102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB1967

 

Introduced 2/17/2021, by Rep. Mark L. Walker

 

SYNOPSIS AS INTRODUCED:
 
20 ILCS 605/605-470 new
20 ILCS 655/5.4  from Ch. 67 1/2, par. 609
20 ILCS 655/8.1
30 ILCS 265/10
30 ILCS 265/11
30 ILCS 265/20
35 ILCS 5/220
35 ILCS 5/232 new

    Amends the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois. Provides that the Department of Commerce and Economic Opportunity shall provide on its website a central repository for new and existing businesses with specified business-related content. Amends the Illinois Enterprise Zone Act. Contains provisions concerning certification and decertification of Enterprise Zones. Amends the Illinois Income Tax Act. Makes changes concerning the angel investment credit. Provides for a credit for taxpayers who hire full-time employees to fill positions at a location in a county with fewer than 250,000 inhabitants. Amends the Technology Development Act. Removes a provision limiting investment in funds created by an Illinois venture capital firm. Provides that distributions from a TDA II-Recipient Fund, in an amount not to exceed the commitment amount and total distributions received, may be reinvested into a specified account without being counted against the 5% cap. Provides that specified moneys in the Technology Development Fund may be provided as grants to technology businesses in order to foster, accelerate, and scale technology innovation in Illinois. Modifies the term "technology business" to expand the meaning of technology oriented or emerging activity. Makes conforming changes. Effective immediately.


LRB102 12691 HLH 18030 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1967LRB102 12691 HLH 18030 b

1    AN ACT concerning State government.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Department of Commerce and Economic
5Opportunity Law of the Civil Administrative Code of Illinois
6is amended by adding Section 605-470 as follows:
 
7    (20 ILCS 605/605-470 new)
8    Sec. 605-470. Online central repository. The Department
9shall provide on its website a central repository for new and
10existing businesses that shall contain all permitting,
11licensing, and registration forms and documents needed to
12conduct business in Illinois, as well as content about how to
13start a business, industry-specific programming, connections
14to mentors, and referrals to investors. When submitting
15applications for tax credits administered by the Department,
16applicants may choose to allow the Department to share their
17contact information on the central repository. The Department
18may adopt rules necessary to implement this Section.
 
19    Section 10. The Illinois Enterprise Zone Act is amended by
20changing Sections 5.4 and 8.1 as follows:
 
21    (20 ILCS 655/5.4)  (from Ch. 67 1/2, par. 609)

 

 

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1    Sec. 5.4. Amendment and Decertification of Enterprise
2Zones.
3    (a) The terms of a certified enterprise zone designating
4ordinance may be amended to
5        (i) alter the boundaries of the Enterprise Zone, or
6        (ii) expand, limit or repeal tax incentives or
7    benefits provided in the ordinance, or
8        (iii) alter the termination date of the zone, or
9        (iv) make technical corrections in the enterprise zone
10    designating ordinance; but such amendment shall not be
11    effective unless the Department issues an amended
12    certificate for the Enterprise Zone, approving the amended
13    designating ordinance. Upon the adoption of any ordinance
14    amending or repealing the terms of a certified enterprise
15    zone designating ordinance, the municipality or county
16    shall promptly file with the Department an application for
17    approval thereof, containing substantially the same
18    information as required for an application under Section
19    5.1 insofar as material to the proposed changes. The
20    municipality or county must hold a public hearing on the
21    proposed changes as specified in Section 5 and, if the
22    amendment is to effectuate the limitation of tax
23    abatements under Section 5.4.1, then the public notice of
24    the hearing shall state that property that is in both the
25    enterprise zone and a redevelopment project area may not
26    receive tax abatements unless within 60 days after the

 

 

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1    adoption of the amendment to the designating ordinance the
2    municipality has determined that eligibility for tax
3    abatements has been established,
4        (v) include an area within another municipality or
5    county as part of the designated enterprise zone provided
6    the requirements of Section 4 are complied with, or
7        (vi) effectuate the limitation of tax abatements under
8    Section 5.4.1.
9    (b) The Department shall approve or disapprove a proposed
10amendment to a certified enterprise zone within 90 days of its
11receipt of the application from the municipality or county.
12The Department may not approve changes in a Zone which are not
13in conformity with this Act, as now or hereafter amended, or
14with other applicable laws. If the Department issues an
15amended certificate for an Enterprise Zone, the amended
16certificate, together with the amended zone designating
17ordinance, shall be filed, recorded and transmitted as
18provided in Section 5.3.
19    (c) An Enterprise Zone may be decertified by joint action
20of the Department and the designating county or municipality
21in accordance with this Section. The designating county or
22municipality shall conduct at least one public hearing within
23the zone prior to its adoption of an ordinance of
24de-designation. The mayor of the designating municipality or
25the chairman of the county board of the designating county
26shall execute a joint decertification agreement with the

 

 

