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Public Act 100-0328


 

Public Act 0328 100TH GENERAL ASSEMBLY

  
  
  

 


 
Public Act 100-0328
 
SB2012 EnrolledLRB100 09567 HLH 19734 b

    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
changing Section 220 as follows:
 
    (35 ILCS 5/220)
    Sec. 220. Angel investment credit.
    (a) As used in this Section:
    "Applicant" means a corporation, partnership, limited
liability company, or a natural person that makes an investment
in a qualified new business venture. The term "applicant" does
not include a corporation, partnership, limited liability
company, or a natural person who has a direct or indirect
ownership interest of at least 51% in the profits, capital, or
value of the investment or a related member.
    "Claimant" means an applicant certified by the Department
who files a claim for a credit under this Section.
    "Department" means the Department of Commerce and Economic
Opportunity.
    "Investment" means money (or its equivalent) given to a
qualified new business venture, at a risk of loss, in
consideration for an equity interest of the qualified new
business venture. The Department may adopt rules to permit
certain forms of contingent equity investments to be considered
eligible for a tax credit under this Section.
    "Qualified new business venture" means a business that is
registered with the Department under this Section.
    "Related member" means a person that, with respect to the
applicant investment, is any one of the following:
        (1) An individual, if the individual and the members of
    the individual's family (as defined in Section 318 of the
    Internal Revenue Code) own directly, indirectly,
    beneficially, or constructively, in the aggregate, at
    least 50% of the value of the outstanding profits, capital,
    stock, or other ownership interest in the applicant.
        (2) A partnership, estate, or trust and any partner or
    beneficiary, if the partnership, estate, or trust and its
    partners or beneficiaries own directly, indirectly,
    beneficially, or constructively, in the aggregate, at
    least 50% of the profits, capital, stock, or other
    ownership interest in the applicant.
        (3) A corporation, and any party related to the
    corporation in a manner that would require an attribution
    of stock from the corporation under the attribution rules
    of Section 318 of the Internal Revenue Code, if the
    applicant and any other related member own, in the
    aggregate, directly, indirectly, beneficially, or
    constructively, at least 50% of the value of the
    corporation's outstanding stock.
        (4) A corporation and any party related to that
    corporation in a manner that would require an attribution
    of stock from the corporation to the party or from the
    party to the corporation under the attribution rules of
    Section 318 of the Internal Revenue Code, if the
    corporation and all such related parties own, in the
    aggregate, at least 50% of the profits, capital, stock, or
    other ownership interest in the applicant.
        (5) A person to or from whom there is attribution of
    stock ownership in accordance with Section 1563(e) of the
    Internal Revenue Code, except that for purposes of
    determining whether a person is a related member under this
    paragraph, "20%" shall be substituted for "5%" whenever
    "5%" appears in Section 1563(e) of the Internal Revenue
    Code.
    (b) For taxable years beginning after December 31, 2010,
and ending on or before December 31, 2021 December 31, 2016,
subject to the limitations provided in this Section, a claimant
may claim, as a credit against the tax imposed under
subsections (a) and (b) of Section 201 of this Act, an amount
equal to 25% of the claimant's investment made directly in a
qualified new business venture. In order for an investment in a
qualified new business venture to be eligible for tax credits,
the business must have applied for and received certification
under subsection (e) for the taxable year in which the
investment was made prior to the date on which the investment
was made. The credit under this Section may not exceed the
taxpayer's Illinois income tax liability for the taxable year.
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 of the 5 taxable years following the excess credit
year. The credit shall be applied to the earliest year for
which there is a tax liability. If there are credits from more
than one tax year that are available to offset a liability, the
earlier credit shall be applied first. In the case of a
partnership or Subchapter S Corporation, the credit is allowed
to the partners or shareholders in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and Subchapter S of the Internal Revenue
Code.
    (c) The minimum amount an applicant must invest in any
single qualified new business venture in order to be eligible
for a credit under this Section is $10,000. The maximum amount
of an applicant's total investment made in any single qualified
new business venture that may be used as the basis for a credit
under this Section is $2,000,000 for each investment made
directly in a qualified new business venture.
    (d) The Department shall implement a program to certify an
applicant for an angel investment credit. Upon satisfactory
review, the Department shall issue a tax credit certificate
stating the amount of the tax credit to which the applicant is
entitled. The Department shall annually certify that: (i) each
