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2023 - 2024 LEGISLATURE
2023 ASSEMBLY BILL 1033
January 30, 2024 - Introduced by Representatives MOSES, SUMMERFIELD, ALLEN,
O'CONNOR, RETTINGER, SCHMIDT, SCHRAA and TITTL, cosponsored by Senator
TESTIN. Referred to Committee on Ways and Means.
***AUTHORS SUBJECT TO CHANGE***
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)
(de), 71.07 (11), 71.28 (11), 71.47 (11), 71.748 and 73.03 (78) of the statutes;
relating to: creating a digital interactive media tax credit, granting
rule-making authority, and making an appropriation.
Analysis by the Legislative Reference Bureau
This bill creates a refundable digital interactive media income and franchise
tax credit. The credit is equal to the sum of the following 1) 30 percent of the salary
or wages paid by a claimant to employees residing in this state for producing digital
interactive media or entertainment; and 2) 30 percent of the eligible expenditures.
Under the bill, “digital interactive media or entertainment” is generally a product or
platform intended for commercial use that uses text, sound, fixed images, animated
images, video, or three-dimensional geometry and that uses a system in which users
are able to input information or data in response to the information or data provided
through the system. “Digital interactive media or entertainment” does not include
largely static Internet sites, social media, and gambling products or services. The
bill also defines “eligible expenditures” as expenditures related to creating digital
interactive media or entertainment, such as testing, source code development, and
leases of facilities and equipment. 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.
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To claim the credit for a taxable year, a person must file an application with the
Department of Revenue and receive a certificate of eligibility for the credit. To grant
a certificate, DOR must determine that the applicant will have at least $25,000 in
eligible expenditures in the taxable year, and DOR, or an auditor certified by DOR,
must conduct an audit of the applicant. The bill requires auditors to comply with
various requirements in conducting the audits, including using sampling methods
adopted by DOR and verifying each expenditure covered by the audit. Applicants
must reimburse DOR for its costs related to the audits. DOR must also certify as
eligible to conduct those audits certified public accountants who submit an
application and satisfy various requirements under the bill. Every two years, DOR
must submit a report to the governor and standing committees of the legislature
related to taxation that includes the number of applications approved for the credit,
the amount of credits claimed, the number of people employed in the state in the
industries eligible for the credit, the economic impact of the credit, and the
community impact of the industries eligible for the credit.
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:
SECTION 1. 20.835 (2) (de) of the statutes is created to read:
20.835 (2) (de) Digital interactive media credit. A sum sufficient to make the
payments under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
SECTION 2. 71.05 (6) (a) 15. of the statutes is amended to read:
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), and (10), and (11) 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).
SECTION 3. 71.07 (11) of the statutes is created to read:
71.07 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
subsection:
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1. “Claimant” means a person who engages in qualified activities, owns a
copyright in digital interactive media or entertainment or has contracted directly
with the copyright owner or a person acting on behalf of the copyright owner, has a
viable plan for the commercial distribution of the digital interactive media or
entertainment, as determined by the department, and files a claim under this
subsection.
2. “Digital interactive media or entertainment” means a product or platform
intended for commercial production, use, or distribution, that has primarily an
entertainment purpose, and that satisfies all of the following:
a. Contains at least 2 of the following types of data: text, sound, fixed images,
animated images, video, or 3-dimensional geometry.
b. Uses discrete values that are ordinarily symbolized numerically to represent
information for input, processing, transmission, and storage, including information
input, processed, transmitted, and stored via the Internet.
c. Uses a system for inputting, processing, transmitting, or storing information
or data in which users of the system are able to respond to the system by inputting,
processing, transmitting, or storing information or data in response to the
information or data provided to them through the system.
d. Uses communication tools to store, transmit, distribute, and deliver
information and data, including distributed networks such as the Internet and
physical media such as compact discs, CD-ROM, DVD, and other removable storage
drives or devices.
3. “Digital interactive media or entertainment” does not include any of the
following:
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a. Software designed and developed primarily for the internal or operational
purposes of an entity.
b. Largely static Internet sites designed primarily to provide information about
a person, business, company, or firm, including Internet sites that are primarily
social media, user generated videos, podcasting, interactive advertising, or
journalism.
c. Products or services regulated under chs. 562 to 569 or any software or
application primarily involving gambling or wagering.
d. Software or applications that contain content in violation of s. 944.21.