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1Department. A decertification of an Enterprise Zone shall not
2become effective until at least 6 months after the execution
3of the decertification agreement, which shall be filed in the
4office of the Secretary of State.
5    (d) An Enterprise Zone may be decertified for cause by the
6Department in accordance with this Section. Prior to
7decertification: (1) the Department shall notify the chief
8elected official of the designating county or municipality in
9writing of the specific deficiencies which provide cause for
10decertification; (2) the Department shall place the
11designating county or municipality on probationary status for
12at least 6 months during which time corrective action may be
13achieved in the enterprise zone by the designating county or
14municipality; and, (3) the Department shall conduct at least
15one public hearing within the zone. If such corrective action
16is not achieved during the probationary period, the Department
17shall issue an amended certificate signed by the Director of
18the Department decertifying the enterprise zone, which
19certificate shall be filed in the office of the Secretary of
20State. A certified copy of the amended enterprise zone
21certificate, or a duplicate original thereof, shall be
22recorded in the office of recorder of the county in which the
23enterprise zone lies, and shall be provided to the chief
24elected official of the designating county or municipality.
25Decertification of an Enterprise Zone shall not become
26effective until 60 days after the date of filing.

 

 

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1    (d-5) The Department shall decertify any Enterprise Zone
2that fails to report any capital investment, job creation or
3retention, or State tax expenditures for 3 consecutive
4calendar years. Prior to decertification: (1) the Department
5shall notify the chief elected official of the designating
6county or municipality in writing of the specific deficiencies
7which provide cause for decertification; (2) the Department
8shall place the designating county or municipality on
9probationary status for at least 6 months during which time
10corrective action may be achieved in the Enterprise Zone by
11the designating county or municipality; and (3) the Department
12shall conduct at least one public hearing within the Zone. If
13such corrective action is not achieved during the probationary
14period, the Department shall issue an amended certificate
15signed by the Director of the Department decertifying the
16Enterprise Zone as of the scheduled termination date of the
17then-current designation. If the decertified Zone was approved
18and designated after the 102nd General Assembly and has been
19in existence for less than 15 years, such Zone shall not be
20eligible for an additional 10-year designation after the
21expiration date of the original Zone set forth in subsection
22(c) of Section 5.3. Further, if such corrective action is not
23achieved during the probationary period provided for in this
24Section, following such probationary period the Zone becomes
25available for a different area to compete for designation.
26    (e) In the event of a decertification, or an amendment

 

 

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1reducing the length of the term or the area of an Enterprise
2Zone or the adoption of an ordinance reducing or eliminating
3tax benefits in an Enterprise Zone, all benefits previously
4extended within the Zone pursuant to this Act or pursuant to
5any other Illinois law providing benefits specifically to or
6within Enterprise Zones shall remain in effect for the
7original stated term of the Enterprise Zone, with respect to
8business enterprises within the Zone on the effective date of
9such decertification or amendment, and with respect to
10individuals participating in urban homestead programs under
11this Act.
12    (f) Except as otherwise provided in Section 5.4.1, with
13respect to business enterprises (or expansions thereof) which
14are proposed or under development within a Zone at the time of
15a decertification or an amendment reducing the length of the
16term of the Zone, or excluding from the Zone area the site of
17the proposed enterprise, or an ordinance reducing or
18eliminating tax benefits in a Zone, such business enterprise
19shall be entitled to the benefits previously applicable within
20the Zone for the original stated term of the Zone, if the
21business enterprise establishes:
22        (i) that the proposed business enterprise or expansion
23    has been committed to be located within the Zone;
24        (ii) that substantial and binding financial
25    obligations have been made towards the development of such
26    enterprise; and

 

 

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1        (iii) that such commitments have been made in
2    reasonable reliance on the benefits and programs which
3    were to have been applicable to the enterprise by reason
4    of the Zone, including in the case of a reduction in term
5    of a zone, the original length of the term.
6    In declaratory judgment actions under this paragraph, the
7Department and the designating municipality or county shall be
8necessary parties defendant.
9(Source: P.A. 90-258, eff. 7-30-97.)
 
10    (20 ILCS 655/8.1)
11    Sec. 8.1. Accounting.
12    (a) Any business receiving tax incentives due to its
13location within an Enterprise Zone or its designation as a
14High Impact Business must annually report to the Department of
15Revenue information reasonably required by the Department of
16Revenue to enable the Department to verify and calculate the
17total Enterprise Zone or High Impact Business tax benefits for
18property taxes and taxes imposed by the State that are
19received by the business, broken down by incentive category
20and enterprise zone, if applicable. Reports will be due no
21later than May 31 of each year and shall cover the previous
22calendar year. The first report will be for the 2012 calendar
23year and will be due no later than May 31, 2013. Failure to
24report data may result in ineligibility to receive incentives.
25To the extent that a business receiving tax incentives has

 

 

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1obtained an Enterprise Zone Building Materials Exemption
2Certificate or a High Impact Business Building Materials
3Exemption Certificate, that business is required to report
4those building materials exemption benefits only under
5subsection (a-5) of this Section. No additional reporting for
6those building materials exemption benefits is required under
7this subsection (a). In addition, if the Department determines
8that 60% or more of the businesses receiving tax incentives
9because of their location within a particular Enterprise Zone
10failed to submit the information required under this
11subsection (a) to the Department in any calendar year, then
12the Enterprise Zone may be decertified by the Department. The
13Department, in consultation with the Department of Revenue, is
14authorized to adopt rules governing ineligibility to receive
15exemptions, including the length of ineligibility. Factors to
16be considered in determining whether a business is ineligible
17shall include, but are not limited to, prior compliance with
18the reporting requirements, cooperation in discontinuing and
19correcting violations, the extent of the violation, and
20whether the violation was willful or inadvertent.
21    (a-5) Each contractor or other entity that has been issued
22an Enterprise Zone Building Materials Exemption Certificate
23under Section 5k of the Retailers' Occupation Tax Act or a High
24Impact Business Building Materials Exemption Certificate under
25Section 5l of the Retailers' Occupation Tax Act shall annually
26report to the Department of Revenue the total value of the

