Wisconsin 2019-2020 Regular Session Status: Enacted Bipartisan · 11 R · 5 D cosponsors

AB 532 — Relating to: income and franchise tax benefit for investment in Wisconsin opportunity zones and providing a penalty. (FE)

Last action — Published 3-4-2020

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  1. ✓
    Introduced
  2. ✓
    In Committee
  3. ✓
    Passed Assembly
  4. ✓
    Passed Senate
  5. ✓
    To Executive
  6. 6
    Enacted

This bill has been enacted into law. Introduced October 14, 2019. Enacted.

Prognosis

Likely to advance 98% · high confidence

Where this bill stands today.

Odds of enactment

High

How often bills like it became law.

  • Enacted

    Current position in the legislative process.

  • 31 sponsors

    31 primary, 0 co-sponsors signed on.

  • Bipartisan support

    Sponsored across 2 parties (11 R · 5 D) — cross-party backing.

  • Cleared a recorded vote

    Passed 9 recorded votes so far.

Prognosis reads this bill's own signals — stage, sponsorship breadth, committee status, recorded votes and cross-state momentum. Odds come from a model trained on which bills have become law.

Bill Text

What changed in the latest version

162 added · 28 removed

Plain-language change summary

The amendment to Assembly Bill 532 updates deadlines related to the investment reporting for taxpayers participating in Wisconsin's opportunity zones. Specifically, it changes references from "2018" to "2019," clarifying when investors must report their income adjustments. Additionally, it specifies that only those individual investors whose entities do not already claim a tax subtraction can take advantage of this benefit. These changes matter because they streamline the reporting process and ensure that the tax benefits are appropriately distributed among investors.

