Technology Zone Tax Credit Information
The North Central Region of Wisconsin was recently was designated as one of the eight Technology Development zones in the state. The Region includes Adams, Forest, Langlade, Lincoln, Marathon, Oneida, Portage, Wood, and Vilas Counties. This nine county region has been titled the North Central Advantage Technology Zone and is intended to promote the development and expansion of high-technology businesses by the issuance of Wisconsin income tax credits.
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Technology Zone Flier 91 KB
Prospect Data Sheet 916 KB
Wisconsin Department of Commerce
North Central Advantage Technology Zone Tax Credit Allocation Worksheet 11 KB
Technology Zone Prospect Data Sheet Addendum 8 KB
Wisconsin Department of Commerce
What are tax credits?
Tax credits are subtracted from the bottom line of taxes owed to the state for annual income tax. Each dollar of tax credit means one dollar less to be paid to the state when figuring income tax.
Who is eligible for these tax credits?
The Department of Commerce will certify new or expanding businesses for tax credits based on a company's ability to create jobs and to attract related businesses. The business must first be endorsed by the local Technology Zone Board. The Technology Zone tax credits program is scheduled to last for ten years. Credits are granted to businesses for a three-year period and may be carried forward with an extension to five years.
What is a high-technology business?
A high-technology business is engaged in research, development or manufacture of advanced products or materials used in a variety of identified fields. The Technology Zone identifies certain businesses as part of a target cluster or they may be any knowledge-based businesses that utilize advanced technology production processes, systems, or equipment.
Who do I contact to apply for these credits?
The list below provides your contacts for each County in the Region:
Adams Co. Daric Smith (608) 339-0052
Forest Co. Jim Landru (715) 478-2212
Langlade Co. Dick Hartmann (715) 627-6385
Lincoln Co. Jack Sroka (715) 536-0383
Marathon Co. Roger Luce (715) 845-6231
Oneida Co. Jim Kumbera (715) 369-9110
Portage Co. Lori Dehlinger (715) 344-1940
Vilas Co. Kelly Haverkampf (715) 479-3651
Wood Co. Gary Popelka (715) 421-8466
How does a high-tech business receive tech zone tax credits?
1. The first step is for the business to contact local representatives of the Technology Zone or contact the North Central Wisconsin Regional Planning Commission for a referral. The local representative will explain the basic operation of the program, answer questions, and determine if the business meets local criteria for the credits.
2. Next, the business will fill out an application form provided by the local representative.
3. The local representative will then recommend to the Technology Zone Board a three-year tax credit allocation for the business. The Technology Zone Board will review the application and then make final recommendation to the Department of Commerce. This allocation is based on the total Wisconsin income, sales, and property tax payments projected by the business over a three-year period. The Advantage Technology Zone Board will also consider factors such as job creation, wages, investment, the nature of technology involved, the project's impact on other high-technology businesses, and the importance of tax credits to the project.
4. The Technology Zone Board's recommendation will be forwarded to the Department of Commerce, where staff will also review the application materials before making a final recommendation to the Department Secretary.
5. If the application is approved by the Department of Commerce, the business will be notified in writing of its designation as a Wisconsin Technology Zone business. Since the Technology Zone program is based on the annual payment of income, sales, and property taxes, all business certification dates will coincide with the first day of the company's tax year.
6. The business can claim the tax credits by submitting annual reports to the Department of Commerce. Department staff will issue annual tax credit verification forms to the business, which will be attached to the businesses' income tax returns.
What are the local criteria that apply to the North Central Advantage Technology Zone?
A. Credit System - Each county within the Technology Zone is initially allocated $280,000 of credits. The remainder is kept in a common pool to be used when the initial county's allotment has been used.
B. Maximum Credits per Application - To avoid one firm exhausting the entire supply of credits, a maximum of $250,000 of credits will be applied to any one project. For unique and major developments in the region, the business may apply for special exemption to exceed this cap.
C. Minimum Total Project Investment - Each application must have a minimum $100,000 initial investment for the first year of the project to be considered for the program. The investment may include working capital, wages (excluding owner salary and fringe benefits), and equipment.
D. Minimum Wage - The minimum wage criteria is equal to the zone's average, or $13.00 per hour.
E. Industry Cluster - Paper/Forestry, Health Care, Information Systems, Financial Services, Agriculture/Food Production, Business Services, and Manufacturing are specifically targeted for inclusion in this program.
How will the Technology Zone tax credit allocation be calculated?
The Technology Zone Board will use a formula incorporating projected tax payments, the average wage level of new jobs to be created as a result of the project, the level of private investment in the project, and several other qualitative factors. The investment of the project, the payroll of new positions, and amount of property taxes are be used to evaluate the business' tax credit allocation. Beginning with the year of expected certification as a Technology Zone business, the following values are determined:
-Capital Investment: Enter 10% of the company's projected capital investment for each of the three years.
-Payroll: Enter 15% of projected wages for the first 12 months for new positions created in Year 1, in Year 2 and in Year 3.
-Real & Personal Property Taxes: Enter the increase from base (prior to project inception) for property taxes to be paid by the business at the zone location for each of the three years.
These values are summed to determine the amount of tax credit for which the business may qualify. The North Central Advantage Technology Zone Board may recommend a credit that is lower than the formula would indicate due to local allocation limits and other local criteria.
Will a business always receive its full allocation of tax credits?
No. A business must show proof of its Wisconsin income, property and sales tax payments on an annual basis. The tax credits that are earned by the business are based on the actual amount paid. Therefore, the tax credits earned may be lower than the allocation, which is based on the tax projections provided by the business.
While the number of jobs being created is not directly related to the tax credit allocation, job creation and investment will play an important role at the end of the three-year Technology Zone designation. By statute, Commerce has the authority to extend a business' eligibility for Technology Zone tax credits for two additional years. To qualify for this extension, the business must reach its benchmarks in terms of job creation and investment over the initial three-year period.