 

 

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1Enterprise Zone or High Impact Business building materials
2exemption from State taxes. Reports shall contain information
3reasonably required by the Department of Revenue to enable it
4to verify and calculate the total tax benefits for taxes
5imposed by the State, and shall be broken down by Enterprise
6Zone. Reports are due no later than May 31 of each year and
7shall cover the previous calendar year. The first report will
8be for the 2013 calendar year and will be due no later than May
931, 2014. Failure to report data may result in revocation of
10the Enterprise Zone Building Materials Exemption Certificate
11or High Impact Business Building Materials Exemption
12Certificate issued to the contractor or other entity.
13    The Department of Revenue is authorized to adopt rules
14governing revocation determinations, including the length of
15revocation. Factors to be considered in revocations shall
16include, but are not limited to, prior compliance with the
17reporting requirements, cooperation in discontinuing and
18correcting violations, and whether the certificate was used
19unlawfully during the preceding year.
20    (b) Each person required to file a return under the Gas
21Revenue Tax Act, the Gas Use Tax Act, the Electricity Excise
22Tax Act, or the Telecommunications Excise Tax Act shall file,
23on or before May 31 of each year, a report with the Department
24of Revenue, in the manner and form required by the Department
25of Revenue, containing information reasonably required by the
26Department of Revenue to enable the Department of Revenue to

 

 

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1calculate the amount of the deduction for taxes imposed by the
2State that is taken under each Act, respectively, due to the
3location of a business in an Enterprise Zone or its
4designation as a High Impact Business. The report shall be
5itemized by business and the business location address.
6    (c) Employers shall report their job creation, retention,
7and capital investment numbers within the zone annually to the
8Department of Revenue no later than May 31 of each calendar
9year. High Impact Businesses shall report their job creation,
10retention, and capital investment numbers to the Department of
11Revenue no later than May 31 of each year.
12    (d) The Department of Revenue will aggregate and collect
13the tax, job, and capital investment data by Enterprise Zone
14and High Impact Business and report this information,
15formatted to exclude company-specific proprietary information,
16to the Department and the Board by August 1, 2013, and by
17August 1 of every calendar year thereafter. The Department
18will include this information in their required reports under
19Section 6 of this Act. The Board shall consider this
20information during the reviews required under subsection (d-5)
21of Section 5.4 of this Act and subsection (c) of Section 5.3 of
22this Act.
23    (e) The Department of Revenue, in its discretion, may
24require that the reports filed under this Section be submitted
25electronically.
26    (f) The Department of Revenue shall have the authority to

 

 

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1adopt rules as are reasonable and necessary to implement the
2provisions of this Section.
3(Source: P.A. 97-905, eff. 8-7-12; 98-109, eff. 7-25-13.)
 
4    Section 15. The Technology Development Act is amended by
5changing Sections 10, 11, and 20 as follows:
 
6    (30 ILCS 265/10)
7    Sec. 10. Technology Development Account.
8    (a) The State Treasurer may segregate a portion of the
9Treasurer's investment portfolio, that at no time shall be
10greater than 1% of the portfolio, in the Technology
11Development Account, an account that shall be maintained
12separately and apart from other moneys invested by the
13Treasurer. The Treasurer may make investments from the Account
14that help attract, assist, and retain quality technology
15businesses in Illinois. The earnings on the Account shall be
16accounted for separately from other investments made by the
17Treasurer.
18    (b) Moneys in the Account may be invested by the State
19Treasurer to provide venture capital to technology businesses
20seeking to locate, expand, or remain in Illinois by placing
21money with Illinois venture capital firms for investment by
22the venture capital firms in technology businesses. "Venture
23capital", as used in this Act, means equity financing that is
24provided for starting up, expanding, or relocating a company,

 

 

HB1967- 12 -LRB102 12691 HLH 18030 b

1or related purposes such as financing for seed capital,
2research and development, introduction of a product or process
3into the marketplace, or similar needs requiring risk capital.
4"Technology business", as used in this Act, means a company
5that has as its principal function the providing of services
6including computer, information transfer, communication,
7distribution, processing, administrative, laboratory,
8experimental, developmental, technical, testing services,
9manufacture of goods or materials, the processing of goods or
10materials by physical or chemical change, computer related
11activities, robotics, biological or pharmaceutical industrial
12activity, or technology oriented or emerging industrial
13activity, including, but not limited to, incubators,
14accelerators, innovation research, technology transfer, and
15educational programs that provide training, support, and other
16resources to current and prospective entrepreneurs. "Illinois
17venture capital firms", as used in this Act, means an entity
18that has a majority of its employees in Illinois or that has at
19least one managing partner domiciled in Illinois that has made
20significant capital investments in Illinois companies and that
21provides equity financing for starting up or expanding a
22company, or related purposes such as financing for seed
23capital, research and development, introduction of a product
24or process into the marketplace, or similar needs requiring
25risk capital.
26    (c) Any fund created by an Illinois venture capital firm

