Illinois General Assembly - Full Text of SB1656
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Full Text of SB1656  100th General Assembly




State of Illinois
2017 and 2018


Introduced 2/9/2017, by Sen. Andy Manar - Chapin Rose


New Act

    Creates the Renewable Chemical Production Tax Credit Program Act. Provides a credit against taxes imposed under the Illinois Income Tax Act for eligible businesses that produces a renewable chemical in this State from biomass feedstock. Provides eligibility requirements and for the amount and applicability of the credit. Defines terms. Effective immediately.

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SB1656LRB100 08447 HLH 18565 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 1. Short title. This Act may be cited as the
5Renewable Chemical Production Tax Credit Program Act.
6    Section 5. Definitions. As used in this Act:
7    "Biobased content percentage" means, with respect to any
8renewable chemical, the amount, expressed as a percentage, of
9renewable organic material present as determined by testing
10representative samples using the ASTM International Standard
11D6866, or its successor standard.
12    "Biomass feedstock" means sugar, polysaccharide, crude
13glycerin, lignin, fat, grease, or oil derived from a plant or
14animal, or a protein capable of being converted to a building
15block chemical by means of a biological or chemical conversion
17    "Building block chemical" means a molecule converted from
18biomass feedstock as a first product or a secondarily derived
19product that can be further refined into a higher-value
20chemical, material, or consumer product. "Building block
21chemical" includes but is not limited to high-purity glycerol,
22oleic acid, lauric acid, methanoic or formic acid, arabonic
23acid, erythonic acid, glyceric acid, glycolic acid, lactic



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1acid, 3-hydroxypropionate, propionic acid, malonic acid,
2serine, succinic acid, fumaric acid, malic acid, aspartic acid,
33-hydroxybutyrolactone, acetoin, threonine, itaconic acid,
4furfural, levulinic acid, glutamic acid, xylonic acid, xylaric
5acid, xylitol, arabitol, citric acid, aconitic acid,
65-hydroxymethylfurfural, lysine, gluconic acid, glucaric acid,
7sorbitol, gallic acid, ferulic acid, nonfuel butanol, nonfuel
8ethanol, or such additional molecules as may be included by the
9Department by rule after consultation with appropriate experts
10from the Department of Agricultural and Biological
11Engineering, or its successor department, of the College of
12Agricultural, Consumer, and Environmental Sciences, of the
13University of Illinois.
14    "Crude glycerin" means glycerin with a purity level below
16    "Department" means the Department of Commerce and Economic
18    "Eligible business" means a business meeting the
19requirements of Section 10.
20    "Food additive" means a building block chemical that is not
21primarily consumed as food but which, when combined with other
22components, improves the taste, appearance, odor, texture, or
23nutritional content of food. The Department, in its discretion,
24shall determine whether or not a building block chemical is
25primarily consumed as food.
26    "High-purity glycerol" means glycerol with a purity level



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1of 95%.
2    "Pre-eligibility production threshold" means, with respect
3to each eligible business, the number of pounds of renewable
4chemicals produced, if any, by an eligible business during the
5calendar year prior to the calendar year in which the business
6first qualified as an eligible business pursuant to Section 10.
7    "Program" means the renewable chemical production tax
8credit program administered pursuant to this part.
9    "Renewable chemical" means a building block chemical with a
10biobased content percentage of at least fifty percent.
11"Renewable chemical" does not include a chemical sold or used
12for the production of food, feed, or fuel. "Renewable chemical"
13includes cellulosic ethanol, starch ethanol, or other ethanol
14derived from biomass feedstock, fatty acid methyl esters, or
15butanol, but only to the extent that such molecules are
16produced and sold for uses other than food, feed, or fuel.
17"Renewable chemical" also includes a building block chemical
18that can be a food additive as long as the building block
19chemical is not primarily consumed as food and is also sold for
20uses other than food. "Renewable chemical" also includes
21supplements, vitamins, nutraceuticals, and pharmaceuticals,
22but only to the extent that such molecules do not provide
23caloric value so as to be considered sustenance as food or
25    "Sugar" means the organic compound glucose, fructose,
26xylose, arabinose, lactose, sucrose, starch, cellulose, or



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2    Section 10. Eligibility requirements. To be eligible to
3receive the renewable chemical production tax credit pursuant
4to the program, a business shall meet all of the following
6        (1) The business is physically located in this State.
7        (2) The business is operated for profit and under
8    single management.
9        (3) The business is not an entity providing
10    professional services, health care services, or medical
11    treatments or an entity engaged primarily in retail
12    operations.
13        (4) The business organized, expanded, or located in the
14    State on or after the effective date of this Act.
15        (5) The business shall not be relocating or reducing
16    operations within the State.
17        (6) The business is in compliance with all agreements
18    entered into under this program or other programs
19    administered by the Department.
20    Section 15. Eligible business application and agreement;
21maximum tax credits.
22    (a) An eligible business that produces a renewable chemical
23in this State from biomass feedstock during a calendar year may
24apply to the Department for the renewable chemical production



