101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3473

 

Introduced 2/14/2020, by Sen. Omar Aquino

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/205  from Ch. 120, par. 2-205
35 ILCS 5/232 new

    Creates the Endow Illinois Tax Credit Act and amends the Illinois Income Tax Act. Requires the Department of Revenue to authorize an income tax credit to taxpayers who provide an endowment gift to a permanent endowment fund. Sets forth procedures and criteria for authorizing the credits. Provides that the aggregate amount of all credits that the Department of Revenue may authorize may not exceed $10,000,000 in 2021, $25,000,000 in 2022, or $50,000,000 in 2023 and each calendar year thereafter. Provides conditions for eligibility. Requires the Department of Revenue to make an annual report concerning the credits. Provides that the credit may be carried forward for 5 years. Exempts the credit from the Act's sunset provisions. Further amends the Illinois Income Tax Act to provide that provisions concerning the unrelated business taxable income of an exempt organization apply for taxable years beginning on or after January 1, 2020 (currently, January 1, 2019). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3473LRB101 19864 HLH 69384 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Endow
5Illinois Tax Credit Act.
 
6    Section 5. Definitions. For the purposes of this Act:
7    "Department" means the Department of Revenue.
8    "Endowment gift" means an irrevocable contribution to a
9permanent endowment fund held by a qualified community
10foundation.
11    "Permanent endowment fund" means a fund that (i) is held by
12a qualified community foundation to provide benefit to
13charitable causes in the State, (ii) is intended to exist in
14perpetuity, and (iii) has an annual spending rate based on the
15foundation spending policy, but not to exceed 7%.
16    "Qualified community foundation" means a community
17foundation or similar publicly-supported organization
18described in Section 170 (b)(1)(A)(vi) of the Internal Revenue
19Code of 1986 that is organized or operating in this State and
20that substantially complies with the national standards for
21U.S. community foundations that are established by the National
22Council on Foundations, as determined by the Department.
 

 

 

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1    Section 10. Tax credit awards.
2    (a) The Department shall authorize an income tax credit to
3taxpayers who provide an endowment gift to a permanent
4endowment fund. The amount of the credit that may be authorized
5to a taxpayer by the Department under this Act is an amount
6equal to 50% of the endowment gift. A taxpayer that is a
7business entity is not eligible to receive a credit under this
8Act for the taxable year if the taxpayer's gross business
9receipts exceed $10,000,000 for taxable years ending in 2021,
10$25,000,000 for taxable years ending in 2022, or $50,000,000
11for taxable years ending in 2023 or thereafter.
12    (b) The aggregate amount of all credits that the Department
13may authorize under this Act may not exceed $10,000,000 in
142021, $25,000,000 in 2022, or $50,000,000 in 2023 and each
15calendar year thereafter. The aggregate amount of all credits
16that the Department may authorize to any single taxpayer in a
17calendar year may not exceed 5% of the aggregate amount of all
18credits authorized by the Department in that calendar year. The
19aggregate amount of all credits that the Department may
20authorize in any calendar year based on endowment gifts to any
21specific community foundation may not exceed 25% of aggregate
22credits authorized for that year.
23    (c) If the Department receives applications for tax credit
24in excess of the amount available, then the applications must
25be prioritized by the date that the Department received them.
26If the number of applications exceeds the amount of annual tax

 

 

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1credits available, then the Department must establish a wait
2list for the next year's allocation of tax credits, and
3applications must first be funded in the order listed on that
4wait list.
 
5    Section 15. Applications for tax credits.
6    (a) The Department shall develop and make available a
7standardized application pertaining to the allocation of tax
8credits under this Act.
9    (b) Of the annual amount available for tax credits, 10%
10must be reserved for those endowment gifts of $30,000 or less.
11If the entire 10% that is reserved for permanent endowment
12gifts totalling $30,000 or less is not allocated, then the
13remaining amount is available in the following years for
14endowment gifts of $30,000 or less.
15    (c) The Department must accept applications and authorize
16credits in an ongoing basis. The Department must make public,
17by June 1 and by December 1 of each year, the total number of
18requests for tax credits and the total amount of requested tax
19credits that have been submitted and awarded.
 
20    Section 20. Annual report. By January 31 of each year, the
21Department must submit an annual report to the Governor and the
22General Assembly concerning the activities conduced under this
23Act during the previous calendar year. The report must include
24a detailed listing of tax credits authorized under this Act by

 

 

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1the Department.
 
