Full Text of SB1522 96th General Assembly
SB1522eng 96TH GENERAL ASSEMBLY
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| AN ACT concerning revenue.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 1. Short title. This Act may be cited as the | 5 |
| Emerging Technology Industries Act. | 6 |
| Section 5. Purpose. It is the purpose of this Act to | 7 |
| develop and diversify the economy of the State of Illinois by: | 8 |
| (1) expediting the innovation and commercialization of | 9 |
| research; | 10 |
| (2) attracting, creating, or expanding private-sector | 11 |
| entities that will promote a substantial increase in | 12 |
| high-quality jobs; and | 13 |
| (3) increasing higher education applied technology | 14 |
| research capabilities. | 15 |
| Section 10. Definitions. As used in this Act: | 16 |
| "Department" means the Department of Commerce and Economic | 17 |
| Opportunity. | 18 |
| "Emerging technology enterprise" means a business concern | 19 |
| that is primarily engaged in an emerging technology industry. | 20 |
| "Emerging technology industry" includes, without | 21 |
| limitation, any industry related to: | 22 |
| (1) agricultural science; |
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| (2) computer and software technology; | 2 |
| (3) biotechnology; | 3 |
| (4) medicine; | 4 |
| (5) life sciences; | 5 |
| (6) nanotechnology;
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| (7) energy; | 7 |
| (8) manufactured energy systems; | 8 |
| (9) aerospace; | 9 |
| (10) petroleum; | 10 |
| (11) micro-electromechanical systems; | 11 |
| (12) defense; | 12 |
| (13) semiconductors; or | 13 |
| (14) any other pursuit that is determined by the | 14 |
| Department to be an emerging technology industry.
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| "Fund" means the Emerging Technology Grant Fund | 16 |
| established under Section 20 of this Act. | 17 |
| "Investment" means the contribution of property, at a risk | 18 |
| of loss, to a qualified Illinois emerging technology enterprise | 19 |
| in exchange for stock, a partnership interest, or other | 20 |
| ownership interest in the qualified company. For the purposes | 21 |
| of this definition, an investment is at risk of loss if its | 22 |
| repayment depends entirely upon the success of the business | 23 |
| operations of the qualified Illinois emerging technology | 24 |
| enterprise.
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| "Qualified investor" means an investor who is: | 26 |
| (1) an individual who invests at least $25,000 in a |
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| qualified Illinois emerging technology enterprise; | 2 |
| (2) an Illinois corporation that invests at least | 3 |
| $250,000 in a qualified Illinois emerging technology | 4 |
| enterprise; or | 5 |
| (3) a qualified Illinois venture capital firm. | 6 |
| "Qualified Illinois emerging technology enterprise" means | 7 |
| a company that has:
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| (1) its headquarters and base of operations in | 9 |
| Illinois;
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| (2) fewer than 50 full-time employees;
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| (3) been in active business no longer than 10 years; | 12 |
| and | 13 |
| (4) been certified in writing as an emerging technology | 14 |
| enterprise by the Department. | 15 |
| "Qualified Illinois venture capital firm" means an entity | 16 |
| that:
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| (1) is organized for the purpose of investing funds in | 18 |
| privately-held companies engaged in the research, | 19 |
| development, or commercialization of innovative and | 20 |
| propriety technology; | 21 |
| (2) has at least 2 principals who each have at least 5 | 22 |
| years of venture capital experience; | 23 |
| (3) has at least one year of experience investing in | 24 |
| emerging technology industries; and | 25 |
| (4) has its headquarters and principal place of | 26 |
| operations in Illinois. |
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| Section 15. Eligibility. An emerging technology enterprise | 2 |
| is eligible to receive a grant under this Act if the activity | 3 |
| to be funded:
(i) will result in the creation of new jobs in | 4 |
| this State; and
(ii) has the potential to result in the | 5 |
| advancement of medicine or science. | 6 |
| Section 20. The Emerging Technology Grant Fund. The | 7 |
| Emerging Technology Grant Fund is created as a special fund in | 8 |