 

 

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1in which the State Treasurer places money pursuant to this Act
2shall be required by the State Treasurer to seek investments
3in technology businesses seeking to locate, expand, or remain
4in Illinois.
5    (d) (Blank). The investment of the State Treasurer in any
6fund created by an Illinois venture capital firm in which the
7State Treasurer places money pursuant to this Act shall not
8exceed 10% of the total investments in the fund.
9    (e) The State Treasurer shall not invest more than
10one-third of the Technology Development Account in any given
11calendar year.
12    (f) The Treasurer may deposit no more than 10% of the
13earnings of the investments in the Technology Development
14Account into the Technology Development Fund.
15(Source: P.A. 94-395, eff. 8-1-05.)
 
16    (30 ILCS 265/11)
17    Sec. 11. Technology Development Account II.
18    (a) Including the amount provided in Section 10 of this
19Act, the State Treasurer shall segregate a portion of the
20Treasurer's State investment portfolio, that at no time shall
21be greater than 5% of the portfolio, in the Technology
22Development Account IIa ("TDA IIa"), an account that shall be
23maintained separately and apart from other moneys invested by
24the Treasurer. Distributions from the investments in TDA IIa
25may be reinvested into TDA IIa without being counted against

 

 

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1the 5% cap. The aggregate investment in TDA IIa and the
2aggregate commitment of investment capital in a TDA
3II-Recipient Fund shall at no time be greater than 5% of the
4State's investment portfolio, which shall be calculated as:
5(1) the balance at the inception of the State's fiscal year; or
6(2) the average balance in the immediately preceding 5 fiscal
7years, whichever number is greater. Distributions from a TDA
8II-Recipient Fund, in an amount not to exceed the commitment
9amount and total distributions received, may be reinvested
10into TDA IIa without being counted against the 5% cap. The
11Treasurer may make investments from TDA IIa that help attract,
12assist, and retain quality technology businesses in Illinois.
13The earnings on TDA IIa shall be accounted for separately from
14other investments made by the Treasurer.
15    (b) The Treasurer may solicit proposals from entities to
16manage and be the General Partner of a separate fund
17("Technology Development Account IIb" or "TDA IIb") consisting
18of investments from private sector investors that must invest,
19at the direction of the general partner, in tandem with TDA IIa
20in a pro-rata portion. The Treasurer may enter into an
21agreement with the entity managing TDA IIb to advise on the
22investment strategy of TDA IIa and TDA IIb (collectively
23"Technology Development Account II" or "TDA II") and fulfill
24other mutually agreeable terms. Funds in TDA IIb shall be kept
25separate and apart from moneys in the State treasury.
26    (c) All or a portion of the moneys in TDA IIa shall be

 

 

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1invested by the State Treasurer to provide venture capital to
2technology businesses, including co-investments, seeking to
3locate, expand, or remain in Illinois by placing money with
4Illinois venture capital firms for investment by the venture
5capital firms in technology businesses. "Venture capital", as
6used in this Section, means equity financing that is provided
7for starting up, expanding, or relocating a company, or
8related purposes such as financing for seed capital, research
9and development, introduction of a product or process into the
10marketplace, or similar needs requiring risk capital.
11"Technology business", as used in this Section, means a
12company that has as its principal function the providing of
13services, including computer, information transfer,
14communication, distribution, processing, administrative,
15laboratory, experimental, developmental, technical, or testing
16services; manufacture of goods or materials; the processing of
17goods or materials by physical or chemical change; computer
18related activities; robotics, biological, or pharmaceutical
19industrial activities; or technology-oriented or emerging
20industrial activity, including, but not limited to,
21incubators, accelerators, innovation research, technology
22transfer, and educational programs that provide training,
23support, and other resources to current and prospective
24entrepreneurs. "Illinois venture capital firm", as used in
25this Section, means an entity that: (1) has a majority of its
26employees in Illinois (more than 50%) or that has at least one

 

 

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1general partner or principal domiciled in Illinois, and that
2(2) provides equity financing for starting up or expanding a
3company, or related purposes such as financing for seed
4capital, research and development, introduction of a product
5or process into the marketplace, or similar needs requiring
6risk capital. "Illinois venture capital firm" may also mean an
7entity that has a track record of identifying, evaluating, and
8investing in Illinois companies and that provides equity
9financing for starting up or expanding a company, or related
10purposes such as financing for seed capital, research and
11development, introduction of a product or process into the
12marketplace, or similar needs requiring risk capital. For
13purposes of this Section, "track record" means having made, on
14average, at least one investment in an Illinois company in
15each of its funds if the Illinois venture capital firm has
16multiple funds or at least 2 investments in Illinois companies
17if the Illinois venture capital firm has only one fund. In no
18case shall more than 15% of the capital in the TDA IIa be
19invested in firms based outside of Illinois.
20    (d) Any fund created by an Illinois venture capital firm
21in which the State Treasurer places money pursuant to this
22Section shall be required by the State Treasurer to seek
23investments in technology businesses seeking to locate,
24expand, or remain in Illinois. Any fund created by an Illinois
25venture capital firm in which the State Treasurer places money
26under this Section ("TDA II-Recipient Fund") shall invest a

