Illinois General Assembly - Full Text of HB3318
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Full Text of HB3318  101st General Assembly



State of Illinois
2019 and 2020


Introduced , by Rep. Mark L. Walker


35 ILCS 5/229 new

    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.

LRB101 05873 HLH 50893 b






HB3318LRB101 05873 HLH 50893 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 5. The Illinois Income Tax Act is amended by adding
5Section 229 as follows:
6    (35 ILCS 5/229 new)
7    Sec. 229. Venture capital investment credit.
8    (a) Definitions. As used in this Section:
9    "Certified investment fund manager" means a business that
10is certified under subsection (e).
11    "Claimant" means an individual who files a claim for credit
12under this Section.
13    "Department" means the Department of Commerce and Economic
14Opportunity, unless otherwise specifically provided.
15    "Equity investment" means a purchase of an equity interest,
16or any other investment expenditure, in a qualified new
17business venture either directly or through a certified
18investment fund manager as determined by subsection (e).
19    "Qualified new business venture" means a business that is
20certified under subsection (d).
21    (b) Filing claims for credit. A claimant may claim as a
22credit against the tax imposed under subsections (a) and (b) of
23Section 201 of this Act an amount equal to 25% of the



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1claimant's equity investment made directly to a qualified new
2business venture in the taxable year, or made to a certified
3fund manager if the fund manager invests in a business
4certified under subsection (d).
5    (c) Limitations.
6        (1) The maximum amount of the credits that may be
7    claimed under this Section for all taxable years combined
8    is $50,000,000.
9        (2) The maximum amount of a claimant's investment that
10    may be used as the basis for a credit under this Section is
11    $500,000 for each investment made directly to a business
12    certified under subsection (d).
13        (3) If an investment for which a claimant claims a
14    credit under subsection (b) is held by the claimant for
15    less than one year, then the claimant shall pay to the
16    Department, in the manner prescribed by the Department, the
17    amount of the credit that the claimant received related to
18    the investment.
19        (4) Any credit allowed under this Section that is
20    unused in the year the credit is earned may be carried
21    forward to each of the 5 taxable years following the year
22    for which the credit is first computed until it is used.
23    This credit shall be applied first to the earliest year for
24    which there is a liability. If there is a credit under this
25    Section from more than one tax year that is available to
26    offset a liability, then the earliest credit arising under



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1    this Section shall be applied first.
2        (5) A partnership may elect to pass through to its
3    partners the credits to which the partnership is entitled
4    under this Section for the taxable year. A partner may use
5    the credit allocated to him or her under this paragraph
6    only against the tax imposed in subsections (a) and (b) of
7    Section 201 of this Act. If the partnership makes that
8    election, those credits shall be allocated among the
9    partners in the partnership in accordance with the rules
10    set forth in Section 704(b) of the Internal Revenue Code,
11    and the rules promulgated under that Section, and the
12    allocated amount of the credits shall be allowed to the
13    partners for that taxable year.
14    (d) Qualified new business ventures. The Department shall
15implement a program to certify businesses for purposes of this
16credit. A business desiring certification shall submit an
17application to the Department in each taxable year for which
18the business desires certification. Unless otherwise provided
19under the rules of the Department, a business may be certified
20under this subsection and may maintain that certification only
21if the business satisfies all of the following conditions:
22        (1) it has its headquarters in this State;
23        (2) at least 51% of the employees employed by the
24    business are employed in this State;
25        (3) it is engaged in, or has committed to engage in,
26    manufacturing, agriculture, or processing or assembling



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1    products and conducting research and development or
2    developing a new product or business process;
3        (4) it is not engaged in real estate development,
4    insurance, banking, lending, lobbying, political
5    consulting, professional services provided by attorneys,
6    accountants, business consultants, physicians, or health
7    care consultants, wholesale or retail trade, leisure,
8    hospitality, transportation, or construction;
9        (5) it has fewer than 100 employees;
10        (6) it has been in operation in this State for not more
11    than 7 consecutive years; and
12        (7) it has not received more than $1,000,000 in
13    investments that have qualified for tax credits under this
14    Section.
15    The Department shall maintain a list of certified
16businesses and shall permit public access to the lists through
17the Department's Internet website.
18    (e) Certified investment fund managers. The Department
19shall implement a program to certify investment fund managers
20for purposes of this Section. An investment fund manager
21desiring certification shall submit an application to the
22Department. In determining whether to certify an investment
23fund manager, the Department shall consider the investment fund
24manager's experience in managing venture capital funds, the
25past performance of investment funds managed by the applicant,
26the expected level of investment in the investment fund to be



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1managed by the applicant, and any other relevant factors. The
2Department may certify only investment fund managers that
3commit to placing investments in businesses certified under
4subsection (d). The Department shall maintain a list of
5certified investment fund managers and shall permit public
6access to the lists through the Department's Internet website.
7    (f) The Department shall notify the Department of Revenue
8of every certification issued under this Section and the date
9on which any such certification is revoked or expires.
10    (g) Annual report. Annually, no later than February 1, the
11Department shall submit a report to the General Assembly for
12distribution to legislators, listing all of the following
14        (1) the total amount of tax credits claimed under this
15    Section;
16        (2) the name of each business in which investments
17    qualifying for those tax credits were made, the amount of
18    the tax credits, and the amount of the investment; and
19        (3) any other information the Department considers
20    reasonable to include.
21    (h) Rules. The Department, in consultation with the
22Department of Revenue, shall adopt rules to administer this