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Dairy Manufacturers Tax Credit passes Legislature


Agri-View| Posted: Friday, February 24, 2012 11:00 am
At a time when controversy in the Wisconsin Legislature seems to make most of the headlines, here’s a story about a measure that has not only received bipartisan support—but unanimous bipartisan support.
Senate Bill 260, authored by Senator Sheila Harsdorf (R-River Falls), and its companion measure
Assembly Bill 357, authored by State Rep. Travis Tranel (R-Platteville), have each received unanimous support from the Agriculture Committees in their respective houses, and also from the State Senate that voted last week 33–0 for passage of the bill.
In an interview with Agri-View, Harsdorf explained how current law allows a dairy cooperative to claim the Dairy Manufacturing Facility Investment Income Tax Credit based on amounts paid in the tax year by the cooperative to modernize or expand its dairy operation.
Those tax credits are passed on to dairy cooperative members and the members claim the credit for the tax year in which the member receives its share of the tax credit. The amount of the tax credit each member receives is in proportion to the amount of milk that the member delivers to the cooperative.
Paul Bauer, Ellsworth Cooperative Creamery, was one of the cooperative managers and leaders who contacted Harsdorf’s office and explained the tax difficulties dairy cooperative members were encountering because of timing issues.
“It was brought to my attention by a dairy cooperative in my district that had made significant improvements in their plant and received credits through the Dairy Manufacturing Facility Investment Credit that their co-op members often could not take advantage of the tax credit without filing an amended return. Given the size of the credit, it often did not pay for members to file an amended tax return,” Harsdorf said.
Both SB 260 and AB 357 seek to provide members of a dairy cooperative with the ability to claim the Dairy Manufacturing Investment Credit in the tax year following the year in which eligible expenditures were made.
“For example,” Harsdorf continued, “these bills would allow a dairy cooperative to make a qualified investment in 2012, apply with the Department of Agriculture, Trade and Consumer Protection in 2013 for the credit, and then their members would claim the credit in 2014 on their tax year 2013 tax returns. This legislation would improve the administration of the credit for cooperative members by allowing sufficient time to claim the credit on their tax return.
“The Dairy Manufacturing Facility Investment Credit is an important component of economic development and job creation in rural areas,” Harsdorf said, adding, “I am pleased these bills have received bipartisan support (unanimous votes in both the Senate and Assembly Committees on Agriculture) and a unanimous 33-0 vote in the State Senate as it passed SB 260 on Feb. 14.”
The bill is scheduled for debate on the Assembly Floor on Feb. 21. If the Assembly approves, the measure will be sent to Gov. Scott Walker for his signature.
Bill Oemichen, president and CEO of Cooperative Network (CN), said SB 260 and its companion bill AB 357, “insert important flexibility into the dairy manufacturing facility investment credit law for cooperatives.
“Because of the timing of the state application deadline and when pass-through credit information becomes available to members, cooperative members have not always been able to receive the tax credit without incurring additional cost for tax preparation. SB 260 and AB 357 resolve this problem by allowing members to be eligible for the credit in the taxable year after the plant modernization or expansion,” Oemichen said.
“This is a logical resolution of the problem that was identified and we worked with our members, Senator Harsdorf, DATCP, and the Department of Revenue to arrive at the solution that all interests could approve. This will improve a law that helps keep Wisconsin’s dairy industry vital and moving ahead,” he added.
The Dairy Manufacturing Facility Investment Tax Credit offers up to $200,000 for cooperatives to expand or modernize their manufacturing facilities.
Earlier lawmakers, state agencies and Governor Doyle had approved investment tax incentives for expansion and modernization for both dairy and livestock farmers.