Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB970 Compare Versions

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

Old	New	Differences
1	1	LRB-4262/1
2	2	KP:amn
3	3	2023 - 2024 LEGISLATURE
4	4	2023 SENATE BILL 970
5	5	January 26, 2024 - Introduced by Senator TESTIN, cosponsored by Representatives
6	6	MOSES, ALLEN, O'CONNOR and SCHMIDT. Referred to Committee on Universities
7	7	and Revenue.
8	8	AN ACT to amend 71.05 (6) (a) 15., 71.10 (4) (i), 71.21 (4) (a), 71.26 (2) (a) 4., 71.30
9	9	(3) (f), 71.34 (1k) (g), 71.45 (2) (a) 10. and 71.49 (1) (f); and to create 20.835 (2)
10	10	(de), 71.07 (11), 71.28 (11), 71.47 (11), 71.748 and 73.03 (78) of the statutes;
11	11	relating to: creating a digital interactive media tax credit, granting
12	12	rule-making authority, and making an appropriation.
13	13	Analysis by the Legislative Reference Bureau
14	14	This bill creates a refundable digital interactive media income and franchise
15	15	tax credit. The credit is equal to the sum of the following 1) 30 percent of the salary
16	16	or wages paid by a claimant to employees residing in this state for producing digital
17	17	interactive media or entertainment; and 2) 30 percent of the eligible expenditures.
18	18	Under the bill, “digital interactive media or entertainment” is generally a product or
19	19	platform intended for commercial use that uses text, sound, fixed images, animated
20	20	images, video, or three-dimensional geometry and that uses a system in which users
21	21	are able to input information or data in response to the information or data provided
22	22	through the system. “Digital interactive media or entertainment” does not include
23	23	largely static Internet sites, social media, and gambling products or services. The
24	24	bill also defines “eligible expenditures” as expenditures related to creating digital
25	25	interactive media or entertainment, such as testing, source code development, and
26	26	leases of facilities and equipment. The credit under the bill is refundable, which
27	27	means that if the credit exceeds the claimant's tax liability, the claimant will receive
28	28	the difference as a refund check.
29	29	1
30	30	2
31	31	3
32	32	4
33	33	5 - 2 -2023 - 2024 Legislature LRB-4262/1
34	34	KP:amn
35	35	SENATE BILL 970
36	36	To claim the credit for a taxable year, a person must file an application with the
37	37	Department of Revenue and receive a certificate of eligibility for the credit. To grant
38	38	a certificate, DOR must determine that the applicant will have at least $25,000 in
39	39	eligible expenditures in the taxable year, and DOR, or an auditor certified by DOR,
40	40	must conduct an audit of the applicant. The bill requires auditors to comply with
41	41	various requirements in conducting the audits, including using sampling methods
42	42	adopted by DOR and verifying each expenditure covered by the audit. Applicants
43	43	must reimburse DOR for its costs related to the audits. DOR must also certify as
44	44	eligible to conduct those audits certified public accountants who submit an
45	45	application and satisfy various requirements under the bill. Every two years, DOR
46	46	must submit a report to the governor and standing committees of the legislature
47	47	related to taxation that includes the number of applications approved for the credit,
48	48	the amount of credits claimed, the number of people employed in the state in the
49	49	industries eligible for the credit, the economic impact of the credit, and the
50	50	community impact of the industries eligible for the credit.
51	51	For further information see the state fiscal estimate, which will be printed as
52	52	an appendix to this bill.
53	53	The people of the state of Wisconsin, represented in senate and assembly, do
54	54	enact as follows:
55	55	SECTION 1. 20.835 (2) (de) of the statutes is created to read:
56	56	20.835 (2) (de) Digital interactive media credit. A sum sufficient to make the
57	57	payments under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
58	58	SECTION 2. 71.05 (6) (a) 15. of the statutes is amended to read:
59	59	71.05 (6) (a) 15. The amount of the credits computed under s. 71.07 (2dm),
60	60	(2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n), (5e), (5i), (5j),
61	61	(5k), (5r), (5rm), (6n), and (10), and (11) and not passed through by a partnership,
62	62	limited liability company, or tax-option corporation that has added that amount to
63	63	the partnership's, company's, or tax-option corporation's income under s. 71.21 (4)
64	64	or 71.34 (1k) (g).
65	65	SECTION 3. 71.07 (11) of the statutes is created to read:
66	66	71.07 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
67	67	subsection:
68	68	1
69	69	2
70	70	3
71	71	4
72	72	5
73	73	6
74	74	7
75	75	8
76	76	9
77	77	10
78	78	11
79	79	12
80	80	13 - 3 -2023 - 2024 Legislature
81	81	LRB-4262/1
82	82	KP:amn
83	83	SECTION 3
84	84	SENATE BILL 970
85	85	1. “Claimant” means a person who engages in qualified activities, owns a
86	86	copyright in digital interactive media or entertainment or has contracted directly
87	87	with the copyright owner or a person acting on behalf of the copyright owner, has a
88	88	viable plan for the commercial distribution of the digital interactive media or
89	89	entertainment, as determined by the department, and files a claim under this
90	90	subsection.