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- 2020 LEGISLATURE LRBa0799/1 EKL:skw ASSEMBLY AMENDMENT 1, TO ASSEMBLY BILL 532 January 6, 2020 - Offered by RepresentatiANDERM EER.
- 2020 LEGISLATURE LRB-1243/1 EKL:ahe ASSEMBLY BILL 532 October 14, 2019 - Introduced by Representatives ANDERM EER, BILLINGS, LLEN, B OWEN , EDMING, FIELDS, KOLSTE, K RUG, KULP, M ILROY, MURSAU , NEYLON, N OVAK, NYGREN, OHNSTAD, OLDENBURG , OPE, QUINN, OHRKASTE , KOWRONSKI , SPIROS, SPREITZER, UBECK , SUMMERFIELD , AUCHEN , C.T AYLOR, HIESFELDT, T RANEL, TUSLER, V INING and V RUWINK , cosponsored by Senators F EYEN, R INGHAND, BEWLEY , DARLING, HANSEN , MILLER, PETROWSKI , L.TAYLOR and T ESTI.
At the locations indicated, amend the bill as follows:
Referred to Committee on Ways and Means.
A N A CT to amend 71.01 (13) and 71.05 (8) (b) 1.;
and to create 71.05 (25m), 71.26 (3) (vm), 71.34 (1k) (p), 71.45 (2) (a) 21.
and 71.83 (1) (e) of the statutes;
relating to:
income and franchise tax benefit for investment in Wisconsin opportunity zones and providing a penalty.
Analysis by the Legislative Reference Bureau This bill allows a taxpayer to decrease the amount of capital gains subject to income and franchise taxation by investing in a Wisconsin opportunity zone.
Currently, under the federal opportunity zone program created in 2017, a taxpayer may defer paying federal income tax on capital gains, and in some cases reduce the amount of tax owed, by investing the gains in an opportunity zone.
An opportunity zone is a low-income population census tract designated by the U.S.
Treasury secretary, with input from a state's governor.
Wisconsin has 120 opportunity zones.
A taxpayer invests in an opportunity zone by investing in a qualified fund, which must hold at least 90 percent of its assets in opportunity zone property.
If the fund's opportunity zone assets fall below the 90 percent threshold, the fund is subject to a fine that is based on the shortfall for each month the threshold is not met.
Under the federal program, the taxpayer defers paying tax on the capital gains until the earlier of the date on which the taxpayer sells the investment in the fund or December 31, 2026.
At that time, the taxpayer may permanently exclude 10 percent of the deferred gains from income, and thus not pay tax on that amount, if the investment was held for at least five years.
The exclusion increases to 15 percent of the gains if the investment was held for at least seven years.
Additionally, if the - 2020 Legislature - 2 - LRB-1243/1 EKL:ahe ASSEMBLY BILL 532 taxpayer holds the investment for at least ten years, the investment's earnings are not taxed.
Wisconsin has incorporated the federal provisions into state law and, therefore, the deferral and exclusion treatments apply when calculating state income and franchise taxes.
Under the bill, for income and franchise tax purposes, a taxpayer may exclude an additional 10 percent of the deferred gains if the taxpayer holds the investment in a Wisconsin qualified opportunity fund for at least five years or an additional 15 percent of the deferred gains if the taxpayer holds the investment for at least seven years.
A Wisconsin qualified opportunity fund must hold at least 90 percent of its assets in property that qualifies under the federal program and is located in a Wisconsin opportunity zone.
If the fund is liable for the federal penalty for failing to meet the 90 percent threshold for opportunity zone assets, the fund must also pay a state civil penalty that is equal to 33 percent of the federal penalty.
Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.
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.
71.01 (13) of the statutes is amended to read:
71.01 (13) “Wisconsin adjusted gross income" means federal adjusted gross income, with the modifications prescribed in s.
71.05 (6) to (12), (19), (20), (24), (25), (25m), and (26).
SECTION 2.
71.05 (8) (b) 1.
of the statutes is amended to read:
71.05 (8) (b) 1.
Except as provided in s.
71.80 (25), a Wisconsin net operating loss may be carried back against Wisconsin taxable income of the previous 2 years and then carried forward against Wisconsin taxable incomes of the next 20 taxable years, if the taxpayer was subject to taxation under this chapter in the taxable year in which the loss was incurred, to the extent not offset against other income of the year of loss and to the extent not offset against Wisconsin modified taxable income of the 2 years preceding the loss and of any year between the loss year and the taxable LRB-1243/1 - 2020 Legislature - 3 - EKL:ahe SECTION 2 ASSEMBLY BILL 532 year for which the loss carry-forward is claimed.
In this paragraph, “Wisconsin modified taxable income" means Wisconsin taxable income with the following exceptions:
a net operating loss deduction or offset for the loss year or any taxable year before or thereafter is not allowed, the deduction for long-term capital gains under subs.
(6) (b) 9.
and 9m.
and, (25), and (25m) is not allowed, the amount deductible for losses from sales or exchanges of capital assets may not exceed the amount includable in income for gains from sales or exchanges of capital assets and “Wisconsin modified taxable income" may not be less than zero.
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S ECTION 3.
71.05 (25m) of the statutes is created to read:
71.05 (25m) CAPITAL GAINS EXCLUSION;
OPPORTUNITY ZONES.
(a) In this subsection:
Page 4, line 3:
“Claimant" means an individual;
delete “2018" and substitute “2019".
an individual partner or member of a partnership, limited liability company, or limited liability partnership;
or an individual shareholder of a tax-option corporation.
Page 4, line 11:
“Wisconsin qualified opportunity fund” means a qualified opportunity fund, as defined in 26 USC 1400Z-2 (d) (1), that holds at least 90 percent of its assets in Wisconsin qualified opportunity zone property, as measured on the last day of the first 6-month period of the fund's taxable year and the last day of the fund's taxable year.