| the State treasury. From appropriations to the Department from | 9 |
| the Fund, the Department shall make grants to emerging | 10 |
| technology enterprises in the State as set forth under this | 11 |
| Act. Moneys received for the purposes of this Section, | 12 |
| including, without limitation, appropriations, repayments of | 13 |
| grant moneys, and gifts, grants, and awards from any public or | 14 |
| private entity, must be deposited into the Fund. Any interest | 15 |
| earnings that are attributable to moneys in the Fund must be | 16 |
| deposited into the Fund. | 17 |
| Section 25. Grant contracts. | 18 |
| (a) Before awarding a grant under this Act, the Department | 19 |
| shall enter into a written contract with the emerging | 20 |
| technology enterprise to be awarded the grant money. In the | 21 |
| contract, the emerging technology enterprise shall guarantee | 22 |
| that it will perform the actions expected to be performed. The | 23 |
| contract may specify that: |
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| (1) If all or any portion of the amount of the grant is | 2 |
| used to build a capital improvement: | 3 |
| (A) the State retains a lien or other interest in | 4 |
| the capital improvement in proportion to the | 5 |
| percentage of the grant amount used to pay for the | 6 |
| capital improvement; and
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| (B) the recipient of the grant shall, if the | 8 |
| capital improvement is sold, (i) repay to the State the | 9 |
| grant money used to pay for the capital improvement, | 10 |
| with interest at the rate and according to the other | 11 |
| terms provided by the agreement, and
(ii) share with | 12 |
| the State a proportionate amount of any profit realized | 13 |
| from the sale; and | 14 |
| (2) If, as of the date certain provided in the | 15 |
| contract, the grant recipient has not used grant money | 16 |
| awarded under this Act for the purposes for which the grant | 17 |
| was intended, then the recipient shall repay that amount | 18 |
| and any related interest applicable under the agreement to | 19 |
| the State at the agreed rate and on the agreed terms. | 20 |
| (b) If an emerging technology enterprise fails to perform | 21 |
| an action guaranteed by contract before a time specified by | 22 |
| contract, then the enterprise shall return all moneys received | 23 |
| from the Fund. | 24 |
| (c) The provisions of this Section take precedence over any | 25 |
| conflicting requirements of the Illinois Grant Funds Recovery | 26 |
| Act. |
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| Section 30. Funding priority. In awarding money from the | 2 |
| Fund under this Act, priority shall be given to proposals that: | 3 |
| (1) involve emerging scientific or technology fields | 4 |
| that have a reasonable probability of enhancing the State's | 5 |
| national and global economic competitiveness; | 6 |
| (2) may result in a medical or scientific advancement;
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| (3) are collaborative between any combination of | 8 |
| private or nonprofit entities and public or private | 9 |
| agencies or institutions in the State;
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| (4) are matched with other available funds, including | 11 |
| funds from the private or nonprofit entity or institution | 12 |
| of higher education collaborating on the project; or
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| (5) have an economic development benefit to the State.
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| Section 35. Research grant matching. Amounts allocated | 15 |
| from the Fund for use as provided by this Act must be reserved | 16 |
| to match funding from research sponsors other than this State, | 17 |
| including federal research sponsors. The Department shall | 18 |
| determine proposals eligible for funding under this Act.
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| amounts allocated from the Fund are used to match a federal | 20 |
| Small Business Innovative Research (SBIR) grant, then the State | 21 |
| matching funds from the Fund for all phases of that SBIR grant | 22 |
| shall not exceed $600,000. Not more than $10,000,000 of moneys | 23 |
| from the Fund shall be used by the Department in any one fiscal | 24 |
| year as grant matching funds under this Act. |
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| Section 40. Documentation of benefits.