91	91	2. “Digital interactive media or entertainment” means a product or platform
92	92	intended for commercial production, use, or distribution, that has primarily an
93	93	entertainment purpose, and that satisfies all of the following:
94	94	a. Contains at least 2 of the following types of data: text, sound, fixed images,
95	95	animated images, video, or 3-dimensional geometry.
96	96	b. Uses discrete values that are ordinarily symbolized numerically to represent
97	97	information for input, processing, transmission, and storage, including information
98	98	input, processed, transmitted, and stored via the Internet.
99	99	c. Uses a system for inputting, processing, transmitting, or storing information
100	100	or data in which users of the system are able to respond to the system by inputting,
101	101	processing, transmitting, or storing information or data in response to the
102	102	information or data provided to them through the system.
103	103	d. Uses communication tools to store, transmit, distribute, and deliver
104	104	information and data, including distributed networks such as the Internet and
105	105	physical media such as compact discs, CD-ROM, DVD, and other removable storage
106	106	drives or devices.
107	107	3. “Digital interactive media or entertainment” does not include any of the
108	108	following:
109	109	1
110	110	2
111	111	3
112	112	4
113	113	5
114	114	6
115	115	7
116	116	8
117	117	9
118	118	10
119	119	11
120	120	12
121	121	13
122	122	14
123	123	15
124	124	16
125	125	17
126	126	18
127	127	19
128	128	20
129	129	21
130	130	22
131	131	23
132	132	24 - 4 -2023 - 2024 Legislature LRB-4262/1
133	133	KP:amn
134	134	SECTION 3 SENATE BILL 970
135	135	a. Software designed and developed primarily for the internal or operational
136	136	purposes of an entity.
137	137	b. Largely static Internet sites designed primarily to provide information about
138	138	a person, business, company, or firm, including Internet sites that are primarily
139	139	social media, user generated videos, podcasting, interactive advertising, or
140	140	journalism.
141	141	c. Products or services regulated under chs. 562 to 569 or any software or
142	142	application primarily involving gambling or wagering.
143	143	d. Software or applications that contain content in violation of s. 944.21.
144	144	4. “Eligible expenditures” means expenditures in this state directly related to
145	145	qualified activities and that have economic substance and a business purpose,
146	146	including all of the following:
147	147	a. Testing software, source code development, patches, updates, sprites,
148	148	3-dimensional models, engine development and other back-end programming
149	149	activities, performance and motion capture, audio production, tool development,
150	150	original scoring, and level design.
151	151	b. Photography, sound synchronization, lighting, and related services.
152	152	c. Information technology support, data analysis, and activities related to a
153	153	community of users of digital interactive media or entertainment.
154	154	d. Leases of facilities and equipment.
155	155	e. Prepackaged audio files, video files, photographic files, or libraries.
156	156	f. Licenses to use prerecorded audio files, video files, or photographic files.
157	157	g. Development associated with producing audio files and video files used in
158	158	the production of end products of digital interactive media or entertainment.
159	159	1
160	160	2
161	161	3
162	162	4
163	163	5
164	164	6
165	165	7
166	166	8
167	167	9
168	168	10
169	169	11
170	170	12
171	171	13
172	172	14
173	173	15
174	174	16
175	175	17
176	176	18
177	177	19
178	178	20
179	179	21
180	180	22
181	181	23
182	182	24 - 5 -2023 - 2024 Legislature
183	183	LRB-4262/1
184	184	KP:amn
185	185	SECTION 3
186	186	SENATE BILL 970
187	187	h. Accountants and lawyers whose work is directly related to qualified
188	188	activities and who are licensed or otherwise authorized to practice in this state.
189	189	5. “Eligible expenditures” does not include any of the following:
190	190	a. Expenditures related to marketing, promotion, or distribution.
191	191	b. Administrative, payroll, or management services that are not directly
192	192	related to management of qualified activities.
193	193	c. Any expenditure that is later reimbursed by the state.
194	194	d. Costs related to the transfer of tax credits.
195	195	e. Amounts that are paid to persons as a result of their participation in profits
196	196	from a digital interactive media or entertainment production.
197	197	f. Any reimbursement required under s. 71.748 (2).
198	198	g. Interest expenses for loans.
199	199	h. Any expenditure incurred solely to increase the amount of the credit under
200	200	this subsection and that involves self-dealing or the claimant inflating prices.
201	201	i. Costs incurred for food or entertainment expenses not involved in qualified
202	202	activities.
203	203	6. “Qualified activities” means creating digital interactive media or
204	204	entertainment, including updates, subsequent editions, new seasons, and sequels.
205	205	(b) Filing claims. Subject to the limitations provided in this subsection, for
206	206	taxable years beginning after December 31, 2023, a claimant may claim as a credit
207	207	against the tax imposed under s. 71.02 any of the following amounts:
208	208	1. An amount equal to 30 percent of the salary or wages paid by the claimant
209	209	in the taxable year to the claimant's employees who were residents of this state at
210	210	the time that they were paid for services rendered in this state to produce digital
211	211	interactive media or entertainment.