delete “A" and substitute “No later than January 31 of the year following the close of the fund's taxable year, a".
Page 4, line 14:
“Wisconsin qualified opportunity zone” means a population census tract located in this state that is designated as a qualified opportunity zone under 26 USC 1400Z-1.
after that line insert:
“(e) An individual partner, member, or shareholder may not make a subtraction under par.
(b) if the entity of which the individual is a partner, member, or shareholder makes a subtraction under par.
(b) when computing net income under s.
71.21 (6) (d) 1.
or makes a subtraction under s.
71.34 (1k) (p) when computing net income under s.
71.365 (4m) (d) 1.”.
Page 4, line 16:
“Wisconsin qualified opportunity zone property” means qualified opportunity zone property, as defined in 26 USC 1400Z-2 (d) (2), except that qualified - 2020 Legislature - 4 - LRB-1243/1 EKL:ahe ASSEMBLY BILL 532 SECTION 3 opportunity zone business property, as defined in 26 USC 1400Z-2 (d) (2) (D) and (3) (A) (i), shall be located in a Wisconsin qualified opportunity zone.
delete “2018" and substitute “2019".
(b) For taxable years beginning after December 31, 2018, a claimant may subtract from federal adjusted gross income the amount of gain excluded from federal gross income in the taxable year due to the application of 26 USC 1400Z-2 (b) (2) (B) (iii) for an investment held in a Wisconsin qualified opportunity fund for at least 5 years or due to the application of 26 USC 1400Z-2 (b) (2) (B) (iv) for an investment held in a Wisconsin qualified opportunity fund for at least 7 years;
LRBa0799/1 - 2020 Legislature - 2 - EKL:skw 5.
except that the gain may not include any amount for which the claimant claimed a subtraction under sub.
Page 4, line 23:
(25) (b) or any gain described under sub.
delete “A" and substitute “No later than January 31 of the year following the close of the fund's taxable year, a".
(26) (b).
6.
(c) A fund shall annually certify to each investor and the department that it qualifies as a Wisconsin qualified opportunity fund for the fund's taxable year.
Page 5, line 1:
(d) Nothing in this subsection affects, or requires an adjustment to, a subtraction by the claimant under sub.
delete “2018" and substitute “2019".
(6) (b) 9.
7.
for the same taxable year.
Page 5, line 9:
SECTION 4.
delete “A" and substitute “No later than January 31 of the year following the close of the fund's taxable year, a".
71.26 (3) (vm) of the statutes is created to read:
8.
71.26 (3) (vm) 1.
Page 5, line 12:
For taxable years beginning after December 31, 2018, section 1400Z-2 (relating to capital gains invested in opportunity zones) is modified so that an increase in basis is twice the amount determined under section 1400Z-2 (b) (2) (B) (iii) for an investment held in a Wisconsin qualified opportunity fund for at least 5 years or under section 1400Z-2 (b) (2) (B) (iv) for an investment held in a Wisconsin qualified opportunity fund for at least 7 years.
delete “2018" and substitute “2019".
In this subdivision, “Wisconsin qualified opportunity fund” has the meaning given in s.
9.
71.05 (25m) (a) 2.
Page 5, line 20:
2.
delete “A" and substitute “No later than January 31 of the year following the close of the fund's taxable year, a".
A fund shall annually certify to each investor and the department that it qualifies as a Wisconsin qualified opportunity fund for the fund's taxable year.
10.
SECTION 5.
Page 6, line 5:
71.34 (1k) (p) of the statutes is created to read:
delete “2018" and substitute “2019".
LRB-1243/1 - 2020 Legislature - 5 - EKL:ahe SECTION 5 ASSEMBLY BILL 532 71.34 (1k) (p) 1.
For taxable years beginning after December 31, 2018, a subtraction may be made of the amount of gain excluded from federal gross income in the taxable year due to the application of 26 USC 1400Z-2 (b) (2) (B) (iii) for an investment held in a Wisconsin qualified opportunity fund for at least 5 years or due to the application of 26 USC 1400Z-2 (b) (2) (B) (iv) for an investment held in a Wisconsin qualified opportunity fund for at least 7 years.
In this subdivision, “Wisconsin qualified opportunity fund” has the meaning given in s.
71.05 (25m) (a) 2.
2.
A fund shall annually certify to each investor and the department of revenue that it qualifies as a Wisconsin qualified opportunity fund for the fund's taxable year.
SECTION 6.
71.45 (2) (a) 21.
of the statutes is created to read:
71.45 (2) (a) 21.
a.
For taxable years beginning after December 31, 2018, by subtracting from federal taxable income an amount equal to the gain excluded from federal gross income in the taxable year due to the application of 26 USC 1400Z-2 (b) (2) (B) (iii) for an investment held in a Wisconsin qualified opportunity fund for at least 5 years or 26 USC 1400Z-2 (b) (2) (B) (iv) for an investment held in a Wisconsin qualified opportunity fund for at least 7 years.
In this subdivision, “Wisconsin qualified opportunity fund” has the meaning given in s.
71.05 (25m) (a) 2.
b.
A fund shall annually certify to each investor and the department that it qualifies as a Wisconsin qualified opportunity fund for the fund's taxable year.
SECTION 7.
71.83 (1) (e) of the statutes is created to read:
71.83 (1) (e) Wisconsin qualified opportunity funds.
A Wisconsin qualified opportunity fund, as defined in s.
71.05 (25m) (a) 2., that is liable for a penalty under section 1400Z-2 (f) of the Internal Revenue Code is liable for a penalty equal to 33 - 2020 Legislature - 6 - LRB-1243/1 EKL:ahe ASSEMBLY BILL 532 SECTION 7 percent of the federal penalty.
The department shall assess, levy, and collect the penalty under this paragraph in the same manner as it assesses, levies, and collects taxes under this chapter.
SECTION 8.Initial applicability.
(1) This act first applies to taxable years beginning after December 31, 2018.
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Action History

