Full Text of SB3710 96th General Assembly
SB3710ham002 96TH GENERAL ASSEMBLY
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Rep. Barbara Flynn Currie
Filed: 5/7/2010
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| AMENDMENT TO SENATE BILL 3710
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| AMENDMENT NO. ______. Amend Senate Bill 3710, AS AMENDED, | 3 |
| by replacing everything after the enacting clause with the | 4 |
| following:
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| "Section 5. The New Markets Development Program Act is | 6 |
| amended by changing Sections 20 and 25 as follows: | 7 |
| (20 ILCS 663/20)
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| Sec. 20. Annual cap on credits. The Department shall limit | 9 |
| the monetary amount of qualified equity investments permitted | 10 |
| under this Act to a level necessary to limit tax credit use at | 11 |
| no more than $20,000,000 $10,000,000 of tax credits in any | 12 |
| fiscal year. This limitation on qualified equity investments | 13 |
| shall be based on the anticipated use of credits without regard | 14 |
| to the potential for taxpayers to carry forward tax credits to | 15 |
| later tax years.
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| (Source: P.A. 95-1024, eff. 12-31-08.) |
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| (20 ILCS 663/25)
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| Sec. 25. Certification of qualified equity investments. | 3 |
| (a) A qualified community development entity that seeks to | 4 |
| have an equity investment or long-term debt security designated | 5 |
| as a qualified equity investment and eligible for tax credits | 6 |
| under this Section shall apply to the Department. The qualified | 7 |
| community development entity must submit an application on a | 8 |
| form that the Department provides that includes: | 9 |
| (1) The name, address, tax identification number of the | 10 |
| entity, and evidence of the entity's certification as a | 11 |
| qualified community development entity. | 12 |
| (2) A copy of the allocation agreement executed by the | 13 |
| entity, or its controlling entity, and the Community | 14 |
| Development Financial Institutions Fund. | 15 |
| (3) A certificate executed by an executive officer of | 16 |
| the entity attesting that the allocation agreement remains | 17 |
| in effect and has not been revoked or cancelled by the | 18 |
| Community Development Financial Institutions Fund. | 19 |
| (4) A description of the proposed amount, structure, | 20 |
| and purchaser of the equity investment or long-term debt | 21 |
| security. | 22 |
| (5) The name and tax identification number of any | 23 |
| taxpayer eligible to utilize tax credits earned as a result | 24 |
| of the issuance of the qualified equity investment. | 25 |
| (6) Information regarding the proposed use of proceeds |
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| from the issuance of the qualified equity investment. | 2 |
| (7) A nonrefundable application fee of $5,000. This fee | 3 |
| shall be paid to the Department and shall be required of | 4 |
| each application submitted. | 5 |
| (b) Within 30 days after receipt of a completed application | 6 |
| containing the information necessary for the Department to | 7 |
| certify a potential qualified equity investment, including the | 8 |
| payment of the application fee, the Department shall grant or | 9 |
| deny the application in full or in part. If the Department | 10 |
| denies any part of the application, it shall inform the | 11 |
| qualified community development entity of the grounds for the | 12 |
| denial. If the qualified community development entity provides | 13 |
| any additional information required by the Department or | 14 |
| otherwise completes its application within 15 days of the | 15 |
| notice of denial, the application shall be considered completed | 16 |
| as of the original date of submission. If the qualified | 17 |
| community development entity fails to provide the information | 18 |
| or complete its application within the 15-day period, the | 19 |
| application remains denied and must be resubmitted in full with | 20 |
| a new submission date. | 21 |
| (c) If the application is deemed complete, the Department | 22 |
| shall certify the proposed equity investment or long-term debt | 23 |
| security as a qualified equity investment that is eligible for | 24 |
| tax credits under this Section, subject to the limitations | 25 |
| contained in Section 20. The Department shall provide written | 26 |
| notice of the certification to the qualified community |
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| development entity. The notice shall include the names of those | 2 |
| taxpayers who are eligible to utilize the credits and their | 3 |
| respective credit amounts. If the names of the taxpayers who | 4 |
| are eligible to utilize the credits change due to a transfer of | 5 |
| a qualified equity investment or a change in an allocation | 6 |
| pursuant to Section 15, the qualified community development | 7 |
| entity shall notify the Department of such change. | 8 |
| (d) The Department shall certify qualified equity | 9 |
| investments in the order applications are received by the | 10 |
| Department. Applications received on the same day shall be | 11 |