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| (a) An emerging technology enterprise that receives a grant | 3 |
| under this Act must document specific benefits that the State | 4 |
| may expect to gain as a result of the grant award. This | 5 |
| documentation must be completed and provided to the Department | 6 |
| before the emerging technology enterprise may enter into a | 7 |
| contract to receive funding under Section 25. | 8 |
| (b) The Department may terminate funding to an emerging | 9 |
| technology enterprise if the enterprise fails to realize a | 10 |
| benefit specified in the contract, as determined by a periodic | 11 |
| review conducted by the Department.
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| Section 45. Income tax credit. A qualified investor may | 13 |
| claim a credit against the tax imposed under subsections (a) | 14 |
| and (b) of Section 201 of the Illinois Income Tax Act, as | 15 |
| provided in this Act and Section 218 of the Illinois Income Tax | 16 |
| Act. The amount of the credit is an amount equal to the final | 17 |
| credit certificate approved by the Department for an investment | 18 |
| in a qualified emerging technology enterprise, as provided | 19 |
| under Sections 50 and 55 of this Act. | 20 |
| This credit is exempt from the provisions of Section 250 of | 21 |
| the Illinois Income Tax Act. | 22 |
| Section 50. Tax credit application; certification. | 23 |
| (a) In order to receive the tax credit under this Act, the |
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| qualified investor must submit an application to the Department | 2 |
| on forms provided by the Department at least 30 days prior to | 3 |
| making an investment in a qualified Illinois emerging | 4 |
| technology enterprise for which the qualified investor is | 5 |
| eligible for an initial tax credit certificate. | 6 |
| (b) The Department shall approve all applications that | 7 |
| qualify for credits under this Act on a first-come first-served | 8 |
| basis. Within 30 days after its receipt of an application, the | 9 |
| Department must certify the amount of any approved tax credits | 10 |
| to a qualified investor.
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| (c) The qualified investor must make an investment in a | 12 |
| qualified Illinois emerging technology enterprise within 30 | 13 |
| days after the Department has issued a tax credit certificate | 14 |
| under subsection (b). Within 10 days after making the | 15 |
| investment, the qualified investor must provide written notice | 16 |
| to the Department. If the qualified investor fails to provide | 17 |
| this written notice within 40 days after the issuance of the | 18 |
| tax credit certificate, then the Department shall rescind the | 19 |
| certificate. | 20 |
| Section 55. Amount of the tax credit. The tax credit | 21 |
| allowed in a tax credit certificate issued under this Act is | 22 |
| 25% of the investment in a qualified Illinois emerging | 23 |
| technology enterprise, but not to exceed: | 24 |
| (1) $50,000 for a qualified investor that is an | 25 |
| individual; or |
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| (2) $250,000 for a qualified investor that is a | 2 |
| corporation or a qualified Illinois venture capital firm. | 3 |
| Section 57. Limit on total tax credits. Total tax credits | 4 |
| allowed under this Act shall not exceed $15,000,000 in any one | 5 |
| State fiscal year. | 6 |
| Section 60. Recapture of the tax credit. | 7 |
| (a) If, within 2 taxable years after the close of the | 8 |
| taxable year in which a credit under Section 45 of this Act is | 9 |
| approved, the qualified investor sells, transfers, or | 10 |
| otherwise disposes of the ownership interest in the qualified | 11 |
| Illinois emerging technology enterprise that gave rise to the | 12 |
| credit, then the credit must be recaptured. | 13 |
| (b) The amount required to be recaptured under this Section | 14 |
| is: | 15 |
| (1) 100% of the amount of the credit if the disposition | 16 |
| occurs during the taxable year in which the tax credit is | 17 |
| approved;
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| (2) 67% of the amount of the credit if the disposition | 19 |
| occurs during the first taxable year after the close of the | 20 |
| taxable year for which the tax is approved; or | 21 |
| (3) 33% of the amount of the credit if the disposition | 22 |
| occurs more than one taxable year but not more than 2 | 23 |
| taxable years after the close of the taxable year for which | 24 |
| the tax credit is approved. |
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| (c) The qualified investor who claimed the credit shall pay | 2 |
| the recaptured amount as taxes payable to the State for the | 3 |
| taxable year in which the disposition occurred. | 4 |
| Section 65. Revocation of the credit. | 5 |
| (a) The Department may revoke its certification of an | 6 |
| approved credit under this Act if any representation in | 7 |
| connection with the application for the certification proves to | 8 |
| have been false when made. | 9 |
| (b) The revocation may be in full or in part as the | 10 |
| Department determines and, subject to subsection (c), must be | 11 |
| communicated in writing to the qualified investor and the | 12 |
| Department of Revenue. | 13 |
| (c) The Department of Revenue may make an assessment | 14 |
| against the qualified investor to recapture any amount of the | 15 |
| tax credit that the qualified investor has already claimed.
