Illinois General Assembly - Full Text of SB1622
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Full Text of SB1622  100th General Assembly




State of Illinois
2017 and 2018


Introduced 2/9/2017, by Sen. Daniel Biss


35 ILCS 5/220

    Amends the Illinois Income Tax Act. Provides that the angel investment credit applies for taxable years ending on or before December 31, 2022 (instead of December 31, 2016). Makes changes concerning the annual report submitted by the Department of Commerce and Economic Opportunity to the Governor and the General Assembly. Effective immediately.

LRB100 06203 HLH 16237 b






SB1622LRB100 06203 HLH 16237 b

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
5changing Section 220 as follows:
6    (35 ILCS 5/220)
7    Sec. 220. Angel investment credit.
8    (a) As used in this Section:
9    "Applicant" means a corporation, partnership, limited
10liability company, or a natural person that makes an investment
11in a qualified new business venture. The term "applicant" does
12not include a corporation, partnership, limited liability
13company, or a natural person who has a direct or indirect
14ownership interest of at least 51% in the profits, capital, or
15value of the investment or a related member.
16    "Claimant" means an applicant certified by the Department
17who files a claim for a credit under this Section.
18    "Department" means the Department of Commerce and Economic
20    "Qualified new business venture" means a business that is
21registered with the Department under this Section.
22    "Related member" means a person that, with respect to the
23investment, is any one of the following:



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1        (1) An individual, if the individual and the members of
2    the individual's family (as defined in Section 318 of the
3    Internal Revenue Code) own directly, indirectly,
4    beneficially, or constructively, in the aggregate, at
5    least 50% of the value of the outstanding profits, capital,
6    stock, or other ownership interest in the applicant.
7        (2) A partnership, estate, or trust and any partner or
8    beneficiary, if the partnership, estate, or trust and its
9    partners or beneficiaries own directly, indirectly,
10    beneficially, or constructively, in the aggregate, at
11    least 50% of the profits, capital, stock, or other
12    ownership interest in the applicant.
13        (3) A corporation, and any party related to the
14    corporation in a manner that would require an attribution
15    of stock from the corporation under the attribution rules
16    of Section 318 of the Internal Revenue Code, if the
17    applicant and any other related member own, in the
18    aggregate, directly, indirectly, beneficially, or
19    constructively, at least 50% of the value of the
20    corporation's outstanding stock.
21        (4) A corporation and any party related to that
22    corporation in a manner that would require an attribution
23    of stock from the corporation to the party or from the
24    party to the corporation under the attribution rules of
25    Section 318 of the Internal Revenue Code, if the
26    corporation and all such related parties own, in the



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1    aggregate, at least 50% of the profits, capital, stock, or
2    other ownership interest in the applicant.
3        (5) A person to or from whom there is attribution of
4    stock ownership in accordance with Section 1563(e) of the
5    Internal Revenue Code, except that for purposes of
6    determining whether a person is a related member under this
7    paragraph, "20%" shall be substituted for "5%" whenever
8    "5%" appears in Section 1563(e) of the Internal Revenue
9    Code.
10    (b) For taxable years beginning after December 31, 2010,
11and ending on or before December 31, 2022 December 31, 2016,
12subject to the limitations provided in this Section, a claimant
13may claim, as a credit against the tax imposed under
14subsections (a) and (b) of Section 201 of this Act, an amount
15equal to 25% of the claimant's investment made directly in a
16qualified new business venture. In order for an investment in a
17qualified new business venture to be eligible for tax credits,
18the business must have applied for and received certification
19under subsection (e) for the taxable year in which the
20investment was made prior to the date on which the investment
21was made. The credit under this Section may not exceed the
22taxpayer's Illinois income tax liability for the taxable year.
23If the amount of the credit exceeds the tax liability for the
24year, the excess may be carried forward and applied to the tax
25liability of the 5 taxable years following the excess credit
26year. The credit shall be applied to the earliest year for



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1which there is a tax liability. If there are credits from more
2than one tax year that are available to offset a liability, the
3earlier credit shall be applied first. In the case of a
4partnership or Subchapter S Corporation, the credit is allowed
5to the partners or shareholders in accordance with the
6determination of income and distributive share of income under
7Sections 702 and 704 and Subchapter S of the Internal Revenue
9    (c) The maximum amount of an applicant's investment that
10may be used as the basis for a credit under this Section is
11$2,000,000 for each investment made directly in a qualified new
12business venture.
13    (d) The Department shall implement a program to certify an
14applicant for an angel investment credit. Upon satisfactory
15review, the Department shall issue a tax credit certificate
16stating the amount of the tax credit to which the applicant is
17entitled. The Department shall annually certify that the
18claimant's investment has been made and remains in the
19qualified new business venture for no less than 3 years.
20    If an investment for which a claimant is allowed a credit
21under subsection (b) is held by the claimant for less than 3
22years, or, if within that period of time the qualified new
23business venture is moved from the State of Illinois, the
24claimant shall pay to the Department of Revenue, in the manner
25prescribed by the Department of Revenue, the amount of the
26credit that the claimant received related to the investment.



