71.748 shall do all of the following:
887	887	a. Comply with any rules promulgated under par. (d).
888	888	b. Use any sampling methods adopted by the department.
889	889	c. Verify each reported expenditure that is included in the audit and identify
890	890	and exclude each expenditure that does not satisfy the requirements under s. 71.07
891	891	(11), 71.28 (11), or 71.47 (11).
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917	917	KP:amn
918	918	SECTION 14
919	919	ASSEMBLY BILL 1033
920	920	2. No audit of an applicant required under par. (a) 2. may be performed by an
921	921	auditor that is part of an accounting entity that is not determined by the department
922	922	to be independent of the applicant, consistent with s. 442.10 and as provided in the
923	923	code of professional conduct of the American Institute of Certified Public
924	924	Accountants, or its successor organization, or as otherwise determined by the
925	925	department.
926	926	3. The department shall determine whether a sampling method is required for
927	927	audits required under par. (a) 2., and if a sampling method is required, an
928	928	appropriate sample method and size that accurately captures a truly representative
929	929	sample of all expenditures for which a credit is claimed under s. 71.07 (11), 71.28 (11),
930	930	or 71.47 (11).
931	931	4. The department shall conduct an audit required under par. (a) 2. when no
932	932	eligible auditor is able to access information necessary to conduct the audit because
933	933	the information is confidential and the department is able to access the confidential
934	934	information.
935	935	(c) At least once every 2 years, beginning not later than December 31, 2025, the
936	936	department shall submit a report to the governor and the standing committees of the
937	937	legislature with jurisdiction over taxation under s. 13.172 (3) that includes all of the
938	938	following:
939	939	1. The number of applications approved under this subsection.
940	940	2. The amount of the credits claimed under ss. 71.07 (11), 71.28 (11), and 71.47
941	941	(11).
942	942	3. The number of people employed in this state in the industries eligible for the
943	943	credits under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
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969	969	SECTION 14 ASSEMBLY BILL 1033
970	970	4. The economic impact of the credits under ss. 71.07 (11), 71.28 (11), and 71.47
971	971	(11).
972	972	5. The community impact of the industries eligible for the credits under ss.
973	973	71.07 (11), 71.28 (11), and 71.47 (11) in this state.
974	974	(d) The department shall promulgate rules to administer this subsection.
975	975	(END)
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