Rep. Mark L. Walker

Filed: 3/22/2021

 

 


 

 


 
10200HB1967ham001LRB102 12691 HLH 24027 a

1
AMENDMENT TO HOUSE BILL 1967

2    AMENDMENT NO. ______. Amend House Bill 1967 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Section 220 and by adding Section 232 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
11investment in a qualified new business venture. The term
12"applicant" does not include (i) a corporation, partnership,
13limited liability company, or a natural person who has a
14direct or indirect ownership interest of at least 33% 51% in
15the profits, capital, or value of the qualified new business
16venture receiving the investment or (ii) a related member.

 

 

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1    "Claimant" means an applicant certified by the Department
2who files a claim for a credit under this Section.
3    "Department" means the Department of Commerce and Economic
4Opportunity.
5    "Investment" means money (or its equivalent) given to a
6qualified new business venture, at a risk of loss, in
7consideration for an equity interest of the qualified new
8business venture. The Department may adopt rules to permit
9certain forms of contingent equity investments to be
10considered eligible for a tax credit under this Section.
11    "Qualified new business venture" means a business that is
12registered with the Department under this Section.
13    "Related member" means a person that, with respect to the
14applicant, is any one of the following:
15        (1) An individual, if the individual and the members
16    of the individual's family (as defined in Section 318 of
17    the Internal Revenue Code) own directly, indirectly,
18    beneficially, or constructively, in the aggregate, at
19    least 50% of the value of the outstanding profits,
20    capital, stock, or other ownership interest in the
21    qualified new business venture that is the recipient of
22    the applicant's investment.
23        (2) A partnership, estate, or trust and any partner or
24    beneficiary, if the partnership, estate, or trust and its
25    partners or beneficiaries own directly, indirectly,
26    beneficially, or constructively, in the aggregate, at

 

 

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1    least 50% of the profits, capital, stock, or other
2    ownership interest in the qualified new business venture
3    that is the recipient of the applicant's investment.
4        (3) A corporation, and any party related to the
5    corporation in a manner that would require an attribution
6    of stock from the corporation under the attribution rules
7    of Section 318 of the Internal Revenue Code, if the
8    applicant and any other related member own, in the
9    aggregate, directly, indirectly, beneficially, or
10    constructively, at least 50% of the value of the
11    outstanding stock of the qualified new business venture
12    that is the recipient of the applicant's investment.
13        (4) A corporation and any party related to that
14    corporation in a manner that would require an attribution
15    of stock from the corporation to the party or from the
16    party to the corporation under the attribution rules of
17    Section 318 of the Internal Revenue Code, if the
18    corporation and all such related parties own, in the
19    aggregate, at least 50% of the profits, capital, stock, or
20    other ownership interest in the qualified new business
21    venture that is the recipient of the applicant's
22    investment.
23        (5) A person to or from whom there is attribution of
24    ownership of stock in the qualified new business venture
25    that is the recipient of the applicant's investment in
26    accordance with Section 1563(e) of the Internal Revenue

 

 

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1    Code, except that for purposes of determining whether a
2    person is a related member under this paragraph, "20%"
3    shall be substituted for "5%" whenever "5%" appears in
4    Section 1563(e) of the Internal Revenue Code.
5    "Social equity business" means a business that is a
6qualified social equity applicant, as defined in Section 1-10
7of the Cannabis Regulation and Tax Act.
8    (b) For taxable years beginning after December 31, 2010,
9and ending on or before December 31, 2021, subject to the
10limitations provided in this Section, a claimant may claim, as
11a credit against the tax imposed under subsections (a) and (b)
12of Section 201 of this Act, an amount equal to 25% of the
13claimant's investment made directly in a qualified new
14business venture. However, if the investment is made in: (1) a
15qualified new business venture that is minority-owned,
16women-owned, or is a business owned a person with a disability
17(as those terms are used and defined in the Business
18Enterprise for Minorities, Women, and Persons with
19Disabilities Act); or (2) a qualified new business venture in
20which the principal place of business is located in a county
21with a population of not more than 250,000, then the amount of
22the credit is 35% of the claimant's investment made directly
23in a qualified new business venture. In order for an
24investment in a qualified new business venture to be eligible
25for tax credits, the business must have applied for and
26received certification under subsection (e) for the taxable