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1    (e) The Department shall implement a program to register
2qualified new business ventures for purposes of this Section. A
3business desiring registration shall submit an application to
4the Department in each taxable year for which the business
5desires registration. The Department may register the business
6only if the business satisfies all of the following conditions:
7        (1) it has its headquarters in this State;
8        (2) at least 51% of the employees employed by the
9    business are employed in this State;
10        (3) it has the potential for increasing jobs in this
11    State, increasing capital investment in this State, or
12    both, and either of the following apply:
13            (A) it is principally engaged in innovation in any
14        of the following: manufacturing; biotechnology;
15        nanotechnology; communications; agricultural sciences;
16        clean energy creation or storage technology;
17        processing or assembling products, including medical
18        devices, pharmaceuticals, computer software, computer
19        hardware, semiconductors, other innovative technology
20        products, or other products that are produced using
21        manufacturing methods that are enabled by applying
22        proprietary technology; or providing services that are
23        enabled by applying proprietary technology; or
24            (B) it is undertaking pre-commercialization
25        activity related to proprietary technology that
26        includes conducting research, developing a new product



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1        or business process, or developing a service that is
2        principally reliant on applying proprietary
3        technology;
4        (4) it is not principally engaged in real estate
5    development, insurance, banking, lending, lobbying,
6    political consulting, professional services provided by
7    attorneys, accountants, business consultants, physicians,
8    or health care consultants, wholesale or retail trade,
9    leisure, hospitality, transportation, or construction,
10    except construction of power production plants that derive
11    energy from a renewable energy resource, as defined in
12    Section 1 of the Illinois Power Agency Act;
13        (5) at the time it is first certified:
14            (A) it has fewer than 100 employees;
15            (B) it has been in operation in Illinois for not
16        more than 10 consecutive years prior to the year of
17        certification; and
18            (C) it has received not more than $10,000,000 in
19        aggregate private equity investment in cash;
20        (6) (blank); and
21        (7) it has received not more than $4,000,000 in
22    investments that qualified for tax credits under this
23    Section.
24    (f) The Department, in consultation with the Department of
25Revenue, shall adopt rules to administer this Section. The
26aggregate amount of the tax credits that may be claimed under



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1this Section for investments made in qualified new business
2ventures shall be limited at $10,000,000 per calendar year.
3    (g) A claimant may not sell or otherwise transfer a credit
4awarded under this Section to another person.
5    (h) On or before March 1 of each year, the Department shall
6report to the Governor and to the General Assembly on the tax
7credit certificates awarded under this Section for the prior
8calendar year.
9        (1) This report must include, for each tax credit
10    certificate awarded:
11            (A) the name of the claimant, and the amount of
12        credit awarded or allocated to that claimant, and the
13        name of the recipient qualified new business venture
14        that received the investment;
15            (B) the name and address, including the county, the
16        North American Industry Classification System (NAICS)
17        code, and the number of employees of the qualified new
18        business venture that received an investment giving
19        rise to the credit the name and address of the
20        qualified new business venture that received the
21        investment giving rise to the credit and the county in
22        which the qualified new business venture is located;
23        and
24            (C) the date of approval by the Department of each
25        claimant's the applications for the tax credit
26        certificate.



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1        (2) The report must also include:
2            (A) the total number of applicants and the total
3        number of claimants, including the amount of each tax
4        credit certificate and amount for tax credit
5        certificates awarded to a claimant under this Section
6        in the prior calendar year;
7            (B) the total number of applications from
8        businesses seeking registration, the total number of
9        new qualified business ventures registered by the
10        Department, and the aggregate amount of investment
11        upon which tax credit certificates were issued in the
12        prior calendar year the total number of applications
13        and amount for which tax credit certificates were
14        issued in the prior calendar year; and
15            (C) the total amount of tax credit certificates
16        sought by applicants, the amount of each tax credit
17        certificate issued to a claimant, the aggregate amount
18        of all tax credit certificates issued in the prior
19        calendar year and the aggregate amount of tax credit
20        certificates issued as authorized under this Section
21        for all calendar years. the total tax credit
22        certificates and amount authorized under this Section
23        for all calendar years.
24        (2) On and after the effective date of this amendatory
25    Act of the 100th General Assembly, the Department shall
26    require a business seeking registration as a qualified new



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1    business venture to include in its application the North
2    American Industry Classification System (NAICS) code
3    associated with the business and the number of employees at
4    the time of application. Each business registered by the
5    Department as a qualified new business venture that
6    receives an investment giving rise to the issuance of a tax
7    credit certificate shall, for each of the 3 subsequent
8    years, report to the Department the following:
9            (A) the number of employees at the end of each
10        year;
11            (B) the amount of additional new capital
12        investment raised within each year; and
13            (C) any liquidity event transpiring within the
14        3-year period; for purposes of this paragraph (C), a
15        liquidity event shall mean an event that allows some or
16        all investors in a company to cash out some or all of
17        their ownership shares or that is considered an exit
18        strategy for an illiquid investment.
19(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11;
2097-1097, eff. 8-24-12.)
21    Section 99. Effective date. This Act takes effect upon
22becoming law.