Full Text of HB3318 101st General Assembly
HB3318 101ST GENERAL ASSEMBLY
101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
Introduced , by Rep. Mark L. Walker
SYNOPSIS AS INTRODUCED:
Amends the Illinois Income Tax Act. Provides for a credit in an amount
equal to 25% of the taxpayer's equity investment in a qualified new
business venture, including investments made through a certified fund
manager. Sets forth limitations on the credit.
|FISCAL NOTE ACT MAY APPLY|
A BILL FOR
|HB3318||LRB101 05873 HLH 50893 b|
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
The Illinois Income Tax Act is amended by adding
Section 229 as follows:
(35 ILCS 5/229 new)
Venture capital investment credit.
(a) Definitions. As used in this Section:
"Certified investment fund manager" means a business that
is certified under subsection (e).
"Claimant" means an individual who files a claim for credit
under this Section.
"Department" means the Department of Commerce and Economic
Opportunity, unless otherwise specifically provided.
"Equity investment" means a purchase of an equity interest,
or any other investment expenditure, in a qualified new
business venture either directly or through a certified
investment fund manager as determined by subsection (e).
"Qualified new business venture" means a business that is
certified under subsection (d).
(b) Filing claims for credit. A claimant may claim as a
credit against the tax imposed under subsections (a) and (b) of
Section 201 of this Act an amount equal to 25% of the
|HB3318||- 2 -||LRB101 05873 HLH 50893 b|
claimant's equity investment made directly to a qualified new
business venture in the taxable year, or made to a certified
fund manager if the fund manager invests in a business
certified under subsection (d).
(1) The maximum amount of the credits that may be
claimed under this Section for all taxable years combined
(2) The maximum amount of a claimant's investment that
may be used as the basis for a credit under this Section is
$500,000 for each investment made directly to a business
certified under subsection (d).
(3) If an investment for which a claimant claims a
credit under subsection (b) is held by the claimant for
less than one year, then the claimant shall pay to the
Department, in the manner prescribed by the Department, the
amount of the credit that the claimant received related to
(4) Any credit allowed under this Section that is
unused in the year the credit is earned may be carried
forward to each of the 5 taxable years following the year
for which the credit is first computed until it is used.
This credit shall be applied first to the earliest year for
which there is a liability. If there is a credit under this
Section from more than one tax year that is available to
offset a liability, then the earliest credit arising under
|HB3318||- 3 -||LRB101 05873 HLH 50893 b|
this Section shall be applied first.
(5) A partnership may elect to pass through to its
partners the credits to which the partnership is entitled
under this Section for the taxable year. A partner may use
the credit allocated to him or her under this paragraph
only against the tax imposed in subsections (a) and (b) of
Section 201 of this Act. If the
partnership makes that
election, those credits shall be allocated among the
partners in the partnership in accordance with the rules
set forth in Section 704(b) of the Internal Revenue Code,
and the rules promulgated under that Section, and the
allocated amount of the credits shall be allowed to the
partners for that taxable year.
(d) Qualified new business ventures. The Department shall
implement a program to certify businesses for purposes of this
credit. A business desiring certification shall submit an
application to the Department in each taxable year for which
the business desires certification. Unless otherwise provided
under the rules of the Department, a business may be certified
under this subsection and may maintain that certification only
if the business satisfies all of the following conditions:
(1) it has its headquarters in this State;
(2) at least 51% of the employees employed by the
business are employed in this State;
(3) it is engaged in, or has committed to engage in,
manufacturing, agriculture, or processing or assembling
|HB3318||- 4 -||LRB101 05873 HLH 50893 b|
products and conducting research and development or
developing a new product or business process;
(4) it is not engaged in real estate development,
insurance, banking, lending, lobbying, political
consulting, professional services provided by attorneys,
accountants, business consultants, physicians, or health
care consultants, wholesale or retail trade, leisure,
hospitality, transportation, or construction;
(5) it has fewer than 100 employees;
(6) it has been in operation in this State for not more
than 7 consecutive years; and
(7) it has not received more than $1,000,000 in
investments that have qualified for tax credits under this
The Department shall maintain a list of certified
businesses and shall permit public access to the lists through
the Department's Internet website.
(e) Certified investment fund managers. The Department
shall implement a program to certify investment fund managers
for purposes of this Section. An investment fund manager
desiring certification shall submit an application to the
Department. In determining whether to certify an investment
fund manager, the Department shall consider the investment fund
manager's experience in managing venture capital funds, the
past performance of investment funds managed by the applicant,
the expected level of investment in the investment fund to be
|HB3318||- 5 -||LRB101 05873 HLH 50893 b|
managed by the applicant, and any other relevant factors. The
Department may certify only investment fund managers that
commit to placing investments in businesses certified under
subsection (d). The Department shall maintain a list of
certified investment fund managers and shall permit public
access to the lists through the Department's Internet website.
(f) The Department shall notify the Department of Revenue
of every certification issued under this Section and the date
on which any such certification is revoked or expires.
(g) Annual report. Annually, no later than February 1, the
Department shall submit a report to the General Assembly for
distribution to legislators, listing all of the following
(1) the total amount of tax credits claimed under this
(2) the name of each business in which investments
qualifying for those tax credits were made, the amount of
the tax credits, and the amount of the investment; and
(3) any other information the Department considers
reasonable to include.
(h) Rules. The Department, in consultation with the
Department of Revenue, shall adopt rules to administer this