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1tax credit provided in Section 20. The application shall be
2made to the Department in the manner prescribed by the
3Department. The application shall be made during the calendar
4year following the calendar year in which the renewable
5chemicals are produced. The Department may accept applications
6on a continuous basis or may establish, by rule, an annual
7application deadline.
8    (b) The application shall include all of the following
10        (1) The amount of renewable chemicals produced in the
11    State from biomass feedstock by the eligible business
12    during the calendar year, measured in pounds.
13        (2) Any other information reasonably required by the
14    Department in order to establish and verify eligibility
15    under the program.
16    (c) Before being issued a tax credit under Section 20, an
17eligible business shall enter into an agreement with the
18Department for the successful completion of all requirements of
19the program. As part of the agreement, the eligible business
20shall agree to collect and provide any information reasonably
21required by the Department in order to allow the Department to
22fulfill its reporting obligation under Section 25.
23        (1) An eligible business shall fulfill all the
24    requirements of the program and the agreement before
25    receiving a tax credit or entering into a subsequent
26    agreement under this Section. The Department may decline to



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1    enter into a subsequent agreement under this Section or
2    issue a tax credit if an agreement is not successfully
3    fulfilled.
4        (2) Upon establishing that all requirements of the
5    program and the agreement have been fulfilled, the
6    Department shall issue a tax credit and related tax credit
7    certificate to the eligible business stating the amount of
8    renewable chemical production tax credit the eligible
9    business may claim.
10    (d) The maximum amount of tax credit that may be issued
11under Section 20 to an eligible business for the production of
12renewable chemicals in a calendar year shall not exceed the
14        (1) In the case of an eligible business that has been
15    in operation in the State for five years or less at the
16    time of application, one million dollars.
17        (2) In the case of an eligible business that has been
18    in operation in the State for more than five years at the
19    time of application, five hundred thousand dollars.
20    An eligible business shall not receive a tax credit for
21renewable chemicals produced before the date the business first
22qualified as an eligible business pursuant to Section 10. An
23eligible business shall only receive a tax credit for renewable
24chemicals produced in a calendar year to the extent such
25production exceeds the eligible business's pre-eligibility
26production threshold. An eligible business shall not receive



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1more than 5 tax credits under the program.
2    The Department shall issue tax credits under the program on
3a first-come, first-served basis until the maximum amount of
4$25,000,000 of tax credits are allocated in any given calendar
5year. The Department shall maintain a list of successful
6applicants under the program, so that if the maximum aggregate
7amount of tax credits is reached in a given year, eligible
8businesses that successfully applied but for which tax credits
9were not issued shall be placed on a wait list in the order the
10eligible businesses applied and shall be given priority for
11receiving tax credits in succeeding years. Placement on a wait
12list pursuant to this subsection (d) shall not constitute a
13promise binding the State. The availability of a tax credit and
14issuance of a tax credit certificate pursuant to this
15subsection (d) in a future year is contingent upon the
16availability of tax credits in that particular year.
17    (e) The failure by an eligible business in fulfilling any
18requirement of the program or any of the terms and obligations
19of an agreement entered into pursuant to this Section may
20result in the reduction, termination, or rescission of the tax
21credits under Section 20 and may subject the eligible business
22to the repayment or recapture of tax credits claimed.
23    (f) Except as provided in this subsection (f), any
24information or record in the possession of the Department with
25respect to the program shall be presumed by the Department to
26be a protected trade secret protected and shall be kept



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1confidential by the Department unless otherwise ordered by a
2court. The identity of a tax credit recipient and the amount of
3the tax credit shall be considered public information.
4    Section 20. Renewable chemical production tax credit.
5    (a) An eligible business that has entered into an agreement
6pursuant to Section 15 may claim a tax credit in an amount
7equal to the product of five cents multiplied by the number of
8pounds of renewable chemicals produced in this State from
9biomass feedstock by the eligible business during the calendar
10year in excess of the eligible business's pre-eligibility
11production threshold. However, an eligible business shall not
12receive a tax credit for the production of a secondarily
13derived building block chemical if that chemical is also the
14subject of a credit at the time of production as a first
15product. The renewable chemical production tax credit shall not
16be available for any renewable chemical produced before the
172018 calendar year.
18    (b) The tax credit shall be allowed against taxes imposed
19on corporations under the Illinois Income Tax Act.
20    (c) The tax credit shall be claimed for the tax year during
21which the eligible business was issued the tax credit.
22    (d) An individual may claim a tax credit under this Section
23of a partnership, limited liability company, S corporation,
24cooperative organized under chapter 501 and filing as a
25partnership for federal tax purposes, estate, or trust electing