212	212	1
213	213	2
214	214	3
215	215	4
216	216	5
217	217	6
218	218	7
219	219	8
220	220	9
221	221	10
222	222	11
223	223	12
224	224	13
225	225	14
226	226	15
227	227	16
228	228	17
229	229	18
230	230	19
231	231	20
232	232	21
233	233	22
234	234	23
235	235	24
236	236	25 - 6 -2023 - 2024 Legislature LRB-4262/1
237	237	KP:amn
238	238	SECTION 3 SENATE BILL 970
239	239	2. An amount equal to 30 percent of the eligible expenditures, other than salary
240	240	or wages described in subd. 1., paid by the claimant in the taxable year.
241	241	(c) Limitations. 1. No credit may be allowed under this subsection unless the
242	242	claimant files an application with the department, at the time and in the manner
243	243	prescribed by the department, and the department approves the application. The
244	244	claimant shall submit a copy of the approved application with the claimant's return.
245	245	2. Partnerships, limited liability companies, and tax-option corporations may
246	246	not claim the credit under this subsection, but the eligibility for, and the amount of,
247	247	the credit are based on their payment of amounts under par. (b). A partnership,
248	248	limited liability company, or tax-option corporation shall compute the amount of
249	249	credit that each of its partners, members, or shareholders may claim and shall
250	250	provide that information to each of them. Partners, members of limited liability
251	251	companies, and shareholders of tax-option corporations may claim the credit in
252	252	proportion to their ownership interest.
253	253	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
254	254	credit under s. 71.28 (4), applies to the credits under this subsection.
255	255	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
256	256	due under this chapter or no tax is due under this chapter, the amount of the claim
257	257	not used to offset the tax due shall be certified by the department of revenue to the
258	258	department of administration for payment by check, share draft, or other draft
259	259	drawn from the appropriation account under s. 20.835 (2) (de).
260	260	SECTION 4. 71.10 (4) (i) of the statutes is amended to read:
261	261	71.10 (4) (i) The total of claim of right credit under s. 71.07 (1), farmland
262	262	preservation credit under ss. 71.57 to 71.61, farmland preservation credit, 2010 and
263	263	beyond under s. 71.613, homestead credit under subch. VIII, jobs tax credit under s.
264	264	1
265	265	2
266	266	3
267	267	4
268	268	5
269	269	6
270	270	7
271	271	8
272	272	9
273	273	10
274	274	11
275	275	12
276	276	13
277	277	14
278	278	15
279	279	16
280	280	17
281	281	18
282	282	19
283	283	20
284	284	21
285	285	22
286	286	23
287	287	24
288	288	25 - 7 -2023 - 2024 Legislature
289	289	LRB-4262/1
290	290	KP:amn
291	291	SECTION 4
292	292	SENATE BILL 970
293	293	71.07 (3q), business development credit under s. 71.07 (3y), research credit under s.
294	294	71.07 (4k) (e) 2. a., veterans and surviving spouses property tax credit under s. 71.07
295	295	(6e), enterprise zone jobs credit under s. 71.07 (3w), electronics and information
296	296	technology manufacturing zone credit under s. 71.07 (3wm), earned income tax
297	297	credit under s. 71.07 (9e), digital interactive media credit under s. 71.07 (11),
298	298	estimated tax payments under s. 71.09, and taxes withheld under subch. X.
299	299	SECTION 5. 71.21 (4) (a) of the statutes is amended to read:
300	300	71.21 (4) (a) The amount of the credits computed by a partnership under s.
301	301	71.07 (2dm), (2dx), (2dy), (3g), (3h), (3n), (3q), (3s), (3t), (3w), (3wm), (3y), (4k), (4n),
302	302	(5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (11) and passed through to
303	303	partners shall be added to the partnership's income.
304	304	SECTION 6. 71.26 (2) (a) 4. of the statutes is amended to read:
305	305	71.26 (2) (a) 4. Plus the amount of the credit computed under s. 71.28 (1dm),
306	306	(1dx), (1dy), (3g), (3h), (3n), (3q), (3t), (3w), (3wm), (3y), (5e), (5g), (5i), (5j), (5k), (5r),
307	307	(5rm), (6n), and (10), and (11) and not passed through by a partnership, limited
308	308	liability company, or tax-option corporation that has added that amount to the
309	309	partnership's, limited liability company's, or tax-option corporation's income under
310	310	s. 71.21 (4) or 71.34 (1k) (g).
311	311	SECTION 7. 71.28 (11) of the statutes is created to read:
312	312	71.28 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
313	313	subsection:
314	314	1. “Claimant” means a person who engages in qualified activities, owns a
315	315	copyright in digital interactive media or entertainment or has contracted directly
316	316	with the copyright owner or a person acting on behalf of the copyright owner, has a
317	317	viable plan for the commercial distribution of the digital interactive media or
318	318	1
319	319	2
320	320	3
321	321	4
322	322	5
323	323	6
324	324	7
325	325	8
326	326	9
327	327	10
328	328	11
329	329	12
330	330	13
331	331	14
332	332	15
333	333	16
334	334	17
335	335	18
336	336	19
337	337	20
338	338	21
339	339	22
340	340	23
341	341	24
342	342	25 - 8 -2023 - 2024 Legislature LRB-4262/1
343	343	KP:amn
344	344	SECTION 7 SENATE BILL 970
345	345	entertainment, as determined by the department, and files a claim under this
346	346	subsection.