  1. Published 3-4-2020

  2. Report approved by the Governor on 3-3-2020. 2019 Wisconsin Act 136

  3. Presented to the Governor on 2-28-2020 by directive of the Speaker

  4. Report correctly enrolled on 2-25-2020

  5. Received from Senate concurred in

  6. Ordered immediately messaged

  7. Read a third time and concurred in, Ayes 26, Noes 7

  8. Rules suspended

  9. Ordered to a third reading

  10. Senate Amendment 8 rejected, Ayes 19, Noes 14

  11. Senate Amendment 7 rejected

  12. Senate Amendment 8 offered by Senator Erpenbach

  13. Senate Amendment 6 withdrawn and returned to author

  14. Senate Amendment 5 rejected, Ayes 19, Noes 14

  15. Rules suspended and taken up

  16. Placed on the foot of the 10th order of business on the calendar of 2-19-2020

  17. Senate Amendment 4 rejected, Ayes 19, Noes 14

  18. Senate Amendment 3 rejected, Ayes 19, Noes 14

  19. Senate Amendment 2 rejected, Ayes 19, Noes 14

  20. Senate Amendment 7 offered by Senators Larson, Erpenbach, Bewley, Johnson, Carpenter and L. Taylor

  21. Senate Amendment 6 offered by Senators Larson, Bewley, Johnson, L. Taylor and Carpenter

  22. Senate Amendment 5 offered by Senators Risser, Larson, Carpenter, Hansen, L. Taylor, Johnson, Smith and Schachtner

  23. Senate Amendment 1 rejected, Ayes 19, Noes 14

  24. Read a second time

  25. Senate Amendment 4 offered by Senators Larson, Carpenter, Risser, Miller, Wirch, Hansen, L. Taylor, Johnson, Smith and Schachtner

  26. Senate Amendment 3 offered by Senators Larson, Carpenter, Risser, Miller, L. Taylor, Johnson, Smith and Schachtner

  27. Senate Amendment 2 offered by Senators Larson, Carpenter, Risser, L. Taylor, Miller, Wirch, Hansen, Johnson, Smith and Schachtner

  28. Senate Amendment 1 offered by Senators Larson, Carpenter, Risser, L. Taylor, Miller, Wirch, Hansen, Johnson, Smith and Schachtner