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1to have income taxed directly to the individual. The amount
2claimed by the individual shall be based upon the pro rata
3share of the individual's earnings from the partnership,
4limited liability company, S corporation, cooperative, estate,
5or trust.
6    (e) For any tax credit in excess of the tax liability, the
7taxpayer may elect to have the overpayment shown on the
8taxpayer's final, completed return credited to the tax
9liability for the following tax year.
10    (f) To claim a tax credit under this Section, a taxpayer
11shall include one or more tax credit certificates with the
12taxpayer's tax return. The tax credit certificate shall contain
13the taxpayer 's name, address, tax identification number, the
14amount of the credit, the name of the eligible business, and
15any other information required by the Department of Revenue.
16The tax credit certificate, unless rescinded by the Department,
17shall be accepted by the Department of Revenue as payment for
18taxes imposed pursuant to the Illinois Income Tax Act, subject
19to any conditions or restrictions placed by the Department upon
20the face of the tax credit certificate and subject to the
21limitations of the program. Tax credit certificates issued
22pursuant to this Section shall not be transferred to any other
24    Section 25. Reports to General Assembly.
25    (a) For purposes of this Section, "successful tax credit



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1applicant" includes, with respect to each calendar year, an
2eligible business that was issued a tax credit for production
3of renewable chemicals during that calendar year, and an
4eligible business that successfully applied for a tax credit
5for the production of renewable chemicals during that calendar
6year, but was not issued a tax credit and was instead placed on
7the wait list provided under subsection (d) of Section 15.
8    (b) By January 31, 2019, and by January 31 of each year
9thereafter, the Department, in cooperation with the Department
10of Revenue, shall submit to the General Assembly and the
11Governor a report describing the activities of the program for
12the most recent calendar year for which the tax credit
13application period has ended pursuant to subsection (a) of
14Section 15. The report shall at a minimum include the following
16        (1) The aggregate number of pounds, and a list of each
17    type, of renewable chemicals produced in Illinois by all
18    successful tax credit applicants during the calendar year
19    prior to the calendar year for which the successful
20    applicants first applied for a tax credit under the
21    program.
22        (2) The aggregate number of pounds, and a list of each
23    type, of renewable chemicals produced in Illinois by all
24    successful tax credit applicants during each calendar
25    year.
26        (3) The aggregate sales of all renewable chemicals



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1    produced by all successful tax credit applicants in each
2    calendar year for which there are at least five successful
3    tax credit applicants.
4        (4) The aggregate number of pounds, and a list of each
5    type, of biomass feedstock used in the production of
6    renewable chemicals in Illinois by all successful tax
7    credit applicants during the calendar year prior to the
8    calendar year for which the successful applicants first
9    applied for a tax credit under the program.
10        (5) The aggregate number of pounds, and a list of each
11    type, of biomass feedstock used in the production of
12    renewable chemicals in Illinois by all successful tax
13    credit applicants during each calendar year.
14        (6) The number of employees located in Illinois of all
15    successful tax credit applicants during the calendar year
16    prior to the calendar year for which the successful
17    applicants first applied for a tax credit under the
18    program.
19        (7) The number of employees located in Illinois of all
20    successful tax credit applicants during each calendar
21    year.
22        (8) The number and aggregate amount of tax credits
23    issued under the program for each calendar year.
24        (9) The number of eligible businesses placed on the
25    wait list for each calendar year, and the total number of
26    eligible businesses remaining on the wait list at the end



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1    of that calendar year.
2        (10) The dollar amount of tax credit claims placed on
3    the wait list for each calendar year, and the total dollar
4    amount of tax credit claims remaining on the wait list at
5    the end of that calendar year.
6        (11) For each eligible business issued a renewable
7    chemical production tax credit during each calendar year:
8            (A) The identity of the eligible business.
9            (B) The amount of the tax credit.
10            (C) The manner in which the eligible business first
11        qualified as an eligible business under paragraph (4)
12        of Section 10, whether by organizing, expanding, or
13        locating in the State.
14        (12) The total amount of all renewable chemical
15    production tax credits claimed during each calendar year,
16    and the portion of the claims issued as refunds.
17    (c) To protect the presumption of confidentiality
18established in subsection (f) of Section 15, the Department
19shall report all information in an aggregate form to prevent,
20as much as possible, information being attributable to any
21particular eligible business, except as provided in paragraph
22(11) of subsection (b) of this Section.
23    Section 30. Rules. The Department and the Illinois
24Department of Revenue shall each adopt rules as necessary for
25the implementation and administration of this Act.



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1    Section 35. Repeal. This Act is repealed on January 1,
3    Section 99. Effective date. This Act takes effect upon
4becoming law.