347	347	2. “Digital interactive media or entertainment” means a product or platform
348	348	intended for commercial production, use, or distribution, that has primarily an
349	349	entertainment purpose, and that satisfies all of the following:
350	350	a. Contains at least 2 of the following types of data: text, sound, fixed images,
351	351	animated images, video, or 3-dimensional geometry.
352	352	b. Uses discrete values that are ordinarily symbolized numerically to represent
353	353	information for input, processing, transmission, and storage, including information
354	354	input, processed, transmitted, and stored via the Internet.
355	355	c. Uses a system for inputting, processing, transmitting, or storing information
356	356	or data in which users of the system are able to respond to the system by inputting,
357	357	processing, transmitting, or storing information or data in response to the
358	358	information or data provided to them through the system.
359	359	d. Uses communication tools to store, transmit, distribute, and deliver
360	360	information and data, including distributed networks such as the Internet and
361	361	physical media such as compact discs, CD-ROM, DVD, and other removable storage
362	362	drives or devices.
363	363	3. “Digital interactive media or entertainment” does not include any of the
364	364	following:
365	365	a. Software designed and developed primarily for the internal or operational
366	366	purposes of an entity.
367	367	b. Largely static Internet sites designed primarily to provide information about
368	368	a person, business, company, or firm, including Internet sites that are primarily
369	369	1
370	370	2
371	371	3
372	372	4
373	373	5
374	374	6
375	375	7
376	376	8
377	377	9
378	378	10
379	379	11
380	380	12
381	381	13
382	382	14
383	383	15
384	384	16
385	385	17
386	386	18
387	387	19
388	388	20
389	389	21
390	390	22
391	391	23
392	392	24 - 9 -2023 - 2024 Legislature
393	393	LRB-4262/1
394	394	KP:amn
395	395	SECTION 7
396	396	SENATE BILL 970
397	397	social media, user generated videos, podcasting, interactive advertising, or
398	398	journalism.
399	399	c. Products or services regulated under chs. 562 to 569 or any software or
400	400	application primarily involving gambling or wagering.
401	401	d. Software or applications that contain content in violation of s. 944.21.
402	402	4. “Eligible expenditures” means expenditures in this state directly related to
403	403	qualified activities and that have economic substance and a business purpose,
404	404	including all of the following:
405	405	a. Testing software, source code development, patches, updates, sprites,
406	406	3-dimensional models, engine development and other back-end programming
407	407	activities, performance and motion capture, audio production, tool development,
408	408	original scoring, and level design.
409	409	b. Photography, sound synchronization, lighting, and related services.
410	410	c. Information technology support, data analysis, and activities related to a
411	411	community of users of digital interactive media or entertainment.
412	412	d. Leases of facilities and equipment.
413	413	e. Prepackaged audio files, video files, photographic files, or libraries.
414	414	f. Licenses to use prerecorded audio files, video files, or photographic files.
415	415	g. Development associated with producing audio files and video files used in
416	416	the production of end products of digital interactive media or entertainment.
417	417	h. Accountants and lawyers whose work is directly related to qualified
418	418	activities and who are licensed or otherwise authorized to practice in this state.
419	419	5. “Eligible expenditures” does not include any of the following:
420	420	a. Expenditures related to marketing, promotion, or distribution.
421	421	1
422	422	2
423	423	3
424	424	4
425	425	5
426	426	6
427	427	7
428	428	8
429	429	9
430	430	10
431	431	11
432	432	12
433	433	13
434	434	14
435	435	15
436	436	16
437	437	17
438	438	18
439	439	19
440	440	20
441	441	21
442	442	22
443	443	23
444	444	24 - 10 -2023 - 2024 Legislature LRB-4262/1
445	445	KP:amn
446	446	SECTION 7 SENATE BILL 970
447	447	b. Administrative, payroll, or management services that are not directly
448	448	related to management of qualified activities.
449	449	c. Any expenditure that is later reimbursed by the state.
450	450	d. Costs related to the transfer of tax credits.
451	451	e. Amounts that are paid to persons as a result of their participation in profits
452	452	from a digital interactive media or entertainment production.
453	453	f. Any reimbursement required under s. 71.748 (2).
454	454	g. Interest expenses for loans.
455	455	h. Any expenditure incurred solely to increase the amount of the credit under
456	456	this subsection and that involves self-dealing or the claimant inflating prices.
457	457	i. Costs incurred for food or entertainment expenses not involved in qualified
458	458	activities.
459	459	6. “Qualified activities” means creating digital interactive media or
460	460	entertainment, including updates, subsequent editions, new seasons, and sequels.
461	461	(b) Filing claims. Subject to the limitations provided in this subsection, for
462	462	taxable years beginning after December 31, 2023, a claimant may claim as a credit
463	463	against the tax imposed under s. 71.23 any of the following amounts:
464	464	1. An amount equal to 30 percent of the salary or wages paid by the claimant
465	465	in the taxable year to the claimant's employees who were residents of this state at
466	466	the time that they were paid for services rendered in this state to produce digital
467	467	interactive media or entertainment.
468	468	2. An amount equal to 30 percent of the eligible expenditures, other than salary
469	469	or wages described in subd. 1., paid by the claimant in the taxable year.
