101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4761

 

Introduced 2/18/2020, by Rep. Ryan Spain

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/232 new

    Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to 10% of the portion of the taxpayer's investment in an opportunity fund that the fund invested during the preceding calendar year in projects located in Illinois opportunity zones. Contains provisions concerning application to the Department of Commerce and Economic Opportunity.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by adding
5Section 232 as follows:
 
6    (35 ILCS 5/232 new)
7    Sec. 232. Opportunity Zone investment credit.
8    (a) The definitions found in Section 1400Z-2 of the federal
9Internal Revenue Code are expressly incorporated into this
10Section, except to the extent that terms are otherwise defined
11in this subsection (a), and except that "all" shall be
12substituted for "substantially all" wherever "substantially
13all" appears in Section 1400Z-2 of the federal Internal Revenue
14Code.
15    As used in this Section:
16    "Illinois qualified opportunity fund" means a qualified
17opportunity fund that holds 100% of its invested assets in
18qualified opportunity zone property situated in an Illinois
19opportunity zone. In the case of qualified opportunity zone
20stock or qualified opportunity zone partnership interest, the
21stock or interest is considered to be situated in an Illinois
22opportunity zone only if, during all of the qualified
23opportunity fund's holding period for such stock or interest,

 

 

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1all of the use of the corporation's or partnership's tangible
2property was in an Illinois opportunity zone. In the case of
3qualified opportunity zone business property, the property is
4considered to be situated in an Illinois opportunity zone only
5if, during all of the fund's holding period for such property,
6all of the use of the property was in an Illinois opportunity
7zone.
8    "Illinois opportunity zone" means a qualified opportunity
9zone designated in this State under Section 1400Z-1 of the
10federal Internal Revenue Code before, on, or after the
11effective date of this amendatory Act of the 101st General
12Assembly.
13    "Taxpayer" means any person subject to the tax imposed by
14subsections (a) and (b) of Section 201 of this Act.
15    "Qualifying taxable year" means a taxpayer's taxable year
16that includes the first day of a calendar year during which an
17Illinois qualified opportunity fund in which the taxpayer
18invests makes an investment in a project located in an Illinois
19opportunity zone.
20    (b) For taxable years ending on or after December 31, 2020,
21each taxpayer is entitled to a credit against the tax imposed
22by subsections (a) and (b) of Section 201 of this Act in an
23amount equal to 10% of the portion of the taxpayer's investment
24in an opportunity fund that the fund invested during the
25preceding calendar year in projects located in Illinois
26opportunity zones. For partners, shareholders of Subchapter S

 

 

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1corporations, and owners of limited liability companies, if the
2liability company is treated as a partnership for purposes of
3federal and State income taxation, there shall be allowed a
4credit under this Section to be determined in accordance with
5the determination of income and distributive share of income
6under Sections 702 and 704 and Subchapter S of the federal
7Internal Revenue Code.
8    (c) A taxpayer that invests in one or more Illinois
9qualified opportunity funds shall apply to the Department of
10Commerce and Economic Opportunity for certification. The
11application shall be made on forms prescribed by the Department
12of Commerce and Economic Opportunity on or after the first day
13of January and on or before the first day of February of each
14year.
15    (d) The taxpayer shall include the following information
16with the taxpayer's application:
17        (1) the amount of the taxpayer's investment in Illinois
18    qualified opportunity funds during the taxpayer's
19    qualifying taxable year, arranged according to the amount
20    invested in each such fund if the taxpayer invested in more
21    than one such fund; and
22        (2) a statement from an employee or officer of each
23    Illinois qualified opportunity fund identified by the
24    taxpayer under item (1) certifying the amount of the
25    taxpayer's investment in the fund and the portion of the
26    taxpayer's investment that the fund invested in projects

 

 

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1    located in Illinois opportunity zones during the preceding
2    calendar year. The statement shall describe each project
3    funded by the investment and state each project's location
4    and the portion of the taxpayer's investment invested in
5    each such project. Unless the fund demonstrates otherwise
6    to the Department of Commerce and Economic Opportunity's
7    satisfaction, the portion of a taxpayer's investment that
8    the fund invested in a project located in an Illinois
9    opportunity zone equals the same proportion of the amount
10    of the fund's investment in the project as the taxpayer's
11    investment in the fund bears to the total investment by all
12    investors in that fund on the date the fund makes the
13    investment in the project. The Department of Commerce and
14    Economic Opportunity shall review applications in the
15    order in which applications are received.
16    (e) Subject to subsection (f), if the Department of
17Commerce and Economic Opportunity determines that the
18applicant qualifies for a credit under this Section, the
19Department off Commerce and Economic Opportunity shall issue,
20within 60 days after the receipt of a complete application, a
21tax credit certificate to the taxpayer identified with a unique
22number and listing the amount of credit the Department of
23Commerce and Economic Opportunity determines the taxpayer is
24eligible to claim.
25    (f) The Department of Commerce and Economic Opportunity
26shall not issue certificates in a total amount that would cause

 

 

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1the tax credits claimed in any fiscal biennium to exceed
2$50,000,000. The Department shall not issue certificates to a
3single applicant in an amount that would cause the tax credits
4claimed in any fiscal biennium by that applicant to exceed
5$1,000,000.
6    (g) In no event shall a credit under this subsection reduce
7a taxpayer's liability to less than zero. If the amount of the
8credit exceeds the tax liability for the year, the excess may
9be carried forward and applied to the tax liability for the 5
10taxable years following the excess credit year. The tax credit
11shall be applied to the earliest year for which there is a tax
12liability. If there are credits for more than one year that are
13available to offset liability, the earlier credit shall be
14applied first.
15    (h) A taxpayer claiming a credit under this Section shall
16submit a copy of the certificate with the taxpayer's return to
17the Department.
18    (i) On or before the first day of August each year, the
19Department of Commerce and Economic Opportunity shall submit a
20report to the Governor and the General Assembly on the tax
21credit program authorized under this Section. The report shall
22include the following information:
23        (1) the number of projects funded by investments for
24    which a tax credit application was submitted under this
25    Section during the preceding year;
26        (2) the Illinois opportunity zone in which each such

 

 

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1    project is located;
2        (3) the number of projects funded by investments for
3    which certificates were allocated during the preceding
4    year;
5        (4) a description of each such project;
6        (5) the composition of an Illinois qualified
7    opportunity fund's investments in each project funded by
8    investments for which a tax credit application was
9    submitted under this Section;
10        (6) the number of taxpayers that invested in an
11    Illinois qualified opportunity fund and applied for a tax
12    credit based on the fund's investment in a project during
13    the preceding year;
14        (7) the name of the fund in which each such investment
15    was made;
16        (8) the number of taxpayers allocated a credit for such
17    investments under this Section and the dollar amount of
18    those credits; and
19        (9) a map that shows the location of each Illinois
20    opportunity zone and that indicates which zones include
21    existing or pending projects that are, or will be, funded
22    by tax credit-eligible investments.
23    (j) This Section is exempt from the provisions of Section
24250.