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


Sen. Dan Kotowski

Filed: 3/1/2012





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2    AMENDMENT NO. ______. Amend Senate Bill 3619 by replacing
3everything after the enacting clause with the following:
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



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1who files a claim for a credit under this Section.
2    "Department" means the Department of Commerce and Economic
4    "Qualified new business venture" means a business that is
5registered with the Department under this Section.
6    "Related member" means a person that, with respect to the
7investment, is any one of the following:
8        (1) An individual, if the individual and the members of
9    the individual's family (as defined in Section 318 of the
10    Internal Revenue Code) own directly, indirectly,
11    beneficially, or constructively, in the aggregate, at
12    least 50% of the value of the outstanding profits, capital,
13    stock, or other ownership interest in the applicant.
14        (2) A partnership, estate, or trust and any partner or
15    beneficiary, if the partnership, estate, or trust and its
16    partners or beneficiaries own directly, indirectly,
17    beneficially, or constructively, in the aggregate, at
18    least 50% of the profits, capital, stock, or other
19    ownership interest in the applicant.
20        (3) A corporation, and any party related to the
21    corporation in a manner that would require an attribution
22    of stock from the corporation under the attribution rules
23    of Section 318 of the Internal Revenue Code, if the
24    applicant and any other related member own, in the
25    aggregate, directly, indirectly, beneficially, or
26    constructively, at least 50% of the value of the



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1    corporation's outstanding stock.
2        (4) A corporation and any party related to that
3    corporation in a manner that would require an attribution
4    of stock from the corporation to the party or from the
5    party to the corporation under the attribution rules of
6    Section 318 of the Internal Revenue Code, if the
7    corporation and all such related parties own, in the
8    aggregate, at least 50% of the profits, capital, stock, or
9    other ownership interest in the applicant.
10        (5) A person to or from whom there is attribution of
11    stock ownership in accordance with Section 1563(e) of the
12    Internal Revenue Code, except that for purposes of
13    determining whether a person is a related member under this
14    paragraph, "20%" shall be substituted for "5%" whenever
15    "5%" appears in Section 1563(e) of the Internal Revenue
16    Code.
17    (b) For taxable years beginning after December 31, 2010,
18and ending on or before December 31, 2016, subject to the
19limitations provided in this Section, a claimant may claim, as
20a credit against the tax imposed under subsections (a) and (b)
21of Section 201 of this Act, an amount equal to 25% of the
22claimant's investment made directly in a qualified new business
23venture. In order for an investment in a qualified new business
24venture to be eligible for tax credits, the business must have
25applied for and received certification under subsection (e) for
26the taxable year in which the investment was made prior to the



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1date on which the investment was made. The credit under this
2Section may not exceed the taxpayer's Illinois income tax
3liability for the taxable year. If the amount of the credit
4exceeds the tax liability for the year, the excess may be
5carried forward and applied to the tax liability of the 5
6taxable years following the excess credit year. The credit
7shall be applied to the earliest year for which there is a tax
8liability. If there are credits from more than one tax year
9that are available to offset a liability, the earlier credit
10shall be applied first. In the case of a partnership or
11Subchapter S Corporation, the credit is allowed to the partners
12or shareholders in accordance with the determination of income
13and distributive share of income under Sections 702 and 704 and
14Subchapter S of the Internal Revenue Code.
15    (c) The maximum amount of an applicant's investment that
16may be used as the basis for a credit under this Section is
17$2,000,000 for each investment made directly in a qualified new
18business venture.
19    (d) The Department shall implement a program to certify an
20applicant for an angel investment credit. Upon satisfactory
21review, the Department shall issue a tax credit certificate
22stating the amount of the tax credit to which the applicant is
23entitled. The Department shall annually certify that the
24claimant's investment has been made and remains in the
25qualified new business venture for no less than 3 years.
26    (d-5) If an investment for which a claimant is allowed a