 

 

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1minimum of twice (2x) the aggregate amount of investable
2capital that is received from the State Treasurer under this
3Section in Illinois companies during the life of the fund.
4"Illinois companies", as used in this Section, are companies
5that are headquartered or that otherwise have a significant
6presence in the State at the time of initial or follow-on
7investment. Investable capital is calculated as committed
8capital, as defined in the firm's applicable fund's governing
9documents, less related estimated fees and expenses to be
10incurred during the life of the fund. For the purposes of this
11subsection (d), "significant presence" means at least one
12physical office and one full-time employee within the
13geographic borders of this State.
14    Any TDA II-Recipient Fund shall also invest additional
15capital in Illinois companies during the life of the fund if,
16as determined by the fund's manager, the investment:
17        (1) is consistent with the firm's fiduciary
18    responsibility to its limited partners;
19        (2) is consistent with the fund manager's investment
20    strategy; and
21        (3) demonstrates the potential to create risk-adjusted
22    financial returns consistent with the fund manager's
23    investment goals.
24    In addition to any reporting requirements set forth in
25Section 10 of this Act, any TDA II-Recipient Fund shall report
26the following additional information to the Treasurer on a

 

 

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1quarterly or annual basis, as determined by the Treasurer, for
2all investments:
3        (1) the names of portfolio companies invested in
4    during the applicable investment period;
5        (2) the addresses of reported portfolio companies;
6        (3) the date of the initial (and follow-on)
7    investment;
8        (4) the cost of the investment;
9        (5) the current fair market value of the investment;
10        (6) for Illinois companies, the number of Illinois
11    employees on the investment date; and
12        (7) for Illinois companies, the current number of
13    Illinois employees.
14    If, as of the earlier to occur of (i) the fourth year of
15the investment period of any TDA II-Recipient Fund or (ii)
16when that TDA II-Recipient Fund has drawn more than 60% of the
17investable capital of all limited partners, that TDA
18II-Recipient Fund has failed to invest the minimum amount
19required under this subsection (d) in Illinois companies, then
20the Treasurer shall deliver written notice to the manager of
21that fund seeking compliance with the minimum amount
22requirement under this subsection (d). If, after 180 days of
23delivery of notice, the TDA II-Recipient Fund has still failed
24to invest the minimum amount required under this subsection
25(d) in Illinois companies, then the Treasurer may elect, in
26writing, to terminate any further commitment to make capital

 

 

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1contributions to that fund which otherwise would have been
2made under this Section.
3    (e) The Notwithstanding the limitation found in subsection
4(d) of Section 10 of this Act, the investment of the State
5Treasurer in any fund created by an Illinois venture capital
6firm in which the State Treasurer places money pursuant to
7this Section shall not exceed 15% of the total TDA IIa account
8balance.
9    (f) (Blank).
10    (g) The Treasurer may deposit no more than 10% of the
11earnings of the investments in the Technology Development
12Account IIa into the Technology Development Fund.
13(Source: P.A. 100-1081, eff. 8-24-18.)
 
14    (30 ILCS 265/20)
15    Sec. 20. Technology Development Fund. The Technology
16Development Fund is created as a special fund outside the
17State treasury with the State Treasurer as custodian. Moneys
18in the Fund may be used by the State Treasurer to pay expenses
19related to investments from the Technology Development
20Account. Moneys in the Fund in excess of those expenses may be
21provided as grants to Illinois schools to purchase computers
22and to upgrade technology, and to technology businesses in
23order to foster, accelerate, and scale technology innovation
24in Illinois in support of this Act.
25(Source: P.A. 94-395, eff. 8-1-05.)
 

 

 

HB1967- 20 -LRB102 12691 HLH 18030 b

1    Section 20. The Illinois Income Tax Act is amended by
2changing Section 220 and by adding Sections 232 and 233 as
3follows:
 
4    (35 ILCS 5/220)
5    Sec. 220. Angel investment credit.
6    (a) As used in this Section:
7    "Applicant" means a corporation, partnership, limited
8liability company, or a natural person that makes an
9investment in a qualified new business venture. The term
10"applicant" does not include (i) a corporation, partnership,
11limited liability company, or a natural person who has a
12direct or indirect ownership interest of at least 33% 51% in
13the profits, capital, or value of the qualified new business
14venture receiving the investment or (ii) a related member.
15    "Claimant" means an applicant certified by the Department
16who files a claim for a credit under this Section.
17    "Department" means the Department of Commerce and Economic
18Opportunity.
19    "Investment" means money (or its equivalent) given to a
20qualified new business venture, at a risk of loss, in
21consideration for an equity interest of the qualified new
22business venture. The Department may adopt rules to permit
23certain forms of contingent equity investments to be
24considered eligible for a tax credit under this Section.

