One of the more common issues taxpayers encounter is not properly complying with or documenting the requirements they have committed to for state credit retention. The state of Wisconsin recently issued a fact sheet regarding the consequences of a revocation of a credit certified by the Wisconsin Economic Development Corporation (WEDC).
The WEDC certifies that a taxpayer has met the qualifications necessary to receive a number of state development credits. After the credits have been certified, the WEDC verifies that the taxpayer has completed the requirements to earn the credits. Those may include creating and maintaining the appropriate number of jobs and expending the requisite capital and other contractual requirements.
The fact sheet, which was released on October 31, 2022, provides for the repayments of funds received if the taxpayer no longer qualifies for the credit. If the credit was used to offset income/franchise taxes or a refund was received, the taxpayer must file an amended return to adjust the credit. Interest of 12% per year is computed on the funds to be repaid from the due date of the original return to the date the amount is repaid. The Wisconsin Department of Revenue may assess tax based on the loss of the credit within one year of receiving notice from the WEDC that the credit has been revoked.
If you find yourself in a position where your company has not been tracking its obligations under a credit agreement or has failed to meet its obligations under a credit agreement, the credits and incentives professionals at Ryan can assist you in meeting your obligations or reducing the costs of underperforming under a credit contract.
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