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Wisconsin: If Your Economic Development Tax Credit is Not Valuable to You, Transfer It




by:
McDonald Hopkins LLC - Cleveland Office

 
April 16, 2014

Previously published on April 10, 2014

On April 2, 2014, Wisconsin Gov. Scott Walker signed legislation, S.B. 449, which provides added flexibility to the state’s economic development tax credit program by way of permitting transfers of the tax credit.

To obtain the relevant credit, the Wisconsin Economic Development Corporation (Corporation) may certify a person to claim tax credits against the person’s income or franchise tax liability for fees imposed on insurers, if the Corporation determines that the person is conducting or will conduct eligible business activities that will result in economic development in Wisconsin (each such credit, an economic development tax credit). Additionally, a person may qualify for additional economic development tax credits if the eligible activity will benefit particular groups or certain distressed areas.

Under S.B. 449, the Corporation may approve the aggregate transfer of up to $15 million worth of economic development tax credits over three years. The Corporation may approve the transfer if the original person to whom the credit was issued meets at least one of the following conditions:

  1. The person is headquartered in, and employs at least 51 percent of its employees in, Wisconsin.

  2. The person intends to relocate its headquarters to, and employ at least 51 percent of its employees in, Wisconsin.

  3. The person intends to expand its operations in Wisconsin, and that expansion will increase the number of full-time employees employed by the person in Wisconsin by a number that equals at least 10 percent of the person’s full-time employees.

  4. The person intends to expand its operations in Wisconsin, and the person will make a significant capital investment in property in Wisconsin as a result of that expansion.

The transferee must give valuable consideration, other than money, in connection with the eligible business activity for which the tax credits were originally awarded in order to be eligible to receive a transfer of the credit. Any unused portion of these transferred credits may be carried forward for up to 15 years until fully claimed. The Multistate Tax Update covered this bill’s passage in the legislature in a prior article.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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