470	470	(c) Limitations. 1. No credit may be allowed under this subsection unless the
471	471	claimant files an application with the department, at the time and in the manner
472	472	1
473	473	2
474	474	3
475	475	4
476	476	5
477	477	6
478	478	7
479	479	8
480	480	9
481	481	10
482	482	11
483	483	12
484	484	13
485	485	14
486	486	15
487	487	16
488	488	17
489	489	18
490	490	19
491	491	20
492	492	21
493	493	22
494	494	23
495	495	24
496	496	25 - 11 -2023 - 2024 Legislature
497	497	LRB-4262/1
498	498	KP:amn
499	499	SECTION 7
500	500	SENATE BILL 970
501	501	prescribed by the department, and the department approves the application. The
502	502	claimant shall submit a copy of the approved application with the claimant's return.
503	503	2. Partnerships, limited liability companies, and tax-option corporations may
504	504	not claim the credit under this subsection, but the eligibility for, and the amount of,
505	505	the credit are based on their payment of amounts under par. (b). A partnership,
506	506	limited liability company, or tax-option corporation shall compute the amount of
507	507	credit that each of its partners, members, or shareholders may claim and shall
508	508	provide that information to each of them. Partners, members of limited liability
509	509	companies, and shareholders of tax-option corporations may claim the credit in
510	510	proportion to their ownership interest.
511	511	(d) Administration. 1. Subsection (4) (e), (g), and (h), as it applies to the credit
512	512	under sub. (4), applies to the credits under this subsection.
513	513	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
514	514	due under this chapter or no tax is due under this chapter, the amount of the claim
515	515	not used to offset the tax due shall be certified by the department of revenue to the
516	516	department of administration for payment by check, share draft, or other draft
517	517	drawn from the appropriation account under s. 20.835 (2) (de).
518	518	SECTION 8. 71.30 (3) (f) of the statutes is amended to read:
519	519	71.30 (3) (f) The total of farmland preservation credit under subch. IX, jobs
520	520	credit under s. 71.28 (3q), enterprise zone jobs credit under s. 71.28 (3w), electronics
521	521	and information technology manufacturing zone credit under s. 71.28 (3wm),
522	522	business development credit under s. 71.28 (3y), research credit under s. 71.28 (4) (k)
523	523	1., digital interactive media credit under s. 71.28 (11), and estimated tax payments
524	524	under s. 71.29.
525	525	SECTION 9. 71.34 (1k) (g) of the statutes is amended to read:
526	526	1
527	527	2
528	528	3
529	529	4
530	530	5
531	531	6
532	532	7
533	533	8
534	534	9
535	535	10
536	536	11
537	537	12
538	538	13
539	539	14
540	540	15
541	541	16
542	542	17
543	543	18
544	544	19
545	545	20
546	546	21
547	547	22
548	548	23
549	549	24
550	550	25 - 12 -2023 - 2024 Legislature LRB-4262/1
551	551	KP:amn
552	552	SECTION 9 SENATE BILL 970
553	553	71.34 (1k) (g) An addition shall be made for credits computed by a tax-option
554	554	corporation under s. 71.28 (1dm), (1dx), (1dy), (3), (3g), (3h), (3n), (3q), (3t), (3w),
555	555	(3wm), (3y), (4), (5), (5e), (5g), (5i), (5j), (5k), (5r), (5rm), (6n), and (10), and (11) and
556	556	passed through to shareholders.
557	557	SECTION 10. 71.45 (2) (a) 10. of the statutes is amended to read:
558	558	71.45 (2) (a) 10. By adding to federal taxable income the amount of credit
559	559	computed under s. 71.47 (1dm) to (1dy), (3g), (3h), (3n), (3q), (3w), (3y), (5e), (5g), (5i),
560	560	(5j), (5k), (5r), (5rm), (6n), and (10), and (11) and not passed through by a partnership,
561	561	limited liability company, or tax-option corporation that has added that amount to
562	562	the partnership's, limited liability company's, or tax-option corporation's income
563	563	under s. 71.21 (4) or 71.34 (1k) (g) and the amount of credit computed under s. 71.47
564	564	(3), (3t), (4), (4m), and (5).
565	565	SECTION 11. 71.47 (11) of the statutes is created to read:
566	566	71.47 (11) DIGITAL INTERACTIVE MEDIA CREDIT. (a) Definitions. In this
567	567	subsection:
568	568	1. “Claimant” means a person who engages in qualified activities, owns a
569	569	copyright in digital interactive media or entertainment or has contracted directly
570	570	with the copyright owner or a person acting on behalf of the copyright owner, has a
571	571	viable plan for the commercial distribution of the digital interactive media or
572	572	entertainment, as determined by the department, and files a claim under this
573	573	subsection.
574	574	2. “Digital interactive media or entertainment” means a product or platform
575	575	intended for commercial production, use, or distribution, that has primarily an
576	576	entertainment purpose, and that satisfies all of the following:
577	577	1
578	578	2
579	579	3
580	580	4
581	581	5
582	582	6
583	583	7
584	584	8
585	585	9
586	586	10
587	587	11
588	588	12
589	589	13
590	590	14
591	591	15
592	592	16
593	593	17
594	594	18
595	595	19
596	596	20
597	597	21
598	598	22
599	599	23
600	600	24 - 13 -2023 - 2024 Legislature
601	601	LRB-4262/1
602	602	KP:amn
603	603	SECTION 11
604	604	SENATE BILL 970
605	605	a. Contains at least 2 of the following types of data: text, sound, fixed images,
606	606	animated images, video, or 3-dimensional geometry.
