Full Text of HB3318 101st General Assembly
HB3318 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 HB3318 Introduced , by Rep. Mark L. Walker SYNOPSIS AS INTRODUCED: |
| | Amends the Illinois Income Tax Act. Provides for a credit in an amount equal to 25% of the taxpayer's equity investment in a qualified new business venture, including investments made through a certified fund manager. Sets forth limitations on the credit.
|
| |
| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
|
| | | HB3318 | | LRB101 05873 HLH 50893 b |
|
| 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 adding | 5 | | Section 229 as follows: | 6 | | (35 ILCS 5/229 new) | 7 | | Sec. 229. Venture capital investment credit. | 8 | | (a) Definitions. As used in this Section: | 9 | | "Certified investment fund manager" means a business that | 10 | | is certified under subsection (e). | 11 | | "Claimant" means an individual who files a claim for credit | 12 | | under this Section. | 13 | | "Department" means the Department of Commerce and Economic | 14 | | Opportunity, unless otherwise specifically provided. | 15 | | "Equity investment" means a purchase of an equity interest, | 16 | | or any other investment expenditure, in a qualified new | 17 | | business venture either directly or through a certified | 18 | | investment fund manager as determined by subsection (e). | 19 | | "Qualified new business venture" means a business that is | 20 | | certified under subsection (d). | 21 | | (b) Filing claims for credit. A claimant may claim as a | 22 | | credit against the tax imposed under subsections (a) and (b) of | 23 | | Section 201 of this Act an amount equal to 25% of the |
| | | HB3318 | - 2 - | LRB101 05873 HLH 50893 b |
|
| 1 | | claimant's equity investment made directly to a qualified new | 2 | | business venture in the taxable year, or made to a certified | 3 | | fund manager if the fund manager invests in a business | 4 | | certified under subsection (d). | 5 | | (c) Limitations. | 6 | | (1) The maximum amount of the credits that may be | 7 | | claimed under this Section for all taxable years combined | 8 | | is $50,000,000. | 9 | | (2) The maximum amount of a claimant's investment that | 10 | | may be used as the basis for a credit under this Section is | 11 | | $500,000 for each investment made directly to a business | 12 | | certified under subsection (d). | 13 | | (3) If an investment for which a claimant claims a | 14 | | credit under subsection (b) is held by the claimant for | 15 | | less than one year, then the claimant shall pay to the | 16 | | Department, in the manner prescribed by the Department, the | 17 | | amount of the credit that the claimant received related to | 18 | | the investment. | 19 | | (4) Any credit allowed under this Section that is | 20 | | unused in the year the credit is earned may be carried | 21 | | forward to each of the 5 taxable years following the year | 22 | | for which the credit is first computed until it is used. | 23 | | This credit shall be applied first to the earliest year for | 24 | | which there is a liability. If there is a credit under this | 25 | | Section from more than one tax year that is available to | 26 | | offset a liability, then the earliest credit arising under |
| | | HB3318 | - 3 - | LRB101 05873 HLH 50893 b |
|
| 1 | | this Section shall be applied first. | 2 | | (5) A partnership may elect to pass through to its | 3 | | partners the credits to which the partnership is entitled | 4 | | under this Section for the taxable year. A partner may use | 5 | | the credit allocated to him or her under this paragraph | 6 | | only against the tax imposed in subsections (a) and (b) of | 7 | | Section 201 of this Act. If the
partnership makes that | 8 | | election, those credits shall be allocated among the | 9 | | partners in the partnership in accordance with the rules | 10 | | set forth in Section 704(b) of the Internal Revenue Code, | 11 | | and the rules promulgated under that Section, and the | 12 | | allocated amount of the credits shall be allowed to the | 13 | | partners for that taxable year. | 14 | | (d) Qualified new business ventures. The Department shall | 15 | | implement a program to certify businesses for purposes of this | 16 | | credit. A business desiring certification shall submit an | 17 | | application to the Department in each taxable year for which | 18 | | the business desires certification. Unless otherwise provided | 19 | | under the rules of the Department, a business may be certified | 20 | | under this subsection and may maintain that certification only | 21 | | if the business satisfies all of the following conditions: | 22 | | (1) it has its headquarters in this State; | 23 | | (2) at least 51% of the employees employed by the | 24 | | business are employed in this State; | 25 | | (3) it is engaged in, or has committed to engage in, | 26 | | manufacturing, agriculture, or processing or assembling |
| | | HB3318 | - 4 - | LRB101 05873 HLH 50893 b |
|
| 1 | | products and conducting research and development or | 2 | | developing a new product or business process; | 3 | | (4) it is not engaged in real estate development, | 4 | | insurance, banking, lending, lobbying, political | 5 | | consulting, professional services provided by attorneys, | 6 | | accountants, business consultants, physicians, or health | 7 | | care consultants, wholesale or retail trade, leisure, | 8 | | hospitality, transportation, or construction; | 9 | | (5) it has fewer than 100 employees; | 10 | | (6) it has been in operation in this State for not more | 11 | | than 7 consecutive years; and | 12 | | (7) it has not received more than $1,000,000 in | 13 | | investments that have qualified for tax credits under this | 14 | | Section. | 15 | | The Department shall maintain a list of certified | 16 | | businesses and shall permit public access to the lists through | 17 | | the Department's Internet website. | 18 | | (e) Certified investment fund managers. The Department | 19 | | shall implement a program to certify investment fund managers | 20 | | for purposes of this Section. An investment fund manager | 21 | | desiring certification shall submit an application to the | 22 | | Department. In determining whether to certify an investment | 23 | | fund manager, the Department shall consider the investment fund | 24 | | manager's experience in managing venture capital funds, the | 25 | | past performance of investment funds managed by the applicant, | 26 | | the expected level of investment in the investment fund to be |
| | | HB3318 | - 5 - | LRB101 05873 HLH 50893 b |
|
| 1 | | managed by the applicant, and any other relevant factors. The | 2 | | Department may certify only investment fund managers that | 3 | | commit to placing investments in businesses certified under | 4 | | subsection (d). The Department shall maintain a list of | 5 | | certified investment fund managers and shall permit public | 6 | | access to the lists through the Department's Internet website. | 7 | | (f) The Department shall notify the Department of Revenue | 8 | | of every certification issued under this Section and the date | 9 | | on which any such certification is revoked or expires. | 10 | | (g) Annual report. Annually, no later than February 1, the | 11 | | Department shall submit a report to the General Assembly for | 12 | | distribution to legislators, listing all of the following | 13 | | information: | 14 | | (1) the total amount of tax credits claimed under this | 15 | | Section; | 16 | | (2) the name of each business in which investments | 17 | | qualifying for those tax credits were made, the amount of | 18 | | the tax credits, and the amount of the investment; and | 19 | | (3) any other information the Department considers | 20 | | reasonable to include. | 21 | | (h) Rules. The Department, in consultation with the | 22 | | Department of Revenue, shall adopt rules to administer this | 23 | | Section.
|
|