 

 

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1year in which the investment was made prior to the date on
2which the investment was made. The credit under this Section
3may not exceed the taxpayer's Illinois income tax liability
4for the taxable year. If the amount of the credit exceeds the
5tax liability for the year, the excess may be carried forward
6and applied to the tax liability of the 5 taxable years
7following the excess credit year. The credit shall be applied
8to the earliest year for which there is a tax liability. If
9there are credits from more than one tax year that are
10available to offset a liability, the earlier credit shall be
11applied first. In the case of a partnership or Subchapter S
12Corporation, the credit is allowed to the partners or
13shareholders in accordance with the determination of income
14and distributive share of income under Sections 702 and 704
15and Subchapter S of the Internal Revenue Code.
16    (c) The minimum amount an applicant must invest in any
17single qualified new business venture in order to be eligible
18for a credit under this Section is $10,000. The maximum amount
19of an applicant's total investment made in any single
20qualified new business venture that may be used as the basis
21for a credit under this Section is $1,000,000 $2,000,000.
22    (d) The Department shall implement a program to certify an
23applicant for an angel investment credit. Upon satisfactory
24review, the Department shall issue a tax credit certificate
25stating the amount of the tax credit to which the applicant is
26entitled. The Department shall annually certify that: (i) each

 

 

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1qualified new business venture that receives an angel
2investment under this Section has maintained a minimum
3employment threshold, as defined by rule, in the State (and
4continues to maintain a minimum employment threshold in the
5State for a period of no less than 3 years from the issue date
6of the last tax credit certificate issued by the Department
7with respect to such business pursuant to this Section); and
8(ii) the claimant's investment has been made and remains,
9except in the event of a qualifying liquidity event, in the
10qualified new business venture for no less than 3 years.
11    If an investment for which a claimant is allowed a credit
12under subsection (b) is held by the claimant for less than 3
13years, other than as a result of a permitted sale of the
14investment to person who is not a related member, the claimant
15shall pay to the Department of Revenue, in the manner
16prescribed by the Department of Revenue, the aggregate amount
17of the disqualified credits that the claimant received related
18to the subject investment.
19    If the Department determines that a qualified new business
20venture failed to maintain a minimum employment threshold in
21the State through the date which is 3 years from the issue date
22of the last tax credit certificate issued by the Department
23with respect to the subject business pursuant to this Section,
24the claimant or claimants shall pay to the Department of
25Revenue, in the manner prescribed by the Department of
26Revenue, the aggregate amount of the disqualified credits that

 

 

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1claimant or claimants received related to investments in that
2business.
3    (e) The Department shall implement a program to register
4qualified new business ventures for purposes of this Section.
5A business desiring registration under this Section shall be
6required to submit a full and complete application to the
7Department. A submitted application shall be effective only
8for the taxable year in which it is submitted, and a business
9desiring registration under this Section shall be required to
10submit a separate application in and for each taxable year for
11which the business desires registration. Further, if at any
12time prior to the acceptance of an application for
13registration under this Section by the Department one or more
14events occurs which makes the information provided in that
15application materially false or incomplete (in whole or in
16part), the business shall promptly notify the Department of
17the same. Any failure of a business to promptly provide the
18foregoing information to the Department may, at the discretion
19of the Department, result in a revocation of a previously
20approved application for that business, or disqualification of
21the business from future registration under this Section, or
22both. The Department may register the business only if all of
23the following conditions are satisfied:
24        (1) it has its principal place of business in this
25    State;
26        (2) at least 51% of the employees employed by the

 

 