4. “Eligible expenditures” means expenditures in this state directly related to
qualified activities and that have economic substance and a business purpose,
including all of the following:
a. Testing software, source code development, patches, updates, sprites,
3-dimensional models, engine development and other back-end programming
activities, performance and motion capture, audio production, tool development,
original scoring, and level design.
b. Photography, sound synchronization, lighting, and related services.
c. Information technology support, data analysis, and activities related to a
community of users of digital interactive media or entertainment.
d. Leases of facilities and equipment.
e. Prepackaged audio files, video files, photographic files, or libraries.
f. Licenses to use prerecorded audio files, video files, or photographic files.
g. Development associated with producing audio files and video files used in
the production of end products of digital interactive media or entertainment.
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h. Accountants and lawyers whose work is directly related to qualified
activities and who are licensed or otherwise authorized to practice in this state.
5. “Eligible expenditures” does not include any of the following:
a. Expenditures related to marketing, promotion, or distribution.
b. Administrative, payroll, or management services that are not directly
related to management of qualified activities.
c. Any expenditure that is later reimbursed by the state.
d. Costs related to the transfer of tax credits.
e. Amounts that are paid to persons as a result of their participation in profits
from a digital interactive media or entertainment production.
f. Any reimbursement required under s. 71.748 (2).
g. Interest expenses for loans.
h. Any expenditure incurred solely to increase the amount of the credit under
this subsection and that involves self-dealing or the claimant inflating prices.
i. Costs incurred for food or entertainment expenses not involved in qualified
activities.
6. “Qualified activities” means creating digital interactive media or
entertainment, including updates, subsequent editions, new seasons, and sequels.
(b) Filing claims. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2023, a claimant may claim as a credit
against the tax imposed under s. 71.02 any of the following amounts:
1. An amount equal to 30 percent of the salary or wages paid by the claimant
in the taxable year to the claimant's employees who were residents of this state at
the time that they were paid for services rendered in this state to produce digital
interactive media or entertainment.
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2. An amount equal to 30 percent of the eligible expenditures, other than salary
or wages described in subd. 1., paid by the claimant in the taxable year.
(c) Limitations. 1. No credit may be allowed under this subsection unless the
claimant files an application with the department, at the time and in the manner
prescribed by the department, and the department approves the application. The
claimant shall submit a copy of the approved application with the claimant's return.
2. 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 their payment of amounts 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 of limited liability
companies, and shareholders of tax-option corporations may claim the credit in
proportion to their ownership interest.
(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 credits under this subsection.
2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
due under this chapter or no tax is due under this chapter, the amount of the claim
not used to offset the tax due 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 account under s. 20.835 (2) (de).
SECTION 4. 71.10 (4) (i) of the statutes is amended to read:
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.
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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), earned income tax
credit under s. 71.07 (9e), digital interactive media credit under s. 71.07 (11),
estimated tax payments under s. 71.09, and taxes withheld under subch. X.
SECTION 5. 71.21 (4) (a) of the statutes is amended to read:
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), and (10), and (11) and passed through to
partners shall be added to the partnership's income.
SECTION 6. 71.26 (2) (a) 4. of the statutes is amended to read:
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), and (10), and (11) 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).
SECTION 7. 71.28 (11) of the statutes is created to read:
71.28 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
subsection:
1. “Claimant” means a person who engages in qualified activities, owns a
copyright in digital interactive media or entertainment or has contracted directly
with the copyright owner or a person acting on behalf of the copyright owner, has a
viable plan for the commercial distribution of the digital interactive media or
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entertainment, as determined by the department, and files a claim under this
subsection.
2. “Digital interactive media or entertainment” means a product or platform
intended for commercial production, use, or distribution, that has primarily an
entertainment purpose, and that satisfies all of the following:
a. Contains at least 2 of the following types of data: text, sound, fixed images,
animated images, video, or 3-dimensional geometry.
b. Uses discrete values that are ordinarily symbolized numerically to represent
information for input, processing, transmission, and storage, including information
input, processed, transmitted, and stored via the Internet.
c. Uses a system for inputting, processing, transmitting, or storing information
or data in which users of the system are able to respond to the system by inputting,
processing, transmitting, or storing information or data in response to the
information or data provided to them through the system.
d. Uses communication tools to store, transmit, distribute, and deliver
information and data, including distributed networks such as the Internet and
physical media such as compact discs, CD-ROM, DVD, and other removable storage
drives or devices.