 

 

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1    "Qualified new business venture" means a business that is
2registered with the Department under this Section.
3    "Related member" means a person that, with respect to the
4applicant, is any one of the following:
5        (1) An individual, if the individual and the members
6    of the individual's family (as defined in Section 318 of
7    the Internal Revenue Code) own directly, indirectly,
8    beneficially, or constructively, in the aggregate, at
9    least 50% of the value of the outstanding profits,
10    capital, stock, or other ownership interest in the
11    qualified new business venture that is the recipient of
12    the applicant's investment.
13        (2) A partnership, estate, or trust and any partner or
14    beneficiary, if the partnership, estate, or trust and its
15    partners or beneficiaries own directly, indirectly,
16    beneficially, or constructively, in the aggregate, at
17    least 50% of the profits, capital, stock, or other
18    ownership interest in the qualified new business venture
19    that is the recipient of the applicant's investment.
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    outstanding stock of the qualified new business venture
2    that is the recipient of the applicant's investment.
3        (4) A corporation and any party related to that
4    corporation in a manner that would require an attribution
5    of stock from the corporation to the party or from the
6    party to the corporation under the attribution rules of
7    Section 318 of the Internal Revenue Code, if the
8    corporation and all such related parties own, in the
9    aggregate, at least 50% of the profits, capital, stock, or
10    other ownership interest in the qualified new business
11    venture that is the recipient of the applicant's
12    investment.
13        (5) A person to or from whom there is attribution of
14    ownership of stock in the qualified new business venture
15    that is the recipient of the applicant's investment in
16    accordance with Section 1563(e) of the Internal Revenue
17    Code, except that for purposes of determining whether a
18    person is a related member under this paragraph, "20%"
19    shall be substituted for "5%" whenever "5%" appears in
20    Section 1563(e) of the Internal Revenue Code.
21    "Social equity business" means a business that is a
22qualified social equity applicant, as defined in Section 1-10
23of the Cannabis Regulation and Tax Act.
24    (b) For taxable years beginning after December 31, 2010,
25and ending on or before December 31, 2021, subject to the
26limitations provided in this Section, a claimant may claim, as

 

 

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1a credit against the tax imposed under subsections (a) and (b)
2of Section 201 of this Act, an amount equal to 25% of the
3claimant's investment made directly in a qualified new
4business venture. However, if the investment is made in: (1) a
5qualified new business venture that is minority-owned,
6women-owned, or is a business owned a person with a disability
7(as those terms are used and defined in the Business
8Enterprise for Minorities, Women, and Persons with
9Disabilities Act); or (2) a qualified new business venture in
10which the principal place of business is located in a county
11with a population of not more than 250,000, then the amount of
12the credit is 35% of the claimant's investment made directly
13in a qualified new business venture. In order for an
14investment in a qualified new business venture to be eligible
15for tax credits, the business must have applied for and
16received certification under subsection (e) for the taxable
17year in which the investment was made prior to the date on
18which the investment was made. The credit under this Section
19may not exceed the taxpayer's Illinois income tax liability
20for the taxable year. If the amount of the credit exceeds the
21tax liability for the year, the excess may be carried forward
22and applied to the tax liability of the 5 taxable years
23following the excess credit year. The credit shall be applied
24to the earliest year for which there is a tax liability. If
25there are credits from more than one tax year that are
26available to offset a liability, the earlier credit shall be

 

 

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1applied first. In the case of a partnership or Subchapter S
2Corporation, the credit is allowed to the partners or
3shareholders in accordance with the determination of income
4and distributive share of income under Sections 702 and 704
5and Subchapter S of the Internal Revenue Code.
6    (c) The minimum amount an applicant must invest in any
7single qualified new business venture in order to be eligible
8for a credit under this Section is $10,000. The maximum amount
9of an applicant's total investment made in any single
10qualified new business venture that may be used as the basis
11for a credit under this Section is $1,000,000 $2,000,000.
12    (d) The Department shall implement a program to certify an
13applicant for an angel investment credit. Upon satisfactory
14review, the Department shall issue a tax credit certificate
15stating the amount of the tax credit to which the applicant is
16entitled. The Department shall annually certify that: (i) each
17qualified new business venture that receives an angel
18investment under this Section has maintained a minimum
19employment threshold, as defined by rule, in the State (and
20continues to maintain a minimum employment threshold in the
21State for a period of no less than 3 years from the issue date
22of the last tax credit certificate issued by the Department
23with respect to such business pursuant to this Section); and
24(ii) the claimant's investment has been made and remains,
25except in the event of a qualifying liquidity event, in the
26qualified new business venture for no less than 3 years.