607	607	b. Uses discrete values that are ordinarily symbolized numerically to represent
608	608	information for input, processing, transmission, and storage, including information
609	609	input, processed, transmitted, and stored via the Internet.
610	610	c. Uses a system for inputting, processing, transmitting, or storing information
611	611	or data in which users of the system are able to respond to the system by inputting,
612	612	processing, transmitting, or storing information or data in response to the
613	613	information or data provided to them through the system.
614	614	d. Uses communication tools to store, transmit, distribute, and deliver
615	615	information and data, including distributed networks such as the Internet and
616	616	physical media such as compact discs, CD-ROM, DVD, and other removable storage
617	617	drives or devices.
618	618	3. “Digital interactive media or entertainment” does not include any of the
619	619	following:
620	620	a. Software designed and developed primarily for the internal or operational
621	621	purposes of an entity.
622	622	b. Largely static Internet sites designed primarily to provide information about
623	623	a person, business, company, or firm, including Internet sites that are primarily
624	624	social media, user generated videos, podcasting, interactive advertising, or
625	625	journalism.
626	626	c. Products or services regulated under chs. 562 to 569 or any software or
627	627	application primarily involving gambling or wagering.
628	628	d. Software or applications that contain content in violation of s. 944.21.
629	629	1
630	630	2
631	631	3
632	632	4
633	633	5
634	634	6
635	635	7
636	636	8
637	637	9
638	638	10
639	639	11
640	640	12
641	641	13
642	642	14
643	643	15
644	644	16
645	645	17
646	646	18
647	647	19
648	648	20
649	649	21
650	650	22
651	651	23
652	652	24 - 14 -2023 - 2024 Legislature LRB-4262/1
653	653	KP:amn
654	654	SECTION 11 SENATE BILL 970
655	655	4. “Eligible expenditures” means expenditures in this state directly related to
656	656	qualified activities and that have economic substance and a business purpose,
657	657	including all of the following:
658	658	a. Testing software, source code development, patches, updates, sprites,
659	659	3-dimensional models, engine development and other back-end programming
660	660	activities, performance and motion capture, audio production, tool development,
661	661	original scoring, and level design.
662	662	b. Photography, sound synchronization, lighting, and related services.
663	663	c. Information technology support, data analysis, and activities related to a
664	664	community of users of digital interactive media or entertainment.
665	665	d. Leases of facilities and equipment.
666	666	e. Prepackaged audio files, video files, photographic files, or libraries.
667	667	f. Licenses to use prerecorded audio files, video files, or photographic files.
668	668	g. Development associated with producing audio files and video files used in
669	669	the production of end products of digital interactive media or entertainment.
670	670	h. Accountants and lawyers whose work is directly related to qualified
671	671	activities and who are licensed or otherwise authorized to practice in this state.
672	672	5. “Eligible expenditures” does not include any of the following:
673	673	a. Expenditures related to marketing, promotion, or distribution.
674	674	b. Administrative, payroll, or management services that are not directly
675	675	related to management of qualified activities.
676	676	c. Any expenditure that is later reimbursed by the state.
677	677	d. Costs related to the transfer of tax credits.
678	678	e. Amounts that are paid to persons as a result of their participation in profits
679	679	from a digital interactive media or entertainment production.
680	680	1
681	681	2
682	682	3
683	683	4
684	684	5
685	685	6
686	686	7
687	687	8
688	688	9
689	689	10
690	690	11
691	691	12
692	692	13
693	693	14
694	694	15
695	695	16
696	696	17
697	697	18
698	698	19
699	699	20
700	700	21
701	701	22
702	702	23
703	703	24
704	704	25 - 15 -2023 - 2024 Legislature
705	705	LRB-4262/1
706	706	KP:amn
707	707	SECTION 11
708	708	SENATE BILL 970
709	709	f. Any reimbursement required under s. 71.748 (2).
710	710	g. Interest expenses for loans.
711	711	h. Any expenditure incurred solely to increase the amount of the credit under
712	712	this subsection and that involves self-dealing or the claimant inflating prices.
713	713	i. Costs incurred for food or entertainment expenses not involved in qualified
714	714	activities.
715	715	6. “Qualified activities” means creating digital interactive media or
716	716	entertainment, including updates, subsequent editions, new seasons, and sequels.
717	717	(b) Filing claims. Subject to the limitations provided in this subsection, for
718	718	taxable years beginning after December 31, 2023, a claimant may claim as a credit
719	719	against the tax imposed under s. 71.43 any of the following amounts:
720	720	1. An amount equal to 30 percent of the salary or wages paid by the claimant
721	721	in the taxable year to the claimant's employees who were residents of this state at
722	722	the time that they were paid for services rendered in this state to produce digital
723	723	interactive media or entertainment.