2    Section 90. The Illinois Income Tax Act is amended by
3changing Section 205 and by adding Section 232 as follows:
 
4    (35 ILCS 5/205)  (from Ch. 120, par. 2-205)
5    Sec. 205. Exempt organizations.
6    (a) Charitable, etc. organizations. For tax years
7beginning before January 1, 2020 January 1, 2019, the base
8income of an organization which is exempt from the federal
9income tax by reason of the Internal Revenue Code shall not be
10determined under section 203 of this Act, but shall be its
11unrelated business taxable income as determined under section
12512 of the Internal Revenue Code, without any deduction for the
13tax imposed by this Act. The standard exemption provided by
14section 204 of this Act shall not be allowed in determining the
15net income of an organization to which this subsection applies.
16    For tax years beginning on or after January 1, 2020 January
171, 2019, the base income of an organization which is exempt
18from the federal income tax by reason of the Internal Revenue
19Code shall not be determined under Section 203 of this Act, but
20shall be its unrelated business taxable income as determined
21under Section 512 of the Internal Revenue Code, without regard
22to Section 512(a)(7) of the Internal Revenue Code and without
23any deduction for the tax imposed by this Act. The standard
24exemption provided by Section 204 of this Act shall not be

 

 

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1allowed in determining the net income of an organization to
2which this subsection applies. This exclusion is exempt from
3the provisions of Section 250.
4    (b) Partnerships. A partnership as such shall not be
5subject to the tax imposed by subsection 201 (a) and (b) of
6this Act, but shall be subject to the replacement tax imposed
7by subsection 201 (c) and (d) of this Act and shall compute its
8base income as described in subsection (d) of Section 203 of
9this Act. For taxable years ending on or after December 31,
102004, an investment partnership, as defined in Section
111501(a)(11.5) of this Act, shall not be subject to the tax
12imposed by subsections (c) and (d) of Section 201 of this Act.
13A partnership shall file such returns and other information at
14such time and in such manner as may be required under Article 5
15of this Act. The partners in a partnership shall be liable for
16the replacement tax imposed by subsection 201 (c) and (d) of
17this Act on such partnership, to the extent such tax is not
18paid by the partnership, as provided under the laws of Illinois
19governing the liability of partners for the obligations of a
20partnership. Persons carrying on business as partners shall be
21liable for the tax imposed by subsection 201 (a) and (b) of
22this Act only in their separate or individual capacities.
23    (c) Subchapter S corporations. A Subchapter S corporation
24shall not be subject to the tax imposed by subsection 201 (a)
25and (b) of this Act but shall be subject to the replacement tax
26imposed by subsection 201 (c) and (d) of this Act and shall

 

 

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1file such returns and other information at such time and in
2such manner as may be required under Article 5 of this Act.
3    (d) Combat zone, terrorist attack, and certain other
4deaths. An individual relieved from the federal income tax for
5any taxable year by reason of section 692 of the Internal
6Revenue Code shall not be subject to the tax imposed by this
7Act for such taxable year.
8    (e) Certain trusts. A common trust fund described in
9Section 584 of the Internal Revenue Code, and any other trust
10to the extent that the grantor is treated as the owner thereof
11under sections 671 through 678 of the Internal Revenue Code
12shall not be subject to the tax imposed by this Act.
13    (f) Certain business activities. A person not otherwise
14subject to the tax imposed by this Act shall not become subject
15to the tax imposed by this Act by reason of:
16        (1) that person's ownership of tangible personal
17    property located at the premises of a printer in this State
18    with which the person has contracted for printing, or
19        (2) activities of the person's employees or agents
20    located solely at the premises of a printer and related to
21    quality control, distribution, or printing services
22    performed by a printer in the State with which the person
23    has contracted for printing.
24    (g) A nonprofit risk organization that holds a certificate
25of authority under Article VIID of the Illinois Insurance Code
26is exempt from the tax imposed under this Act with respect to

 

 

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1its activities or operations in furtherance of the powers
2conferred upon it under that Article VIID of the Illinois
3Insurance Code.
4(Source: P.A. 101-545, eff. 8-23-19.)
 
5    (35 ILCS 5/232 new)
6    Sec. 232. The Endow Illinois tax credit.
7    (a) For taxable years ending on or after December 31, 2021,
8each taxpayer for whom a tax credit has been authorized by the
9Department of Revenue under the Endow Illinois Tax Credit Act,
10is entitled to a credit against the tax imposed under
11subsections (a) and (b) of Section 201 in an amount equal to
12the amount authorized under that Act.
13    (b) For partners, shareholders of Subchapter S
14corporations, and members of limited liability companies, if
15the liability company is treated as a partnership for purposes
16of federal and State income taxation, there is allowed a credit
17under this Section to be determined in accordance with the
18determination of income and distributive share of income under
19Sections 702 and 704 and Subchapter S of the Internal Revenue
20Code.
21    (c) The credit may not be carried back and may not reduce
22the taxpayer's liability to less than zero. If the amount of
23the credit exceeds the tax liability for the year, the excess
24may be carried forward and applied to the tax liability of the
255 taxable years following the excess credit year. The tax

 

 

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1credit shall be applied to the earliest year for which there is
2a tax liability. If there are credits for more than one year
3that are available to offset a liability, the earlier credit
4shall be applied first.
5    (d) This Section is exempt from the provisions of Section
6250.
 
7    Section 99. Effective date. This Act takes effect upon
8becoming law.