 

 

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1    If an investment for which a claimant is allowed a credit
2under subsection (b) is held by the claimant for less than 3
3years, other than as a result of a permitted sale of the
4investment to person who is not a related member, the claimant
5shall pay to the Department of Revenue, in the manner
6prescribed by the Department of Revenue, the aggregate amount
7of the disqualified credits that the claimant received related
8to the subject investment.
9    If the Department determines that a qualified new business
10venture failed to maintain a minimum employment threshold in
11the State through the date which is 3 years from the issue date
12of the last tax credit certificate issued by the Department
13with respect to the subject business pursuant to this Section,
14the claimant or claimants shall pay to the Department of
15Revenue, in the manner prescribed by the Department of
16Revenue, the aggregate amount of the disqualified credits that
17claimant or claimants received related to investments in that
18business.
19    (e) The Department shall implement a program to register
20qualified new business ventures for purposes of this Section.
21A business desiring registration under this Section shall be
22required to submit a full and complete application to the
23Department. A submitted application shall be effective only
24for the taxable year in which it is submitted, and a business
25desiring registration under this Section shall be required to
26submit a separate application in and for each taxable year for

 

 

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1which the business desires registration. Further, if at any
2time prior to the acceptance of an application for
3registration under this Section by the Department one or more
4events occurs which makes the information provided in that
5application materially false or incomplete (in whole or in
6part), the business shall promptly notify the Department of
7the same. Any failure of a business to promptly provide the
8foregoing information to the Department may, at the discretion
9of the Department, result in a revocation of a previously
10approved application for that business, or disqualification of
11the business from future registration under this Section, or
12both. The Department may register the business only if all of
13the following conditions are satisfied:
14        (1) it has its principal place of business in this
15    State;
16        (2) at least 51% of the employees employed by the
17    business are employed in this State;
18        (3) the business has the potential for increasing jobs
19    in this State, increasing capital investment in this
20    State, or both, as determined by the Department, and any
21    either of the following apply:
22            (A) it is principally engaged in innovation in any
23        of the following: manufacturing; biotechnology;
24        nanotechnology; communications; agricultural
25        sciences; clean energy creation or storage technology;
26        processing or assembling products, including medical

 

 

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1        devices, pharmaceuticals, computer software, computer
2        hardware, semiconductors, other innovative technology
3        products, or other products that are produced using
4        manufacturing methods that are enabled by applying
5        proprietary technology; or providing services that are
6        enabled by applying proprietary technology; or
7            (B) it is undertaking pre-commercialization
8        activity related to proprietary technology that
9        includes conducting research, developing a new product
10        or business process, or developing a service that is
11        principally reliant on applying proprietary
12        technology; or
13            (C) the business is a social equity business and
14        is engaged in innovation in the field of cannabis
15        cultivation, extraction, processing, distribution,
16        infusion, or dispensing, or is undertaking
17        pre-commercialization activity within the adult use
18        cannabis industry related to proprietary technology
19        that includes conducting research, developing a new
20        product or business process, or developing a service
21        that is principally reliant on applying proprietary
22        technology;
23        (4) it is not principally engaged in real estate
24    development, insurance, banking, lending, lobbying,
25    political consulting, professional services provided by
26    attorneys, accountants, business consultants, physicians,

 

 

HB1967- 28 -LRB102 12691 HLH 18030 b

1    or health care consultants, wholesale or retail trade,
2    leisure, hospitality, transportation, or construction,
3    except construction of power production plants that derive
4    energy from a renewable energy resource, as defined in
5    Section 1 of the Illinois Power Agency Act; however, the
6    restrictions in this Section relating to wholesale or
7    retail trade and transportation shall not apply to social
8    equity businesses;
9        (5) at the time it is first certified:
10            (A) it has fewer than 100 employees;
11            (B) it has been in operation in Illinois for not
12        more than 10 consecutive years prior to the year of
13        certification; and
14            (C) it has received not more than $5,000,000
15        $10,000,000 in aggregate investments;
16        (5.1) it agrees to maintain a minimum employment
17    threshold in the State of Illinois prior to the date which
18    is 3 years from the issue date of the last tax credit
19    certificate issued by the Department with respect to that
20    business pursuant to this Section;
21        (6) (blank); and
22        (7) it has received not more than $2,000,000
23    $4,000,000 in investments that qualified for tax credits
24    under this Section.
25    (f) The Department, in consultation with the Department of
26Revenue, shall adopt rules to administer this Section. The

 

 

HB1967- 29 -LRB102 12691 HLH 18030 b

1aggregate amount of the tax credits that may be claimed under
2this Section for investments made in qualified new business
3ventures shall be limited at $10,000,000 per calendar year, of
4which $1,500,000 $500,000 shall be reserved for investments
5made in qualified new business ventures which are
6minority-owned businesses, women-owned businesses, or
7businesses owned by a person with a disability (as those terms
8are used and defined in the Business Enterprise for
9Minorities, Women, and Persons with Disabilities Act), and an
10additional $1,500,000 $500,000 shall be reserved for
11investments made in qualified new business ventures with their
12principal place of business in counties with a population of
13not more than 250,000. The foregoing annual allowable amounts
14shall be allocated by the Department, on a per calendar
15quarter basis and prior to the commencement of each calendar
16year, in such proportion as determined by the Department,
17provided that: (i) the amount initially allocated by the
18Department for any one calendar quarter shall not exceed 35%
19of the total allowable amount; (ii) any portion of the
20allocated allowable amount remaining unused as of the end of
21any of the first 3 calendar quarters of a given calendar year
22shall be rolled into, and added to, the total allocated amount
23for the next available calendar quarter; and (iii) the
24reservation of tax credits for investments in minority-owned
25businesses, women-owned businesses, businesses owned by a
26person with a disability, and in businesses in counties with a

 

 

