Full Text of SB3619 97th General Assembly
SB3619eng 97TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing 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 | 10 | | liability company, or a natural person that makes an investment | 11 | | in a qualified new business venture. The term "applicant" does | 12 | | not include a corporation, partnership, limited liability | 13 | | company, or a natural person who has a direct or indirect | 14 | | ownership interest of at least 51% in the profits, capital, or | 15 | | value of the investment or a related member. | 16 | | "Claimant" means an applicant certified by the Department | 17 | | who files a claim for a credit under this Section. | 18 | | "Department" means the Department of Commerce and Economic | 19 | | Opportunity. | 20 | | "Qualified new business venture" means a business that is | 21 | | registered with the Department under this Section. | 22 | | "Related member" means a person that, with respect to the
| 23 | | investment, 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, | 11 | | and ending on or before December 31, 2016, subject to the | 12 | | limitations provided in this Section, a claimant may claim, as | 13 | | a credit against the tax imposed under subsections (a) and (b) | 14 | | of Section 201 of this Act, an amount equal to 25% of the | 15 | | claimant's investment made directly in a qualified new business | 16 | | venture. In order for an investment in a qualified new business | 17 | | venture to be eligible for tax credits, the business must have | 18 | | applied for and received certification under subsection (e) for | 19 | | the taxable year in which the investment was made prior to the | 20 | | date on which the investment was made. The credit under this | 21 | | Section may not exceed the taxpayer's Illinois income tax | 22 | | liability for the taxable year. If the amount of the credit | 23 | | exceeds the tax liability for the year, the excess may be | 24 | | carried forward and applied to the tax liability of the 5 | 25 | | taxable years following the excess credit year. The credit | 26 | | shall be applied to the earliest year for which there is a tax |
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| 1 | | liability. If there are credits from more than one tax year | 2 | | that are available to offset a liability, the earlier credit | 3 | | shall be applied first. In the case of a partnership or | 4 | | Subchapter S Corporation, the credit is allowed to the partners | 5 | | or shareholders in accordance with the determination of income | 6 | | and distributive share of income under Sections 702 and 704 and | 7 | | Subchapter S of the Internal Revenue Code. | 8 | | (c) The maximum amount of an applicant's investment that | 9 | | may be used as the basis for a credit under this Section is | 10 | | $2,000,000 for each investment made directly in a qualified new | 11 | | business venture. | 12 | | (d) The Department shall implement a program to certify an | 13 | | applicant for an angel investment credit. Upon satisfactory | 14 | | review, the Department shall issue a tax credit certificate | 15 | | stating the amount of the tax credit to which the applicant is | 16 | | entitled. The Department shall annually certify that the | 17 | | claimant's investment has been made and remains in the | 18 | | qualified new business venture for no less than 3 years. | 19 | | (d-5) If an investment for which a claimant is allowed a | 20 | | credit under subsection (b) is held by the claimant for less | 21 | | than 3 years, or, if within that period of time the qualified | 22 | | new business venture is moved from the State of Illinois, the | 23 | | claimant shall pay to the Department of Revenue, in the manner | 24 | | prescribed by the Department of Revenue, the amount of the | 25 | | credit that the claimant received related to the investment. | 26 | | Repayment of the credit shall not be required under this |
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| 1 | | paragraph if, prior to the time the claimant disposes of its | 2 | | investment or the business venture is moved from the State of | 3 | | Illinois: | 4 | | (1) the investment by the claimant becomes worthless; | 5 | | (2) 80% or more of the assets of the qualified new | 6 | | business venture are sold to a party that is not related to | 7 | | the qualified new business venture or to the claimant; | 8 | | (3) bankruptcy or insolvency proceedings are commenced | 9 | | for the qualified new business venture; or | 10 | | (4) the qualified new business venture's common stock | 11 | | begins trading on an established securities market. | 12 | | If the Department determines that the qualified new | 13 | | business venture did not meet the requirement that at least 51% | 14 | | of the employees employed by the business are employed in this | 15 | | State in any of the 3 years following the date on which an | 16 | | investment in the qualified new business venture was made, the | 17 | | claimant shall pay to the Department of Revenue, in the manner | 18 | | prescribed by the Department of Revenue, the following | 19 | | percentage of the credits allowed for qualified investments in | 20 | | the qualified new business venture: | |
21 | | Year following the date on which | Percentage of credit required | |
22 | | the investment was made: | to be repaid: | |
