Illinois General Assembly - Full Text of SB3619
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Full Text of SB3619  97th General Assembly



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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, 2016, subject to the
12limitations provided in this Section, a claimant may claim, as
13a credit against the tax imposed under subsections (a) and (b)
14of Section 201 of this Act, an amount equal to 25% of the
15claimant's investment made directly in a qualified new business
16venture. In order for an investment in a qualified new business
17venture to be eligible for tax credits, the business must have
18applied for and received certification under subsection (e) for
19the taxable year in which the investment was made prior to the
20date on which the investment was made. The credit under this
21Section may not exceed the taxpayer's Illinois income tax
22liability for the taxable year. If the amount of the credit
23exceeds the tax liability for the year, the excess may be
24carried forward and applied to the tax liability of the 5
25taxable years following the excess credit year. The credit
26shall be applied to the earliest year for which there is a tax



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1liability. If there are credits from more than one tax year
2that are available to offset a liability, the earlier credit
3shall be applied first. In the case of a partnership or
4Subchapter S Corporation, the credit is allowed to the partners
5or shareholders in accordance with the determination of income
6and distributive share of income under Sections 702 and 704 and
7Subchapter S of the Internal Revenue Code.
8    (c) The maximum amount of an applicant's investment that
9may 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
11business venture.
12    (d) The Department shall implement a program to certify an
13applicant for an angel investment credit. Upon satisfactory
14review, the Department shall issue a tax credit certificate
15stating the amount of the tax credit to which the applicant is
16entitled. The Department shall annually certify that the
17claimant's investment has been made and remains in the
18qualified new business venture for no less than 3 years.
19    (d-5) If an investment for which a claimant is allowed a
20credit under subsection (b) is held by the claimant for less
21than 3 years, or, if within that period of time the qualified
22new business venture is moved from the State of Illinois, the
23claimant shall pay to the Department of Revenue, in the manner
24prescribed by the Department of Revenue, the amount of the
25credit that the claimant received related to the investment.
26Repayment of the credit shall not be required under this



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1paragraph if, prior to the time the claimant disposes of its
2investment or the business venture is moved from the State of
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
13business venture did not meet the requirement that at least 51%
14of the employees employed by the business are employed in this
15State in any of the 3 years following the date on which an
16investment in the qualified new business venture was made, the
17claimant shall pay to the Department of Revenue, in the manner
18prescribed by the Department of Revenue, the following
19percentage of the credits allowed for qualified investments in
20the qualified new business venture:
21Year following the date on which Percentage of credit required
22the investment was made: to be repaid:
23First 100%
24Second 66%
25Third 33%
26Fourth and later 0%



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1    The Department must notify the Department of Revenue of
2every credit revoked and subject to full or partial repayment
3under this subsection.
4    (e) The Department shall implement a program to register
5qualified new business ventures for purposes of this Section. A
6business desiring registration shall submit an application to
7the Department in each taxable year for which the business
8desires registration. The Department may register the business
9only 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
5Revenue, shall adopt rules to administer this Section. The
6aggregate amount of the tax credits that may be claimed under
7this Section for investments made in qualified new business
8ventures shall be limited at $10,000,000 per calendar year.
9    (g) A claimant may not sell or otherwise transfer a credit
10awarded under this Section to another person.
11    (h) On or before March 1 of each year, the Department shall
12report to the Governor and to the General Assembly on the tax
13credit certificates awarded under this Section for the prior
14calendar 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
10becoming law.