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1    business are employed in this State;
2        (3) the business has the potential for increasing jobs
3    in this State, increasing capital investment in this
4    State, or both, as determined by the Department, and any
5    either of the following apply:
6            (A) it is principally engaged in innovation in any
7        of the following: manufacturing; biotechnology;
8        nanotechnology; communications; agricultural
9        sciences; clean energy creation or storage technology;
10        processing or assembling products, including medical
11        devices, pharmaceuticals, computer software, computer
12        hardware, semiconductors, other innovative technology
13        products, or other products that are produced using
14        manufacturing methods that are enabled by applying
15        proprietary technology; or providing services that are
16        enabled by applying proprietary technology; or
17            (B) it is undertaking pre-commercialization
18        activity related to proprietary technology that
19        includes conducting research, developing a new product
20        or business process, or developing a service that is
21        principally reliant on applying proprietary
22        technology; or
23            (C) the business is a social equity business and
24        is engaged in innovation in the field of cannabis
25        cultivation, extraction, processing, distribution,
26        infusion, or dispensing, or is undertaking

 

 

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1        pre-commercialization activity within the adult use
2        cannabis industry related to proprietary technology
3        that includes conducting research, developing a new
4        product or business process, or developing a service
5        that is 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; however, the
16    restrictions in this Section relating to wholesale or
17    retail trade and transportation shall not apply to social
18    equity businesses;
19        (5) at the time it is first certified:
20            (A) it has fewer than 100 employees;
21            (B) it has been in operation in Illinois for not
22        more than 10 consecutive years prior to the year of
23        certification; and
24            (C) it has received not more than $5,000,000
25        $10,000,000 in aggregate investments;
26        (5.1) it agrees to maintain a minimum employment

 

 

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1    threshold in the State of Illinois prior to the date which
2    is 3 years from the issue date of the last tax credit
3    certificate issued by the Department with respect to that
4    business pursuant to this Section;
5        (6) (blank); and
6        (7) it has received not more than $2,000,000
7    $4,000,000 in investments that qualified for tax credits
8    under this Section.
9    (f) The Department, in consultation with the Department of
10Revenue, shall adopt rules to administer this Section. The
11aggregate amount of the tax credits that may be claimed under
12this Section for investments made in qualified new business
13ventures shall be limited at $10,000,000 per calendar year, of
14which $1,500,000 $500,000 shall be reserved for investments
15made in qualified new business ventures which are
16minority-owned businesses, women-owned businesses, or
17businesses owned by a person with a disability (as those terms
18are used and defined in the Business Enterprise for
19Minorities, Women, and Persons with Disabilities Act), and an
20additional $1,500,000 $500,000 shall be reserved for
21investments made in qualified new business ventures with their
22principal place of business in counties with a population of
23not more than 250,000. The foregoing annual allowable amounts
24shall be allocated by the Department, on a per calendar
25quarter basis and prior to the commencement of each calendar
26year, in such proportion as determined by the Department,

 

 

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1provided that: (i) the amount initially allocated by the
2Department for any one calendar quarter shall not exceed 35%
3of the total allowable amount; (ii) any portion of the
4allocated allowable amount remaining unused as of the end of
5any of the first 3 calendar quarters of a given calendar year
6shall be rolled into, and added to, the total allocated amount
7for the next available calendar quarter; and (iii) the
8reservation of tax credits for investments in minority-owned
9businesses, women-owned businesses, businesses owned by a
10person with a disability, and in businesses in counties with a
11population of not more than 250,000 is limited to the first 3
12calendar quarters of a given calendar year, after which they
13may be claimed by investors in any qualified new business
14venture.
15    (g) A claimant may not sell or otherwise transfer a credit
16awarded under this Section to another person.
17    (h) On or before March 1 of each year, the Department shall
18report to the Governor and to the General Assembly on the tax
19credit certificates awarded under this Section for the prior
20calendar year.
21        (1) This report must include, for each tax credit
22    certificate awarded:
23            (A) the name of the claimant and the amount of
24        credit awarded or allocated to that claimant;
25            (B) the name and address (including the county) of
26        the qualified new business venture that received the

 

 