qualified new business venture that receives an angel
investment under this Section has maintained a minimum
employment threshold, as defined by rule, in the State (and
continues to maintain a minimum employment threshold in the
State for a period of no less than 3 years from the issue date
of the last tax credit certificate issued by the Department
with respect to such business pursuant to this Section); and
(ii) the claimant's investment has been made and remains,
except in the event of a qualifying liquidity event, in the
qualified new business venture for no less than 3 years.
    If an investment for which a claimant is allowed a credit
under subsection (b) is held by the claimant for less than 3
years, other than as a result of a permitted sale of the
investment to person who is not a related member, or, if within
that period of time the qualified new business venture is moved
from the State of Illinois, the claimant shall pay to the
Department of Revenue, in the manner prescribed by the
Department of Revenue, the aggregate amount of the disqualified
credits credit that the claimant received related to the
subject investment.
    If the Department determines that a qualified new business
venture failed to maintain a minimum employment threshold in
the State through the date which is 3 years from the issue date
of the last tax credit certificate issued by the Department
with respect to the subject business pursuant to this Section,
the claimant or claimants shall pay to the Department of
Revenue, in the manner prescribed by the Department of Revenue,
the aggregate amount of the disqualified credits that claimant
or claimants received related to investments in that business.
    (e) The Department shall implement a program to register
qualified new business ventures for purposes of this Section. A
business desiring registration under this Section shall be
required to submit a full and complete an application to the
Department in each taxable year for which the business desires
registration. A submitted application shall be effective only
for the taxable year in which it is submitted, and a business
desiring registration under this Section shall be required to
submit a separate application in and for each taxable year for
which the business desires registration. Further, if at any
time prior to the acceptance of an application for registration
under this Section by the Department one or more events occurs
which makes the information provided in that application
materially false or incomplete (in whole or in part), the
business shall promptly notify the Department of the same. Any
failure of a business to promptly provide the foregoing
information to the Department may, at the discretion of the
Department, result in a revocation of a previously approved
application for that business, or disqualification of the
business from future registration under this Section, or both.
The Department may register the business only if the business
satisfies all of the following conditions are satisfied:
        (1) it has its principal place of business headquarters
    in this State;
        (2) at least 51% of the employees employed by the
    business are employed in this State;
        (3) the business it has the potential for increasing
    jobs in this State, increasing capital investment in this
    State, or both, as determined by the Department, and either
    of the following apply:
            (A) it is principally engaged in innovation in any
        of the following: manufacturing; biotechnology;
        nanotechnology; communications; agricultural sciences;
        clean energy creation or storage technology;
        processing or assembling products, including medical
        devices, pharmaceuticals, computer software, computer
        hardware, semiconductors, other innovative technology
        products, or other products that are produced using
        manufacturing methods that are enabled by applying
        proprietary technology; or providing services that are
        enabled by applying proprietary technology; or
            (B) it is undertaking pre-commercialization
        activity related to proprietary technology that
        includes conducting research, developing a new product
        or business process, or developing a service that is
        principally reliant on applying proprietary
        technology;
        (4) it is not principally engaged in real estate
    development, insurance, banking, lending, lobbying,
    political consulting, professional services provided by
    attorneys, accountants, business consultants, physicians,
    or health care consultants, wholesale or retail trade,
    leisure, hospitality, transportation, or construction,
    except construction of power production plants that derive
    energy from a renewable energy resource, as defined in
    Section 1 of the Illinois Power Agency Act;
        (5) at the time it is first certified:
            (A) it has fewer than 100 employees;
            (B) it has been in operation in Illinois for not
        more than 10 consecutive years prior to the year of
        certification; and
            (C) it has received not more than $10,000,000 in
        aggregate investments private equity investment in
        cash;
        (5.1) it agrees to maintain a minimum employment
    threshold in the State of Illinois prior to the date which
    is 3 years from the issue date of the last tax credit
    certificate issued by the Department with respect to that
    business pursuant to this Section;