724	724	2. An amount equal to 30 percent of the eligible expenditures, other than salary
725	725	or wages described in subd. 1., paid by the claimant in the taxable year.
726	726	(c) Limitations. 1. No credit may be allowed under this subsection unless the
727	727	claimant files an application with the department, at the time and in the manner
728	728	prescribed by the department, and the department approves the application. The
729	729	claimant shall submit a copy of the approved application with the claimant's return.
730	730	2. Partnerships, limited liability companies, and tax-option corporations may
731	731	not claim the credit under this subsection, but the eligibility for, and the amount of,
732	732	the credit are based on their payment of amounts under par. (b). A partnership,
733	733	limited liability company, or tax-option corporation shall compute the amount of
734	734	1
735	735	2
736	736	3
737	737	4
738	738	5
739	739	6
740	740	7
741	741	8
742	742	9
743	743	10
744	744	11
745	745	12
746	746	13
747	747	14
748	748	15
749	749	16
750	750	17
751	751	18
752	752	19
753	753	20
754	754	21
755	755	22
756	756	23
757	757	24
758	758	25 - 16 -2023 - 2024 Legislature LRB-4262/1
759	759	KP:amn
760	760	SECTION 11 SENATE BILL 970
761	761	credit that each of its partners, members, or shareholders may claim and shall
762	762	provide that information to each of them. Partners, members of limited liability
763	763	companies, and shareholders of tax-option corporations may claim the credit in
764	764	proportion to their ownership interest.
765	765	(d) Administration. 1. Section 71.28 (4) (e), (g), and (h), as it applies to the
766	766	credit under s. 71.28 (4), applies to the credits under this subsection.
767	767	2. If the allowable amount of the claim under par. (b) exceeds the tax otherwise
768	768	due under this chapter or no tax is due under this chapter, the amount of the claim
769	769	not used to offset the tax due shall be certified by the department of revenue to the
770	770	department of administration for payment by check, share draft, or other draft
771	771	drawn from the appropriation account under s. 20.835 (2) (de).
772	772	SECTION 12. 71.49 (1) (f) of the statutes is amended to read:
773	773	71.49 (1) (f) The total of farmland preservation credit under subch. IX, jobs
774	774	credit under s. 71.47 (3q), enterprise zone jobs credit under s. 71.47 (3w), business
775	775	development credit under s. 71.47 (3y), research credit under s. 71.47 (4) (k) 1., digital
776	776	interactive media credit under s. 71.47 (11), and estimated tax payments under s.
777	777	71.48.
778	778	SECTION 13. 71.748 of the statutes is created to read:
779	779	71.748 Digital interactive media credit audits. (1) In this section,
780	780	“claimant” has the meaning given in s. 71.07 (11) (a) 1., 71.28 (11) (a) 1., or 71.47 (11)
781	781	(a) 1., as the context requires.
782	782	(2) A claimant shall reimburse the department for any audit initiated by the
783	783	department, and for all costs incurred by the department in reviewing an audit
784	784	conducted by an auditor certified under sub. (3) (a), relating to the credits under s.
785	785	71.07 (11), 71.28 (11), or 71.47 (11), including audits required under s. 73.03 (78) (a)
786	786	1
787	787	2
788	788	3
789	789	4
790	790	5
791	791	6
792	792	7
793	793	8
794	794	9
795	795	10
796	796	11
797	797	12
798	798	13
799	799	14
800	800	15
801	801	16
802	802	17
803	803	18
804	804	19
805	805	20
806	806	21
807	807	22
808	808	23
809	809	24
810	810	25 - 17 -2023 - 2024 Legislature
811	811	LRB-4262/1
812	812	KP:amn
813	813	SECTION 13
814	814	SENATE BILL 970
815	815	2. This subsection does not apply to routine audits of a claimant's entire return that
816	816	include review of credits claimed under s. 71.07 (11), 71.28 (11), or 71.47 (11).
817	817	(3) (a) The department shall certify as eligible to conduct an audit required
818	818	under s. 73.03 (78) (a) 2. a certified public accountant that submits an application to
819	819	the department in the form and manner prescribed by the department and satisfies
820	820	all of the following:
821	821	1. The applicant is licensed as a certified public accountant under ch. 442.
822	822	2. The applicant is capable of conducting audits required under s. 73.03 (78) (a)
823	823	2. according to the requirements under s. 73.03 (78) (b) and any rules promulgated
824	824	related to the conduct of those audits and agrees to comply with those rules.
825	825	3. The applicant successfully completes any training required by the
826	826	department.
827	827	4. The applicant pays to the department the fee established under par. (c).
828	828	5. The applicant posts and maintains any bond or insurance required by the
829	829	department.
830	830	(b) The department shall revoke the certification of an auditor certified under
831	831	par. (a) if any of the following apply:
832	832	1. The auditor no longer satisfies a requirement under par. (a) 1. or 5.
833	833	2. The auditor violates s. 73.03 (78) (b) or any rules related to the conduct of
834	834	audits required under s. 73.03 (78) (a) 2.
835	835	(c) The department shall do all of the following:
836	836	1. Establish a fee for granting certifications under par. (a).
837	837	2. Publish and regularly update a list of all auditors certified under par. (a).
