Early Seed and Angel Investment Credits

S.B. 463, effective on day after date of publication, provides that a person receiving an angel investment credit or early stage seed investment credit must keep the investment in a certified business, or with a certified fund manager, for no less than 3 years, unless the person's investment becomes worthless, as determined by the Wisconsin Economic Development Corporation (WEDC), during the 3-year period or the person has kept the investment for no less than 12 months and a bona fide liquidity event, as determined by the WEDC, occurs during the 3-year period. The requirements for certification of businesses under the angel investment and early stage seed investment tax credit programs are modified, so that the following certification requirements apply only to the initial certification of the business: (1) the requirement to have less than 100 employees; (2) the requirement to have been in operation instate for not more than 10 consecutive years; and (3) the requirement to have not received an aggregate private equity investment in cash of more than $10 million before being certified as a qualified new business venture. In addition, to obtain certification a business must agree that it will not relocate outside Wisconsin during the three years after it receives an investment for which a person can claim an angel investment credit and agrees to pay a prescribed penalty if it does relocate. For this purpose, a business relocates outside Wisconsin when the business locates more than 51% of any of the following outside the state: (a) the business's employees; (b) the business's total payroll; (c) the activities of the businesses's headquarters, as determined by the WEDC.