3. “Digital interactive media or entertainment” does not include any of the
following:
a. Software designed and developed primarily for the internal or operational
purposes of an entity.
b. Largely static Internet sites designed primarily to provide information about
a person, business, company, or firm, including Internet sites that are primarily
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social media, user generated videos, podcasting, interactive advertising, or
journalism.
c. Products or services regulated under chs. 562 to 569 or any software or
application primarily involving gambling or wagering.
d. Software or applications that contain content in violation of s. 944.21.
4. “Eligible expenditures” means expenditures in this state directly related to
qualified activities and that have economic substance and a business purpose,
including all of the following:
a. Testing software, source code development, patches, updates, sprites,
3-dimensional models, engine development and other back-end programming
activities, performance and motion capture, audio production, tool development,
original scoring, and level design.
b. Photography, sound synchronization, lighting, and related services.
c. Information technology support, data analysis, and activities related to a
community of users of digital interactive media or entertainment.
d. Leases of facilities and equipment.
e. Prepackaged audio files, video files, photographic files, or libraries.
f. Licenses to use prerecorded audio files, video files, or photographic files.
g. Development associated with producing audio files and video files used in
the production of end products of digital interactive media or entertainment.
h. Accountants and lawyers whose work is directly related to qualified
activities and who are licensed or otherwise authorized to practice in this state.
5. “Eligible expenditures” does not include any of the following:
a. Expenditures related to marketing, promotion, or distribution.
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b. Administrative, payroll, or management services that are not directly
related to management of qualified activities.
c. Any expenditure that is later reimbursed by the state.
d. Costs related to the transfer of tax credits.
e. Amounts that are paid to persons as a result of their participation in profits
from a digital interactive media or entertainment production.
f. Any reimbursement required under s. 71.748 (2).
g. Interest expenses for loans.
h. Any expenditure incurred solely to increase the amount of the credit under
this subsection and that involves self-dealing or the claimant inflating prices.
i. Costs incurred for food or entertainment expenses not involved in qualified
activities.
6. “Qualified activities” means creating digital interactive media or
entertainment, including updates, subsequent editions, new seasons, and sequels.
(b) Filing claims. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2023, a claimant may claim as a credit
against the tax imposed under s. 71.23 any of the following amounts:
1. An amount equal to 30 percent of the salary or wages paid by the claimant
in the taxable year to the claimant's employees who were residents of this state at
the time that they were paid for services rendered in this state to produce digital
interactive media or entertainment.
2. An amount equal to 30 percent of the eligible expenditures, other than salary
or wages described in subd. 1., paid by the claimant in the taxable year.
(c) Limitations. 1. No credit may be allowed under this subsection unless the
claimant files an application with the department, at the time and in the manner
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prescribed by the department, and the department approves the application. The
claimant shall submit a copy of the approved application with the claimant's return.
2. 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 their payment of amounts 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 of limited liability
companies, and shareholders of tax-option corporations may claim the credit in
proportion to their ownership interest.
(d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
under sub. (4), applies to the credits under this subsection.
2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
due under this chapter or no tax is due under this chapter, the amount of the claim
not used to offset the tax due 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 account under s. 20.835 (2) (de).
SECTION 8. 71.30 (3) (f) of the statutes is amended to read:
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., digital interactive media credit under s. 71.28 (11), and estimated tax payments
under s. 71.29.
SECTION 9. 71.34 (1k) (g) of the statutes is amended to read:
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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), and (10), and (11) and
passed through to shareholders.
SECTION 10. 71.45 (2) (a) 10. of the statutes is amended to read:
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), and (10), and (11) 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).
SECTION 11. 71.47 (11) of the statutes is created to read:
71.47 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
subsection:
1. “Claimant” means a person who engages in qualified activities, owns a
copyright in digital interactive media or entertainment or has contracted directly
with the copyright owner or a person acting on behalf of the copyright owner, has a
viable plan for the commercial distribution of the digital interactive media or
entertainment, as determined by the department, and files a claim under this
subsection.
2. “Digital interactive media or entertainment” means a product or platform
intended for commercial production, use, or distribution, that has primarily an
entertainment purpose, and that satisfies all of the following:
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a. Contains at least 2 of the following types of data: text, sound, fixed images,
animated images, video, or 3-dimensional geometry.
b. Uses discrete values that are ordinarily symbolized numerically to represent
information for input, processing, transmission, and storage, including information
input, processed, transmitted, and stored via the Internet.
c. Uses a system for inputting, processing, transmitting, or storing information
or data in which users of the system are able to respond to the system by inputting,
processing, transmitting, or storing information or data in response to the
information or data provided to them through the system.
d. Uses communication tools to store, transmit, distribute, and deliver
information and data, including distributed networks such as the Internet and
physical media such as compact discs, CD-ROM, DVD, and other removable storage
drives or devices.