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| Section 70. Annual report. | 17 |
| (a) On or before January 10 of each year, the Department | 18 |
| shall report to the Governor and to the General Assembly on the | 19 |
| tax credit certificates awarded under this Act for the prior | 20 |
| calendar year. | 21 |
| (b) This report must include, for each tax credit | 22 |
| certificate awarded: | 23 |
| (1) the name of the qualified investor and the amount | 24 |
| of credit awarded or allocated to that investor; |
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| (2) the name and address of the qualified Illinois | 2 |
| emerging technology enterprise that received the | 3 |
| investment giving rise to the credit and the county in | 4 |
| which the qualified Illinois emerging technology | 5 |
| enterprise is located; and | 6 |
| (3) the dates of receipt and approval by the Department | 7 |
| of the applications for the tax credit certificate. | 8 |
| (c) The report must summarize for each category of | 9 |
| qualified investors: | 10 |
| (1) the total number of applicants for initial tax | 11 |
| credit certificates under this Act in the prior calendar | 12 |
| year; | 13 |
| (2) the total number of applications for which initial | 14 |
| tax credit certificates were issued in the prior calendar | 15 |
| year; and
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| (3) the total tax credit certificates authorized under | 17 |
| this Act for all calendar years.
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| Section 75. Rules. The Department shall adopt any rule | 19 |
| necessary for the administration of this Act, except that the | 20 |
| Department of Revenue shall prescribe rules in accordance with | 21 |
| subsection (d) of Section 218 of the Illinois Income Tax Act. | 22 |
| Section 90. The State Finance Act is amended by adding | 23 |
| Section 5.719 as follows: |
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| (30 ILCS 105/5.719 new)
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| Sec. 5.719. The Emerging Technology Grant Fund. | 3 |
| Section 95. The Illinois Income Tax Act is amended by | 4 |
| adding Section 218 as follows: | 5 |
| (35 ILCS 5/218 new) | 6 |
| Sec. 218. Emerging Technology Investment Tax Credit. | 7 |
| (a) For tax years beginning on or after January 1, 2009, a | 8 |
| taxpayer who has been awarded a tax credit under the Emerging | 9 |
| Technology Industries Act is entitled to a credit against the | 10 |
| taxes imposed under subsections (a) and (b) of Section 201 of | 11 |
| this Act in an amount determined by the Department of Commerce | 12 |
| and Economic Opportunity under the Emerging Technology | 13 |
| Industries Act. | 14 |
| (b) If the taxpayer is a partnership or Subchapter S | 15 |
| corporation, the credit is allowed to the partners or | 16 |
| shareholders in accordance with the determination of income and | 17 |
| distributive share of income under Sections 702 and 704 and | 18 |
| Subchapter S of the Internal Revenue Code. | 19 |
| (c) The credit may not be carried forward or back. | 20 |
| (d) The Department, in cooperation with the Department of | 21 |
| Commerce and Economic Opportunity, may prescribe rules to | 22 |
| enforce and administer the provisions of this Section. | 23 |
| (e) The credit established under this Section and Sections | 24 |
| 45 through 65 of the Emerging Technology Industries Act is |
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| exempt from the provisions of Section 250 of this Act.
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| Section 99. Effective date. This Act takes effect upon | 3 |
| becoming law.
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