23 | | First | 100% | |
24 | | Second | 66% | |
25 | | Third | 33% | |
26 | | Fourth and later | 0% |
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| 1 | | The Department must notify the Department of Revenue of | 2 | | every credit revoked and subject to full or partial repayment | 3 | | under this subsection. | 4 | | (e) The Department shall implement a program to register | 5 | | qualified new business ventures for purposes of this Section. A | 6 | | business desiring registration shall submit an application to | 7 | | the Department in each taxable year for which the business | 8 | | desires registration. The Department may register the business | 9 | | only if the business satisfies all of the following conditions: | 10 | | (1) it has its headquarters in this State; | 11 | | (2) at least 51% of the employees employed by the | 12 | | business are employed in this State; | 13 | | (3) it has the potential for increasing jobs in this | 14 | | State, increasing capital investment in this State, or | 15 | | both, and either of the following apply: | 16 | | (A) it is principally engaged in innovation in any | 17 | | of the following: manufacturing; biotechnology; | 18 | | nanotechnology; communications; agricultural sciences; | 19 | | clean energy creation or storage technology; | 20 | | processing or assembling products, including medical | 21 | | devices, pharmaceuticals, computer software, computer | 22 | | hardware, semiconductors, other innovative technology | 23 | | products, or other products that are produced using | 24 | | manufacturing methods that are enabled by applying | 25 | | proprietary technology; or providing services that are | 26 | | enabled by applying proprietary technology; or |
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| 1 | | (B) it is undertaking pre-commercialization | 2 | | activity related to proprietary technology that | 3 | | includes conducting research, developing a new product | 4 | | or business process, or developing a service that is | 5 | | principally reliant on applying proprietary | 6 | | technology; | 7 | | (4) it is not principally engaged in real estate | 8 | | development, insurance, banking, lending, lobbying, | 9 | | political consulting, professional services provided by | 10 | | attorneys, accountants, business consultants, physicians, | 11 | | or health care consultants, wholesale or retail trade, | 12 | | leisure, hospitality, transportation, or construction, | 13 | | except construction of power production plants that derive | 14 | | energy from a renewable energy resource, as defined in | 15 | | Section 1 of the Illinois Power Agency Act; | 16 | | (5) at the time it is first certified: | 17 | | (A) it has fewer than 100 employees; | 18 | | (B) it has been in operation in Illinois for not | 19 | | more than 10 consecutive years prior to the year of | 20 | | certification; and | 21 | | (C) it has received not more than $10,000,000 in | 22 | | aggregate private equity investment in cash; | 23 | | (6) (blank); it has been in operation in Illinois for | 24 | | not more than 10 consecutive years prior to the year of | 25 | | certification; and | 26 | | (7) it has received not more than (i) $10,000,000 in |
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| 1 | | aggregate private equity investment in cash or (ii) | 2 | | $4,000,000 in investments that qualified for tax credits | 3 | | under this Section. | 4 | | (f) The Department, in consultation with the Department of | 5 | | Revenue, shall adopt rules to administer this Section. The | 6 | | aggregate amount of the tax credits that may be claimed under | 7 | | this Section for investments made in qualified new business | 8 | | ventures shall be limited at $10,000,000 per calendar year. | 9 | | (g) A claimant may not sell or otherwise transfer a credit | 10 | | awarded under this Section to another person. | 11 | | (h) On or before March 1 of each year, the Department shall | 12 | | report to the Governor and to the General Assembly on the tax | 13 | | credit certificates awarded under this Section for the prior | 14 | | calendar year. | 15 | | (1) This report must include, for each tax credit | 16 | | certificate awarded: | 17 | | (A) the name of the claimant and the amount of | 18 | | credit awarded or allocated to that claimant; | 19 | | (B) the name and address of the qualified new | 20 | | business venture that received the investment giving | 21 | | rise to the credit and the county in which the | 22 | | qualified new business venture is located; and | 23 | | (C) the date of approval by the Department of the | 24 | | applications for the tax credit certificate. | 25 | | (2) The report must also include: | 26 | | (A) the total number of applicants and amount for |
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| 1 | | tax credit certificates awarded under this Section in | 2 | | the prior calendar year; | 3 | | (B) the total number of applications and amount for | 4 | | which tax credit certificates were issued in the prior | 5 | | calendar year; and | 6 | | (C) the total tax credit certificates and amount | 7 | | authorized under this Section for all calendar years.
| 8 | | (Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11.)
| 9 | | Section 99. Effective date. This Act takes effect upon | 10 | | becoming law. |
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