838	838	3. Publish on its website all of the following:
839	839	a. The application for certification under par. (a).
840	840	1
841	841	2
842	842	3
843	843	4
844	844	5
845	845	6
846	846	7
847	847	8
848	848	9
849	849	10
850	850	11
851	851	12
852	852	13
853	853	14
854	854	15
855	855	16
856	856	17
857	857	18
858	858	19
859	859	20
860	860	21
861	861	22
862	862	23
863	863	24
864	864	25 - 18 -2023 - 2024 Legislature LRB-4262/1
865	865	KP:amn
866	866	SECTION 13 SENATE BILL 970
867	867	b. The requirements for certification under par. (a).
868	868	c. The requirements for audits under s. 73.03 (78) (b).
869	869	d. The amount of the fee established under subd. 1.
870	870	SECTION 14. 73.03 (78) of the statutes is created to read:
871	871	73.03 (78) (a) To implement a program to approve applications for a certificate
872	872	for purposes of ss. 71.07 (11), 71.28 (11), and 71.47 (11). Application shall be made
873	873	to the department in each taxable year for which a certificate is desired. The
874	874	department may not approve an application unless all of the following apply:
875	875	1. The department determines that the applicant's qualified activities, as
876	876	defined in s. 71.47 (11) (a) 6., will result in eligible expenditures, as defined in s. 71.47
877	877	(11) (a) 4., in excess of $25,000 for the taxable year.
878	878	2. The department, or an auditor certified by the department under s. 71.748,
879	879	conducts an audit of the applicant. The department shall review an audit conducted
880	880	by an auditor certified under s. 71.748 and shall conduct any additional audit
881	881	necessary and make necessary adjustments.
882	882	3. The applicant reimburses the department for the cost of the audit conducted
883	883	under subd. 2.
884	884	(b) 1. In conducting an audit required under par. (a) 2., the department or
885	885	auditor certified by the department under s. 71.748 shall do all of the following:
886	886	a. Comply with any rules promulgated under par. (d).
887	887	b. Use any sampling methods adopted by the department.
888	888	c. Verify each reported expenditure that is included in the audit and identify
889	889	and exclude each expenditure that does not satisfy the requirements under s. 71.07
890	890	(11), 71.28 (11), or 71.47 (11).
891	891	1
892	892	2
893	893	3
894	894	4
895	895	5
896	896	6
897	897	7
898	898	8
899	899	9
900	900	10
901	901	11
902	902	12
903	903	13
904	904	14
905	905	15
906	906	16
907	907	17
908	908	18
909	909	19
910	910	20
911	911	21
912	912	22
913	913	23
914	914	24 - 19 -2023 - 2024 Legislature
915	915	LRB-4262/1
916	916	KP:amn
917	917	SECTION 14
918	918	SENATE BILL 970
919	919	2. No audit of an applicant required under par. (a) 2. may be performed by an
920	920	auditor that is part of an accounting entity that is not determined by the department
921	921	to be independent of the applicant, consistent with s. 442.10 and as provided in the
922	922	code of professional conduct of the American Institute of Certified Public
923	923	Accountants, or its successor organization, or as otherwise determined by the
924	924	department.
925	925	3. The department shall determine whether a sampling method is required for
926	926	audits required under par. (a) 2., and if a sampling method is required, an
927	927	appropriate sample method and size that accurately captures a truly representative
928	928	sample of all expenditures for which a credit is claimed under s. 71.07 (11), 71.28 (11),
929	929	or 71.47 (11).
930	930	4. The department shall conduct an audit required under par. (a) 2. when no
931	931	eligible auditor is able to access information necessary to conduct the audit because
932	932	the information is confidential and the department is able to access the confidential
933	933	information.
934	934	(c) At least once every 2 years, beginning not later than December 31, 2025, the
935	935	department shall submit a report to the governor and the standing committees of the
936	936	legislature with jurisdiction over taxation under s. 13.172 (3) that includes all of the
937	937	following:
938	938	1. The number of applications approved under this subsection.
939	939	2. The amount of the credits claimed under ss. 71.07 (11), 71.28 (11), and 71.47
940	940	(11).
941	941	3. The number of people employed in this state in the industries eligible for the
942	942	credits under ss. 71.07 (11), 71.28 (11), and 71.47 (11).
943	943	1
944	944	2
945	945	3
946	946	4
947	947	5
948	948	6
949	949	7
950	950	8
951	951	9
952	952	10
953	953	11
954	954	12
955	955	13
956	956	14
957	957	15
958	958	16
959	959	17
960	960	18
961	961	19
962	962	20
963	963	21
964	964	22
965	965	23
966	966	24 - 20 -2023 - 2024 Legislature LRB-4262/1
967	967	KP:amn
968	968	SECTION 14 SENATE BILL 970
969	969	4. The economic impact of the credits under ss. 71.07 (11), 71.28 (11), and 71.47
970	970	(11).
971	971	5. The community impact of the industries eligible for the credits under ss.
972	972	71.07 (11), 71.28 (11), and 71.47 (11) in this state.
973	973	(d) The department shall promulgate rules to administer this subsection.
974	974	(END)
975	975	1
976	976	2
977	977	3
978	978	4
979	979	5
980	980	6