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1        investment giving rise to the credit, the North
2        American Industry Classification System (NAICS) code
3        applicable to that qualified new business venture, and
4        the number of employees of the qualified new business
5        venture; and
6            (C) the date of approval by the Department of each
7        claimant's tax credit certificate.
8        (2) The report must also include:
9            (A) the total number of applicants and the total
10        number of claimants, including the amount of each tax
11        credit certificate awarded to a claimant under this
12        Section in the prior calendar year;
13            (B) the total number of applications from
14        businesses seeking registration under this Section,
15        the total number of new qualified business ventures
16        registered by the Department, and the aggregate amount
17        of investment upon which tax credit certificates were
18        issued in the prior calendar year; and
19            (C) the total amount of tax credit certificates
20        sought by applicants, the amount of each tax credit
21        certificate issued to a claimant, the aggregate amount
22        of all tax credit certificates issued in the prior
23        calendar year and the aggregate amount of tax credit
24        certificates issued as authorized under this Section
25        for all calendar years.
26    (i) For each business seeking registration under this

 

 

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1Section after December 31, 2016, the Department shall require
2the business to include in its application the North American
3Industry Classification System (NAICS) code applicable to the
4business and the number of employees of the business at the
5time of application. Each business registered by the
6Department as a qualified new business venture that receives
7an investment giving rise to the issuance of a tax credit
8certificate pursuant to this Section shall, for each of the 3
9years following the issue date of the last tax credit
10certificate issued by the Department with respect to such
11business pursuant to this Section, report to the Department
12the following:
13        (1) the number of employees and the location at which
14    those employees are employed, both as of the end of each
15    year;
16        (2) the amount of additional new capital investment
17    raised as of the end of each year, if any; and
18        (3) the terms of any liquidity event occurring during
19    such year; for the purposes of this Section, a "liquidity
20    event" means any event that would be considered an exit
21    for an illiquid investment, including any event that
22    allows the equity holders of the business (or any material
23    portion thereof) to cash out some or all of their
24    respective equity interests.
25(Source: P.A. 100-328, eff. 1-1-18; 100-686, eff. 1-1-19;
26100-863, eff. 8-14-18; 101-81, eff. 7-12-19.)
 

 

 

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1    (35 ILCS 5/232 new)
2    Sec. 232. Credit for full-time employees in a county with
3fewer than 250,000 inhabitants.
4    (a) For taxable years beginning on or after January 1,
52021, each taxpayer that hires a full-time employee to fill a
6position at a location in a county with fewer than 250,000
7inhabitants is entitled to a credit against the taxes imposed
8by subsections (a) and (b) of Section 201 of this Act in an
9amount not to exceed $5,000 per eligible employee in any
10taxable year. The credit may be taken for the taxable year in
11which the employee is hired and for the next taxable year if
12the employee remains employed with that taxpayer in the next
13taxable year. The amount of the credit shall be $5,000 in each
14taxable year, multiplied by a fraction the numerator of which
15is the number of days the employee is employed by the taxpayer
16during the taxable year and the denominator of which is 365.
17    (b) For partners, shareholders of Subchapter S
18corporations, and owners of limited liability companies, if
19the liability company is treated as a partnership for purposes
20of federal and State income taxation, there shall be allowed a
21credit under this Section to be determined in accordance with
22the determination of income and distributive share of income
23under Sections 702 and 704 and Subchapter S of the Internal
24Revenue Code.
25    (c) In no event shall a credit under this Section reduce

 

 

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1the taxpayer's liability to less than zero. If the amount of
2the credit exceeds the tax liability for the year, the excess
3may be carried forward and applied to the tax liability of the
45 taxable years following the excess credit year. The tax
5credit shall be applied to the earliest year for which there is
6a tax liability. If there are credits for more than one year
7that are available to offset a liability, the earlier credit
8shall be applied first.
9    (d) As used in this Section, "full-time employee" means an
10individual who is employed for consideration for at least 35
11hours each week or who renders any other standard of service
12generally accepted by industry custom or practice as full-time
13employment. An individual for whom a W-2 is issued by a
14Professional Employer Organization (PEO) is a full-time
15employee if employed in the service of the taxpayer for
16consideration for at least 35 hours each week or who renders
17any other standard of service generally accepted by industry
18custom or practice as full-time employment to the taxpayer.
19    (e) This Section is exempt from the provisions of Section
20250.
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.".