102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB5817

 

Introduced 11/16/2022, by Rep. Michael J. Zalewski - Norine K. Hammond, Joe Sosnowski, Michael Halpin, Denyse Wang Stoneback, et al.

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/234 new

    Creates the Endow Illinois Tax Credit Act. Creates an income tax credit for taxpayers who provide an endowment gift to a permanent endowment fund. Provides that the amount of the credit is an amount equal to 50% of the endowment gift. Sets forth the aggregate amount of the credit. Provides that the Department of Revenue shall administer the credit. Provides that the Department of Revenue shall submit an annual report to the Governor and the General Assembly concerning the activities conducted under the Act during the previous calendar year. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.


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A BILL FOR

 

HB5817LRB102 29155 HLH 41097 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    "Consumer Price Index" means the index published by the
8Bureau of Labor Statistics of the United States Department of
9Labor that measures the average change in prices of goods and
10services purchased by all urban consumers, United States city
11average, all items, 1982-84 = 100.
12    "Department" means the Department of Revenue.
13    "Donor advised fund" has the meaning given to that term in
14subsection (d) of Section 4966 of the Internal Revenue Code of
151986.
16    "Endowment gift" means an irrevocable contribution to a
17permanent endowment fund held by a qualified community
18foundation.
19    "Permanent endowment fund" means a fund that (i) is held
20by a qualified community foundation, (ii) provides charitable
21assistance exclusively for the benefit of residents of the
22State or projects located in the State, (iii) is intended to
23exist in perpetuity, (iv) has an annual spending rate based on

 

 

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1the foundation spending policy, but not to exceed 7%, and (v)
2is not a donor advised fund.
3    "Qualified community foundation" means a community
4foundation or similar publicly supported organization
5described in Section 170 (b)(1)(A)(vi) of the Internal Revenue
6Code of 1986 that is organized or operating in this State and
7that substantially complies with the national standards for
8U.S. community foundations that are established by the
9National Council on Foundations, as determined by the
10Department.
 
11    Section 10. Tax credit awards.
12    (a) For taxable years ending on or after December 31,
132024, the Department shall award income tax credits to
14taxpayers who provide an endowment gift to a permanent
15endowment fund. The amount of the credit that may be awarded to
16a taxpayer by the Department under this Act is an amount equal
17to 50% of the endowment gift. A taxpayer that is a business
18entity is not eligible to receive a credit under this Act for
19the taxable year if the taxpayer's federal adjusted gross
20income for the previous taxable year exceeds the following:
21        (1) $10,000,000 if the taxable year for which the
22    credit is sought begins on or after January 1, 2024 and
23    begins prior to January 1, 2025;
24        (2) $25,000,000 if the taxable year for which the
25    credit is sought begins on or after January 1, 2025 and

 

 

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1    begins prior to January 1, 2026; or
2        (3) $50,000,000 if the taxable year for which the
3    credit is sought begins on or after January 1, 2026.
4    (b) No credit may be awarded under this Act for an
5endowment gift that does not exceed the greater of (i) $100 or
6(ii) the minimum contribution amount accepted by the permanent
7endowment fund by rule or policy of the qualified community
8foundation.
9    (c) The aggregate amount of all credits awarded by the
10Department under this Act may not exceed $10,000,000 in 2024,
11$25,000,000 in 2025, or $50,000,000 in 2026 and each calendar
12year thereafter. The aggregate amount of all credits that the
13Department may award to any single taxpayer under this Act in
14calendar year 2024 may not exceed $100,000 for single filers
15or $200,000 for spouses filing a joint return. In calendar
16year 2025 and each calendar year thereafter, the aggregate
17amount of all credits that the Department may award to any
18single taxpayer under this Act may not exceed the maximum
19credit amount authorized under this Act for single taxpayers
20in the immediately preceding calendar year, multiplied by the
21sum of one plus the percentage increase, if any, in the
22Consumer Price Index during the 12-month period ending in
23September of that preceding calendar year and rounded to the
24nearest $25,000. The aggregate amount of all credits that the
25Department may authorize in any calendar year based on
26endowment gifts to any specific community foundation may not

 

 

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1exceed 10% of the aggregate amount of all Endow Illinois
2credits authorized by the Department under this Act in that
3calendar year.
4    (d) If the Department receives applications for tax
5credits in excess of the amount available, then the
6applications must be prioritized by the date that the
7Department received them. If the number of applications
8exceeds the amount of annual tax credits available, then the
9Department must establish a wait list for the next year's
10allocation of tax credits, and applications must first be
11funded in the order listed on that wait list.
12    (e) To the extent possible, the Department shall award
13credits under this Act in a geographically equitable manner
14based on the service area and the population served by each
15qualified community foundation in the State.
 
16    Section 15. Applications for tax credits.
17    (a) The Department shall develop and make available a
18standardized application for the allocation of tax credits
19under this Act.
20    (b) Of the annual amount available for tax credits, 10%
21must be reserved for endowment gifts that do not exceed the
22small gift maximum set forth under this subsection. If the
23entire 10% that is reserved for permanent endowment gifts that
24do not exceed the small gift maximum is not allocated in any
25year, then the remaining amount is available in the following

 

 

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1years for endowment gifts that do not exceed the small gift
2maximum established by the Department for the calendar year in
3which the remaining amount is used. For the calendar year
4ending on December 31, 2024, the small gift maximum is
5$30,000. For subsequent calendar years, the small gift maximum
6is the small gift maximum for the immediately preceding
7calendar year, multiplied by the sum of one plus the
8percentage increase, if any, in the Consumer Price Index
9during the 12-month period ending in September of that
10immediately preceding calendar year and rounded to the nearest
11$100.
12    (c) The Department shall accept applications during the
13application period established by the Department by rule.
14Applications that are properly submitted during the
15application period shall be processed, and credits shall be
16awarded, within 90 days after the application is submitted.
17The Department must make public, by June 1 and by December 1 of
18each year, the total number of requests for tax credits and the
19total amount of requested tax credits that have been submitted
20and awarded during the calendar year.
 
21    Section 20. Annual report. By January 31 of each year, the
22Department must submit an annual report to the Governor and
23the General Assembly concerning the activities conducted under
24this Act during the previous calendar year. The report must
25include a detailed listing of tax credits authorized under

 

 

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1this Act by the Department.
 
2    Section 90. The Illinois Income Tax Act is amended by
3adding Section 234 as follows:
 
4    (35 ILCS 5/234 new)
5    Sec. 234. The Endow Illinois tax credit.
6    (a) For taxable years ending on or after December 31,
72024, each taxpayer for whom a tax credit has been authorized
8by the Department of Revenue under the Endow Illinois Tax
9Credit Act is entitled to a credit against the tax imposed
10under subsections (a) and (b) of Section 201 in an amount equal
11to the amount authorized under that Act.
12    (b) For partners, shareholders of Subchapter S
13corporations, and members of limited liability companies, if
14the liability company is treated as a partnership for purposes
15of federal and State income taxation, there is allowed a
16credit under this Section to be determined in accordance with
17the determination of income and distributive share of income
18under Sections 702 and 704 and Subchapter S of the Internal
19Revenue Code.
20    (c) The credit may not be carried back and may not reduce
21the taxpayer's liability to less than zero. If the amount of
22the credit exceeds the tax liability for the year, the excess
23may be carried forward and applied to the tax liability of the
245 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.