3. “Digital interactive media or entertainment” does not include any of the
following:
a. Software designed and developed primarily for the internal or operational
purposes of an entity.
b. Largely static Internet sites designed primarily to provide information about
a person, business, company, or firm, including Internet sites that are primarily
social media, user generated videos, podcasting, interactive advertising, or
journalism.
c. Products or services regulated under chs. 562 to 569 or any software or
application primarily involving gambling or wagering.
d. Software or applications that contain content in violation of s. 944.21.
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4. “Eligible expenditures” means expenditures in this state directly related to
qualified activities and that have economic substance and a business purpose,
including all of the following:
a. Testing software, source code development, patches, updates, sprites,
3-dimensional models, engine development and other back-end programming
activities, performance and motion capture, audio production, tool development,
original scoring, and level design.
b. Photography, sound synchronization, lighting, and related services.
c. Information technology support, data analysis, and activities related to a
community of users of digital interactive media or entertainment.
d. Leases of facilities and equipment.
e. Prepackaged audio files, video files, photographic files, or libraries.
f. Licenses to use prerecorded audio files, video files, or photographic files.
g. Development associated with producing audio files and video files used in
the production of end products of digital interactive media or entertainment.
h. Accountants and lawyers whose work is directly related to qualified
activities and who are licensed or otherwise authorized to practice in this state.
5. “Eligible expenditures” does not include any of the following:
a. Expenditures related to marketing, promotion, or distribution.
b. Administrative, payroll, or management services that are not directly
related to management of qualified activities.
c. Any expenditure that is later reimbursed by the state.
d. Costs related to the transfer of tax credits.
e. Amounts that are paid to persons as a result of their participation in profits
from a digital interactive media or entertainment production.
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f. Any reimbursement required under s. 71.748 (2).
g. Interest expenses for loans.
h. Any expenditure incurred solely to increase the amount of the credit under
this subsection and that involves self-dealing or the claimant inflating prices.
i. Costs incurred for food or entertainment expenses not involved in qualified
activities.
6. “Qualified activities” means creating digital interactive media or
entertainment, including updates, subsequent editions, new seasons, and sequels.
(b) Filing claims. Subject to the limitations provided in this subsection, for
taxable years beginning after December 31, 2023, a claimant may claim as a credit
against the tax imposed under s. 71.43 any of the following amounts:
1. An amount equal to 30 percent of the salary or wages paid by the claimant
in the taxable year to the claimant's employees who were residents of this state at
the time that they were paid for services rendered in this state to produce digital
interactive media or entertainment.
2. An amount equal to 30 percent of the eligible expenditures, other than salary
or wages described in subd. 1., paid by the claimant in the taxable year.
(c) Limitations. 1. No credit may be allowed under this subsection unless the
claimant files an application with the department, at the time and in the manner
prescribed by the department, and the department approves the application. The
claimant shall submit a copy of the approved application with the claimant's return.
2. 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 their payment of amounts under par. (b). A partnership,
limited liability company, or tax-option corporation shall compute the amount of
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credit that each of its partners, members, or shareholders may claim and shall
provide that information to each of them. Partners, members of limited liability
companies, and shareholders of tax-option corporations may claim the credit in
proportion to their ownership interest.
(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 credits under this subsection.
2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
due under this chapter or no tax is due under this chapter, the amount of the claim
not used to offset the tax due 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 account under s. 20.835 (2) (de).
SECTION 12. 71.49 (1) (f) of the statutes is amended to read:
71.49 (1) (f) The total of farmland preservation credit under subch. IX, jobs
credit under s. 71.47 (3q), enterprise zone jobs credit under s. 71.47 (3w), business
development credit under s. 71.47 (3y), research credit under s. 71.47 (4) (k) 1., digital
interactive media credit under s. 71.47 (11), and estimated tax payments under s.
71.48.
SECTION 13. 71.748 of the statutes is created to read:
71.748 Digital interactive media credit audits. (1) In this section,
“claimant” has the meaning given in s. 71.07 (11) (a) 1., 71.28 (11) (a) 1., or 71.47 (11)
(a) 1., as the context requires.
