April 22, 2010Client Alert

Dairy and Food Processing Tax Credit Legislation Sent To Governor

This week, two investment tax credit bills aimed at creating jobs and strengthening Wisconsin’s $59 billion agribusiness economy by investing in dairy and food processing operations were sent to the Governor to be signed into law. This alert provides a summary of both these bills including the Dairy & Livestock Investment Tax Credit (AB 756) and the Food Processing Plant and Food Warehouse Investment Tax Credit (AB 757).

The first bill, AB 756, unanimously passed the Assembly on April 13, 2010, on a vote of 98-0 and passed the Senate on April 20, 2010, on a vote of 32-1. This bill will allow farms of all sizes to invest in their operations. The bill would extend the dairy farm modernization and expansion tax credit for two years to January 1, 2012. The tax credit will be for 10% of modernization or expansion costs up to $75,000 per claimant (up from $50,000). The bill specifies that the increase in the aggregate tax credit limit would only apply to costs incurred after the effective date of the bill. The tax credits will support a broad range of improvements such as building newer barns, milking parlors or improving fencing or waste management systems.

The second bill, AB 757, passed the Assembly on April 13, 2010, on a vote of 92-5 and passed the Senate on April 20, 2010, on a vote of 31-2. This bill will allow businesses that process and distribute commodities grown in our state to expand their operations, cut costs, invest in new technologies, save energy and create jobs. This bill provides a refundable income and franchise tax credit for 10 % of the amount that a person pays in the taxable year for food processing plant and food warehouse modernization or expansion related to the person’s food processing operation The maximum total credits available is set at $1,000,000 in fiscal year 2009-10 and $1,200,000 in fiscal year 2010-11. For fiscal year 2011-12, and in each year thereafter, the maximum total amount of credits is set at $700,000. Further, no taxpayer may be certified to claim tax credits under the bill if, in the year a credit could be claimed or in the five years preceding that year, the taxpayer has been found to have violated 8 U.S.C. 1324a (a), relating to the unlawful employment of unauthorized aliens.

The Governor is expected to sign both bills into law in the coming days.

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