Woody Biomass Harvesting and Processing Tax Credit (Personal)

Summary

Note: The application period is closed; eligible projects had to have been placed in service in Wisconsin during taxable years that end after June 30, 2011, and before January 1, 2015. New facilities are not eligible for this tax credit.

In May 2010, Wisconsin enacted legislation allowing taxpayers to claim a tax credit from income or franchise taxes of 10% of the cost of equipment primarily used to harvest or process woody biomass for use as a fuel or as a component of fuel. The adopted law creates identical tax credits in the portions of the Wisconsin tax code relating to income taxes on individuals (§71.07), income and franchise taxes on corporations (§71.28), and income and franchise taxes on insurance companies (§71.47). In order to receive the credit, a taxpayer must first submit an application to the Department of Agriculture, Trade and Consumer Protection (DATCP) to be certified as eligible. In November 2011, DATCP established final administrative rules (ATCP 166), including rules for the certification application process. Tax credits can be claimed either by the operator of the facility or the owner of the facility.

Eligible Technologies

Woody biomass is defined as "...trees and woody plants, including limbs, tops, needles, leaves, and other woody parts, grown in a forest or woodland or on agricultural land." For equipment use to be considered "primarily" for an eligible purpose, other uses of the equipment are limited to no more than 25% of total use. The credit may not be claimed for any business or trade expenses deducted by the taxpayer under 26 USC §162.

Requirements

Tax credits are earned by incurring eligible expenses for Woody Biomass Harvesting and Processing equipment used primarily for Woody Biomass Harvesting and Processing that is used as fuel or as a component of fuel; and if acquired and placed in service in Wisconsin during taxable years that end after June 30, 2011, and before January 1, 2015. "Used primarily" means used to the exclusion of all other uses except for use not exceeding 25 percent of total use.

Allowable credits in excess of a claimant's tax liability for a given year will be refunded. Credits are limited to $100,000 per claimant in aggregate, and $900,000 in total each fiscal year. In addition, DATCP is required to allocate $450,000 in tax credits each fiscal year to businesses that individually have no more than $5 million in gross receipts in Wisconsin for the taxable year in which the credit is claimed. Taxpayers will need to be certified by DATCP in order to claim the tax credit. Forms and instructions for claiming the tax credit are available at the Department of Revenue web site.