        (6) (blank); and
        (7) it has received not more than $4,000,000 in
    investments that qualified for tax credits under this
    Section.
    (f) The Department, in consultation with the Department of
Revenue, shall adopt rules to administer this Section. The
aggregate amount of the tax credits that may be claimed under
this Section for investments made in qualified new business
ventures shall be limited at $10,000,000 per calendar year, of
which $500,000 shall be reserved for investments made in
qualified new business ventures which are "minority owned
businesses", "female owned businesses", or "businesses owned
by a person with a disability" (as those terms are used and
defined in the Business Enterprise for Minorities, Females, and
Persons with Disabilities Act), and an additional $500,000
shall be reserved for investments made in qualified new
business ventures with their principal place of business in
counties with a population of not more than 250,000. The
foregoing annual allowable amounts shall be allocated by the
Department, on a per calendar quarter basis and prior to the
commencement of each calendar year, in such proportion as
determined by the Department, provided that: (i) the amount
initially allocated by the Department for any one calendar
quarter shall not exceed 35% of the total allowable amount; and
(ii) any portion of the allocated allowable amount remaining
unused as of the end of any of the first 2 calendar quarters of
a given calendar year shall be rolled into, and added to, the
total allocated amount for the next available calendar quarter.
    (g) A claimant may not sell or otherwise transfer a credit
awarded under this Section to another person.
    (h) On or before March 1 of each year, the Department shall
report to the Governor and to the General Assembly on the tax
credit certificates awarded under this Section for the prior
calendar year.
        (1) This report must include, for each tax credit
    certificate awarded:
            (A) the name of the claimant and the amount of
        credit awarded or allocated to that claimant;
            (B) the name and address (including the county) of
        the qualified new business venture that received the
        investment giving rise to the credit, the North
        American Industry Classification System (NAICS) code
        applicable to that qualified new business venture, and
        the number of employees of the the qualified new
        business venture that received the investment giving
        rise to the credit and the county in which the
        qualified new business venture is located; and
            (C) the date of approval by the Department of each
        claimant's the applications for the tax credit
        certificate.
        (2) The report must also include:
            (A) the total number of applicants and the total
        number of claimants, including the amount of each tax
        credit certificate and amount for tax credit
        certificates awarded to a claimant under this Section
        in the prior calendar year;
            (B) the total number of applications from
        businesses seeking registration under this Section,
        the total number of new qualified business ventures
        registered by the Department, and the aggregate amount
        of investment upon which tax credit certificates were
        issued in the prior calendar year the total number of
        applications and amount for which tax credit
        certificates were issued in the prior calendar year;
        and
            (C) the total amount of tax credit certificates
        sought by applicants, the amount of each tax credit
        certificate issued to a claimant, the aggregate amount
        of all tax credit certificates issued in the prior
        calendar year and the aggregate amount of tax credit
        certificates issued as authorized under this Section
        for all calendar years the total tax credit
        certificates and amount authorized under this Section
        for all calendar years.
    (i) For each business seeking registration under this
Section after December 31, 2016, the Department shall require
the business to include in its application the North American
Industry Classification System (NAICS) code applicable to the
business and the number of employees of the business at the
time of application. Each business registered by the Department
as a qualified new business venture that receives an investment
giving rise to the issuance of a tax credit certificate
pursuant to this Section shall, for each of the 3 years
following the issue date of the last tax credit certificate
issued by the Department with respect to such business pursuant
to this Section, report to the Department the following:
        (1) the number of employees and the location at which
    those employees are employed, both as of the end of each
    year;
        (2) the amount of additional new capital investment
    raised as of the end of each year, if any; and
        (3) the terms of any liquidity event occurring during
    such year; for the purposes of this Section, a "liquidity
    event" means any event that would be considered an exit for
    an illiquid investment, including any event that allows the
    equity holders of the business (or any material portion
    thereof) to cash out some or all of their respective equity
    interests.
(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11;
97-1097, eff. 8-24-12.)

Effective Date: 1/1/2018