(2) A claimant shall reimburse the department for any audit initiated by the
department, and for all costs incurred by the department in reviewing an audit
conducted by an auditor certified under sub. (3) (a), relating to the credits under s.
71.07 (11), 71.28 (11), or 71.47 (11), including audits required under s. 73.03 (78) (a)
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2. This subsection does not apply to routine audits of a claimant's entire return that
include review of credits claimed under s. 71.07 (11), 71.28 (11), or 71.47 (11).
(3) (a) The department shall certify as eligible to conduct an audit required
under s. 73.03 (78) (a) 2. a certified public accountant that submits an application to
the department in the form and manner prescribed by the department and satisfies
all of the following:
1. The applicant is licensed as a certified public accountant under ch. 442.
2. The applicant is capable of conducting audits required under s. 73.03 (78) (a)
2. according to the requirements under s. 73.03 (78) (b) and any rules promulgated
related to the conduct of those audits and agrees to comply with those rules.
3. The applicant successfully completes any training required by the
department.
4. The applicant pays to the department the fee established under par. (c).
5. The applicant posts and maintains any bond or insurance required by the
department.
(b) The department shall revoke the certification of an auditor certified under
par. (a) if any of the following apply:
1. The auditor no longer satisfies a requirement under par. (a) 1. or 5.
2. The auditor violates s. 73.03 (78) (b) or any rules related to the conduct of
audits required under s. 73.03 (78) (a) 2.
(c) The department shall do all of the following:
1. Establish a fee for granting certifications under par. (a).
2. Publish and regularly update a list of all auditors certified under par. (a).
3. Publish on its website all of the following:
a. The application for certification under par. (a).
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b. The requirements for certification under par. (a).
c. The requirements for audits under s. 73.03 (78) (b).
d. The amount of the fee established under subd. 1.
SECTION 14. 73.03 (78) of the statutes is created to read:
73.03 (78) (a) To implement a program to approve applications for a certificate
for purposes of ss. 71.07 (11), 71.28 (11), and 71.47 (11). Application shall be made
to the department in each taxable year for which a certificate is desired. The
department may not approve an application unless all of the following apply:
1. The department determines that the applicant's qualified activities, as
defined in s. 71.47 (11) (a) 6., will result in eligible expenditures, as defined in s. 71.47
(11) (a) 4., in excess of $25,000 for the taxable year.
2. The department, or an auditor certified by the department under s. 71.748,
conducts an audit of the applicant. The department shall review an audit conducted
by an auditor certified under s. 71.748 and shall conduct any additional audit
necessary and make necessary adjustments.
3. The applicant reimburses the department for the cost of the audit conducted
under subd. 2.
(b) 1. In conducting an audit required under par. (a) 2., the department or
auditor certified by the department under s. 71.748 shall do all of the following:
a. Comply with any rules promulgated under par. (d).
b. Use any sampling methods adopted by the department.
c. Verify each reported expenditure that is included in the audit and identify
and exclude each expenditure that does not satisfy the requirements under s. 71.07
(11), 71.28 (11), or 71.47 (11).
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2. No audit of an applicant required under par. (a) 2. may be performed by an
auditor that is part of an accounting entity that is not determined by the department
to be independent of the applicant, consistent with s. 442.10 and as provided in the
code of professional conduct of the American Institute of Certified Public
Accountants, or its successor organization, or as otherwise determined by the
department.
3. The department shall determine whether a sampling method is required for
audits required under par. (a) 2., and if a sampling method is required, an
appropriate sample method and size that accurately captures a truly representative
sample of all expenditures for which a credit is claimed under s. 71.07 (11), 71.28 (11),
or 71.47 (11).
4. The department shall conduct an audit required under par. (a) 2. when no
eligible auditor is able to access information necessary to conduct the audit because
the information is confidential and the department is able to access the confidential
information.
(c) At least once every 2 years, beginning not later than December 31, 2025, the
department shall submit a report to the governor and the standing committees of the
legislature with jurisdiction over taxation under s. 13.172 (3) that includes all of the
following:
1. The number of applications approved under this subsection.
2. The amount of the credits claimed under ss. 71.07 (11), 71.28 (11), and 71.47
(11).
3. The number of people employed in this state in the industries eligible for the
credits under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
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4. The economic impact of the credits under ss. 71.07 (11), 71.28 (11), and 71.47
(11).
5. The community impact of the industries eligible for the credits under ss.
71.07 (11), 71.28 (11), and 71.47 (11) in this state.
(d) The department shall promulgate rules to administer this subsection.
(END)
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