HB1967- 30 -LRB102 12691 HLH 18030 b

1population of not more than 250,000 is limited to the first 3
2calendar quarters of a given calendar year, after which they
3may be claimed by investors in any qualified new business
4venture.
5    (g) A claimant may not sell or otherwise transfer a credit
6awarded under this Section to another person.
7    (h) On or before March 1 of each year, the Department shall
8report to the Governor and to the General Assembly on the tax
9credit certificates awarded under this Section for the prior
10calendar year.
11        (1) This report must include, for each tax credit
12    certificate awarded:
13            (A) the name of the claimant and the amount of
14        credit awarded or allocated to that claimant;
15            (B) the name and address (including the county) of
16        the qualified new business venture that received the
17        investment giving rise to the credit, the North
18        American Industry Classification System (NAICS) code
19        applicable to that qualified new business venture, and
20        the number of employees of the qualified new business
21        venture; and
22            (C) the date of approval by the Department of each
23        claimant's tax credit certificate.
24        (2) The report must also include:
25            (A) the total number of applicants and the total
26        number of claimants, including the amount of each tax

 

 

HB1967- 31 -LRB102 12691 HLH 18030 b

1        credit certificate awarded to a claimant under this
2        Section in the prior calendar year;
3            (B) the total number of applications from
4        businesses seeking registration under this Section,
5        the total number of new qualified business ventures
6        registered by the Department, and the aggregate amount
7        of investment upon which tax credit certificates were
8        issued in the prior calendar year; and
9            (C) the total amount of tax credit certificates
10        sought by applicants, the amount of each tax credit
11        certificate issued to a claimant, the aggregate amount
12        of all tax credit certificates issued in the prior
13        calendar year and the aggregate amount of tax credit
14        certificates issued as authorized under this Section
15        for all calendar years.
16    (i) For each business seeking registration under this
17Section after December 31, 2016, the Department shall require
18the business to include in its application the North American
19Industry Classification System (NAICS) code applicable to the
20business and the number of employees of the business at the
21time of application. Each business registered by the
22Department as a qualified new business venture that receives
23an investment giving rise to the issuance of a tax credit
24certificate pursuant to this Section shall, for each of the 3
25years following the issue date of the last tax credit
26certificate issued by the Department with respect to such

 

 

HB1967- 32 -LRB102 12691 HLH 18030 b

1business pursuant to this Section, report to the Department
2the following:
3        (1) the number of employees and the location at which
4    those employees are employed, both as of the end of each
5    year;
6        (2) the amount of additional new capital investment
7    raised as of the end of each year, if any; and
8        (3) the terms of any liquidity event occurring during
9    such year; for the purposes of this Section, a "liquidity
10    event" means any event that would be considered an exit
11    for an illiquid investment, including any event that
12    allows the equity holders of the business (or any material
13    portion thereof) to cash out some or all of their
14    respective equity interests.
15(Source: P.A. 100-328, eff. 1-1-18; 100-686, eff. 1-1-19;
16100-863, eff. 8-14-18; 101-81, eff. 7-12-19.)
 
17    (35 ILCS 5/232 new)
18    Sec. 232. Credit for full-time employees in a county with
19fewer than 250,000 inhabitants.
20    (a) For taxable years beginning on or after January 1,
212021, each taxpayer that hires a full-time employee to fill a
22position at a location in a county with fewer than 250,000
23inhabitants is entitled to a credit against the taxes imposed
24by subsections (a) and (b) of Section 201 of this Act in an
25amount not to exceed $5,000 per eligible employee in any

 

 

HB1967- 33 -LRB102 12691 HLH 18030 b

1taxable year. The credit may be taken for the taxable year in
2which the employee is hired and for the next taxable year if
3the employee remains employed with that taxpayer in the next
4taxable year. The amount of the credit shall be $5,000 in each
5taxable year, multiplied by a fraction the numerator of which
6is the number of days the employee is employed by the taxpayer
7during the taxable year and the denominator of which is 365.
8    (b) For partners, shareholders of Subchapter S
9corporations, and owners of limited liability companies, if
10the liability company is treated as a partnership for purposes
11of federal and State income taxation, there shall be allowed a
12credit under this Section to be determined in accordance with
13the determination of income and distributive share of income
14under Sections 702 and 704 and Subchapter S of the Internal
15Revenue Code.
16    (c) In no event shall a credit under this Section reduce
17the taxpayer's liability to less than zero. If the amount of
18the credit exceeds the tax liability for the year, the excess
19may be carried forward and applied to the tax liability of the
205 taxable years following the excess credit year. The tax
21credit shall be applied to the earliest year for which there is
22a tax liability. If there are credits for more than one year
23that are available to offset a liability, the earlier credit
24shall be applied first.
25    (d) As used in this Section, "full-time employee" means an
26individual who is employed for consideration for at least 35

 

 

HB1967- 34 -LRB102 12691 HLH 18030 b

1hours each week or who renders any other standard of service
2generally accepted by industry custom or practice as full-time
3employment. An individual for whom a W-2 is issued by a
4Professional Employer Organization (PEO) is a full-time
5employee if employed in the service of the taxpayer for
6consideration for at least 35 hours each week or who renders
7any other standard of service generally accepted by industry
8custom or practice as full-time employment to the taxpayer.
9    (e) This Section is exempt from the provisions of Section
10250.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.