HB4761 101ST GENERAL ASSEMBLY

LRB101 18483 HLH 67934 b

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.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 232 as follows:

(35 ILCS 5/232 new)

Sec. 232. Opportunity Zone investment credit.

(a) The definitions found in Section 1400Z-2 of the federal Internal Revenue Code are expressly incorporated into this Section, except to the extent that terms are otherwise defined in this subsection (a), and except that "all" shall be substituted for "substantially all" wherever "substantially all" appears in Section 1400Z-2 of the federal Internal Revenue Code.

As used in this Section:

"Illinois qualified opportunity fund" means a qualified opportunity fund that holds 100% of its invested assets in qualified opportunity zone property situated in an Illinois opportunity zone. In the case of qualified opportunity zone stock or qualified opportunity zone partnership interest, the stock or interest is considered to be situated in an Illinois opportunity zone only if, during all of the qualified opportunity fund's holding period for such stock or interest, all of the use of the corporation's or partnership's tangible property was in an Illinois opportunity zone. In the case of qualified opportunity zone business property, the property is considered to be situated in an Illinois opportunity zone only if, during all of the fund's holding period for such property, all of the use of the property was in an Illinois opportunity zone.

"Illinois opportunity zone" means a qualified opportunity zone designated in this State under Section 1400Z-1 of the federal Internal Revenue Code before, on, or after the effective date of this amendatory Act of the 101st General Assembly.

"Taxpayer" means any person subject to the tax imposed by subsections (a) and (b) of Section 201 of this Act.

"Qualifying taxable year" means a taxpayer's taxable year that includes the first day of a calendar year during which an Illinois qualified opportunity fund in which the taxpayer invests makes an investment in a project located in an Illinois opportunity zone.

(b) For taxable years ending on or after December 31, 2020, each taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 of this Act 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. For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the federal Internal Revenue Code.

(c) A taxpayer that invests in one or more Illinois qualified opportunity funds shall apply to the Department of Commerce and Economic Opportunity for certification. The application shall be made on forms prescribed by the Department of Commerce and Economic Opportunity on or after the first day of January and on or before the first day of February of each year.

(d) The taxpayer shall include the following information with the taxpayer's application:

(1) the amount of the taxpayer's investment in Illinois qualified opportunity funds during the taxpayer's qualifying taxable year, arranged according to the amount invested in each such fund if the taxpayer invested in more than one such fund; and

(2) a statement from an employee or officer of each Illinois qualified opportunity fund identified by the taxpayer under item (1) certifying the amount of the taxpayer's investment in the fund and the portion of the taxpayer's investment that the fund invested in projects located in Illinois opportunity zones during the preceding calendar year. The statement shall describe each project funded by the investment and state each project's location and the portion of the taxpayer's investment invested in each such project. Unless the fund demonstrates otherwise to the Department of Commerce and Economic Opportunity's satisfaction, the portion of a taxpayer's investment that the fund invested in a project located in an Illinois opportunity zone equals the same proportion of the amount of the fund's investment in the project as the taxpayer's investment in the fund bears to the total investment by all investors in that fund on the date the fund makes the investment in the project. The Department of Commerce and Economic Opportunity shall review applications in the order in which applications are received.

(e) Subject to subsection (f), if the Department of Commerce and Economic Opportunity determines that the applicant qualifies for a credit under this Section, the Department off Commerce and Economic Opportunity shall issue, within 60 days after the receipt of a complete application, a tax credit certificate to the taxpayer identified with a unique number and listing the amount of credit the Department of Commerce and Economic Opportunity determines the taxpayer is eligible to claim.

(f) The Department of Commerce and Economic Opportunity shall not issue certificates in a total amount that would cause the tax credits claimed in any fiscal biennium to exceed $50,000,000. The Department shall not issue certificates to a single applicant in an amount that would cause the tax credits claimed in any fiscal biennium by that applicant to exceed $1,000,000.

(g) In no event shall a credit under this subsection reduce a taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability for the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset liability, the earlier credit shall be applied first.

(h) A taxpayer claiming a credit under this Section shall submit a copy of the certificate with the taxpayer's return to the Department.

(i) On or before the first day of August each year, the Department of Commerce and Economic Opportunity shall submit a report to the Governor and the General Assembly on the tax credit program authorized under this Section. The report shall include the following information:

(1) the number of projects funded by investments for which a tax credit application was submitted under this Section during the preceding year;

(2) the Illinois opportunity zone in which each such project is located;

(3) the number of projects funded by investments for which certificates were allocated during the preceding year;

(4) a description of each such project;

(5) the composition of an Illinois qualified opportunity fund's investments in each project funded by investments for which a tax credit application was submitted under this Section;

(6) the number of taxpayers that invested in an Illinois qualified opportunity fund and applied for a tax credit based on the fund's investment in a project during the preceding year;

(7) the name of the fund in which each such investment was made;

(8) the number of taxpayers allocated a credit for such investments under this Section and the dollar amount of those credits; and

(9) a map that shows the location of each Illinois opportunity zone and that indicates which zones include existing or pending projects that are, or will be, funded by tax credit-eligible investments.

(j) This Section is exempt from the provisions of Section 250.