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1credit under subsection (b) is held by the claimant for less
2than 3 years, or, if within that period of time the qualified
3new business venture is moved from the State of Illinois, the
4claimant shall pay to the Department of Revenue, in the manner
5prescribed by the Department of Revenue, the amount of the
6credit that the claimant received related to the investment.
7Repayment of the credit shall not be required under this
8paragraph if, prior to the time the claimant disposes of its
9investment or the business venture is moved from the State of
11        (1) the investment by the claimant becomes worthless;
12        (2) 80% or more of the assets of the qualified new
13    business venture are sold to a party that is not related to
14    the qualified new business venture or to the claimant;
15        (3) bankruptcy or insolvency proceedings are commenced
16    for the qualified new business venture; or
17        (4) the qualified new business venture's common stock
18    begins trading on an established securities market.
19    If the Department determines that the qualified new
20business venture did not meet the requirement that at least 51%
21of the employees employed by the business are employed in this
22State in any of the 3 years following the date on which an
23investment in the qualified new business venture was made, the
24claimant shall pay to the Department of Revenue, in the manner
25prescribed by the Department of Revenue, the following
26percentage of the credits allowed for qualified investments in



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1the qualified new business venture:
2Year following the date on which Percentage of credit required
3the investment was made: to be repaid:
4First 100%
5Second 66%
6Third 33%
7Fourth and later 0%
8    The Department must notify the Department of Revenue of
9every credit revoked and subject to full or partial repayment
10under this subsection.
11    (e) The Department shall implement a program to register
12qualified new business ventures for purposes of this Section. A
13business desiring registration shall submit an application to
14the Department in each taxable year for which the business
15desires registration. The Department may register the business
16only if the business satisfies all of the following conditions:
17        (1) it has its headquarters in this State;
18        (2) at least 51% of the employees employed by the
19    business are employed in this State;
20        (3) it has the potential for increasing jobs in this
21    State, increasing capital investment in this State, or
22    both, and either of the following apply:
23            (A) it is principally engaged in innovation in any
24        of the following: manufacturing; biotechnology;
25        nanotechnology; communications; agricultural sciences;
26        clean energy creation or storage technology;



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1        processing or assembling products, including medical
2        devices, pharmaceuticals, computer software, computer
3        hardware, semiconductors, other innovative technology
4        products, or other products that are produced using
5        manufacturing methods that are enabled by applying
6        proprietary technology; or providing services that are
7        enabled by applying proprietary technology; or
8            (B) it is undertaking pre-commercialization
9        activity related to proprietary technology that
10        includes conducting research, developing a new product
11        or business process, or developing a service that is
12        principally reliant on applying proprietary
13        technology;
14        (4) it is not principally engaged in real estate
15    development, insurance, banking, lending, lobbying,
16    political consulting, professional services provided by
17    attorneys, accountants, business consultants, physicians,
18    or health care consultants, wholesale or retail trade,
19    leisure, hospitality, transportation, or construction,
20    except construction of power production plants that derive
21    energy from a renewable energy resource, as defined in
22    Section 1 of the Illinois Power Agency Act;
23        (5) at the time it is first certified:
24            (A) it has fewer than 100 employees;
25            (B) it has been in operation in Illinois for not
26        more than 10 consecutive years prior to the year of



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1        certification; and
2            (C) it has received not more than $10,000,000 in
3        aggregate private equity investment in cash;
4        (6) (blank); it has been in operation in Illinois for
5    not more than 10 consecutive years prior to the year of
6    certification; and
7        (7) it has received not more than (i) $10,000,000 in
8    aggregate private equity investment in cash or (ii)
9    $4,000,000 in investments that qualified for tax credits
10    under this Section.
11    (f) The Department, in consultation with the Department of
12Revenue, shall adopt rules to administer this Section. The
13aggregate amount of the tax credits that may be claimed under
14this Section for investments made in qualified new business
15ventures shall be limited at $10,000,000 per calendar year.
16    (g) A claimant may not sell or otherwise transfer a credit
17awarded under this Section to another person.
18    (h) On or before March 1 of each year, the Department shall
19report to the Governor and to the General Assembly on the tax
20credit certificates awarded under this Section for the prior
21calendar year.
22        (1) This report must include, for each tax credit
23    certificate awarded:
24            (A) the name of the claimant and the amount of
25        credit awarded or allocated to that claimant;
26            (B) the name and address of the qualified new



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1        business venture that received the investment giving
2        rise to the credit and the county in which the
3        qualified new business venture is located; and
4            (C) the date of approval by the Department of the
5        applications for the tax credit certificate.
6        (2) The report must also include:
7            (A) the total number of applicants and amount for
8        tax credit certificates awarded under this Section in
9        the prior calendar year;
10            (B) the total number of applications and amount for
11        which tax credit certificates were issued in the prior
12        calendar year; and
13            (C) the total tax credit certificates and amount
14        authorized under this Section for all calendar years.
15(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11.)
16    Section 99. Effective date. This Act takes effect upon
17becoming law.".