  29. Rules suspended to withdraw from committee on Senate Organization and take up

  30. Available for scheduling

  31. Read first time and referred to committee on Senate Organization

  32. Received from Assembly

  33. Ordered immediately messaged

  34. Read a third time and passed

  35. Rules suspended

  36. Ordered to a third reading

  37. Assembly Amendment 1 adopted

  38. Read a second time

  39. Rules suspended to withdraw from committee on Rules and take up

  40. Referred to committee on Rules

  41. Report passage as amended recommended by Committee on Ways and Means, Ayes 12, Noes 0

  42. Report Assembly Amendment 1 adoption recommended by Committee on Ways and Means, Ayes 12, Noes 0

  43. Senator Miller withdrawn as a cosponsor

  44. Executive action taken

  45. Public hearing held

  46. Assembly Amendment 1 offered by Representative VanderMeer

  47. Representative Wichgers added as a coauthor

  48. Fiscal estimate received

  49. Read first time and referred to Committee on Ways and Means

  50. Introduced by Representatives VanderMeer, Billings, Allen, Bowen, Edming, Fields, Kolste, Krug, Kulp, Milroy, Mursau, Neylon, Novak, Nygren, Ohnstad, Oldenburg, Pope, Quinn, Rohrkaste, Skowronski, Spiros, Spreitzer, Subeck, Summerfield, Tauchen, C. Taylor, Thiesfeldt, Tranel, Tusler, Vining and Vruwink; cosponsored by Senators Feyen, Ringhand, Bewley, Darling, Hansen, Miller, Petrowski, L. Taylor and Testin

Sponsors

Sponsorship breakdown

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31 sponsors · 0 co-sponsors · 101 not signed on · 3 voted No

Sponsors (31)

Co-sponsors (0)

None.

Not signed on (101)

101 members have not signed on to this bill.

Show all 101 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Votes

CONCURRENCE

Passed 26 Yea · 7 Nay
Party YeaNayPresentNot Voting
Unaffiliated 15400
Republican 7100
Democrat 4200
Total 26700
% of votes cast 79%21%0%0%
How each member voted (33)
Member Party Vote
BERNIER — Yea
ROTH — Yea
BEWLEY — Yea
JOHNSON — Yea
SCHACHTNER — Yea
SHILLING — Yea
COWLES — Yea
KOOYENGA — Yea
CRAIG — Yea
DARLING — Yea
OLSEN — Yea
TIFFANY — Yea
PETROWSKI — Yea
HANSEN — Yea
RINGHAND — Yea
ERPENBACH — Nay
RISSER — Nay
MILLER — Nay
STROEBEL — Nay
Carpenter, Tim Democrat Yea
Fitzgerald, Joan Democrat Yea
Larson, Chris Democrat Nay
Smith, Jeff Democrat Yea
Taylor, Sequanna Democrat Yea
Wirch, Robert Democrat Nay
Feyen, Dan Republican Yea
Jacque, André Republican Yea
Kapenga, Chris Republican Yea
LeMahieu, Devin Republican Yea
Marklein, Howard Republican Yea
Nass, Steve Republican Nay
Testin, Patrick Republican Yea
Wanggaard, Van Republican Yea

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Subjects

taxation
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Frequently asked questions

Who sponsors AB 532?
AB 532 is sponsored by VanderMeer, Nancy (Republican), Billings, Jill (Democrat), Allen, Scott (Republican), Bowen, Edming, Fields, Kolste, Krug, Scott (Republican), Kulp, Milroy, Mursau, Jeffrey (Republican), Neylon, Adam (Republican), Novak, Todd (Republican), Nygren, Ohnstad, Oldenburg, Pope, Quinn, Romaine (Republican), Rohrkaste, Skowronski, Spiros, John (Republican), Spreitzer, Mark (Democrat), Subeck, Lisa (Democrat), Summerfield, Rob (Republican), Tauchen, Thiesfeldt, Tranel, Travis (Republican), Tusler, Ron (Republican), Vruwink, Vining, Robyn (Democrat), and Taylor, Sequanna (Democrat).
What is the current status of AB 532?
This bill has been enacted into law. Introduced October 14, 2019. Enacted.
Where can I track AB 532?
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