| deemed to have been received simultaneously. For applications | 12 |
| received on the same day and deemed complete, the Department | 13 |
| shall certify, consistent with remaining tax credit capacity, | 14 |
| qualified equity investments in proportionate percentages | 15 |
| based upon the ratio of the amount of qualified equity | 16 |
| investment requested in an application to the total amount of | 17 |
| qualified equity investments requested in all applications | 18 |
| received on the same day. | 19 |
| (e) Once the Department has certified qualified equity | 20 |
| investments that, on a cumulative basis, are eligible for | 21 |
| $20,000,000 $10,000,000 in tax credits, the Department may not | 22 |
| certify any more qualified equity investments. If a pending | 23 |
| request cannot be fully certified, the Department shall certify | 24 |
| the portion that may be certified unless the qualified | 25 |
| community development entity elects to withdraw its request | 26 |
| rather than receive partial credit. |
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| (f) Within 30 days after receiving notice of certification, | 2 |
| the qualified community development entity shall issue the | 3 |
| qualified equity investment and receive cash in the amount of | 4 |
| the certified amount. The qualified community development | 5 |
| entity must provide the Department with evidence of the receipt | 6 |
| of the cash investment within 10 business days after receipt. | 7 |
| If the qualified community development entity does not receive | 8 |
| the cash investment and issue the qualified equity investment | 9 |
| within 30 days following receipt of the certification notice, | 10 |
| the certification shall lapse and the entity may not issue the | 11 |
| qualified equity investment without reapplying to the | 12 |
| Department for certification. A certification that lapses | 13 |
| reverts back to the Department and may be reissued only in | 14 |
| accordance with the application process outline in this Section | 15 |
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| (Source: P.A. 95-1024, eff. 12-31-08.) | 17 |
| Section 10. The Illinois Income Tax Act is amended by | 18 |
| adding Section 220 as follows: | 19 |
| (35 ILCS 5/220 new) | 20 |
| Sec. 220. Angel investment credit. | 21 |
| (a) As used in this Section: | 22 |
| "Applicant" means a corporation, partnership, limited | 23 |
| liability company, or a natural person that makes an investment | 24 |
| in a qualified new business venture. The term "applicant" does |
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| not include a corporation, partnership, limited liability | 2 |
| company, or a natural person who has a direct or indirect | 3 |
| ownership interest of at least 51% in the profits, capital, or | 4 |
| value of the investment or a related member. | 5 |
| "Claimant" means a applicant certified by the Department | 6 |
| who files a claim for a credit under this Section. | 7 |
| "Department" means the Department of Commerce and Economic | 8 |
| Opportunity. | 9 |
| "Qualified new business venture" means a business that is | 10 |
| registered with the Department under this Section. | 11 |
| "Related member" means a person that, with respect to the
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| investment, is any one of the following, | 13 |
| (1) An individual, if the individual and the members of | 14 |
| the individual's family (as defined in Section 318 of the | 15 |
| Internal Revenue Code) own directly, indirectly,
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| beneficially, or constructively, in the aggregate, at | 17 |
| least 50% of the value of the outstanding profits, capital, | 18 |
| stock, or other ownership interest in the applicant. | 19 |
| (2) A partnership, estate, or trust and any partner or | 20 |
| beneficiary, if the partnership, estate, or trust and its | 21 |
| partners or beneficiaries own directly, indirectly, | 22 |
| beneficially, or constructively, in the aggregate, at | 23 |
| least 50% of the profits, capital, stock, or other | 24 |
| ownership interest in the applicant. | 25 |
| (3) A corporation, and any party related to the | 26 |
| corporation in a manner that would require an attribution |
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| of stock from the corporation under the attribution rules
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| of Section 318 of the Internal Revenue Code, if the | 3 |
| applicant and any other related member own, in the | 4 |
| aggregate, directly, indirectly, beneficially, or | 5 |
| constructively, at least 50% of the value of the | 6 |
| corporation's outstanding stock. | 7 |
| (4) A corporation and any party related to that | 8 |
| corporation in a manner that would require an attribution | 9 |
| of stock from the corporation to the party or from the
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| party to the corporation under the attribution rules of | 11 |
| Section 318 of the Internal Revenue Code, if the | 12 |
| corporation and all such related parties own, in the | 13 |
| aggregate, at least 50% of the profits, capital, stock, or | 14 |
| other ownership interest in the applicant. | 15 |
| (5) A person to or from whom there is attribution of | 16 |
| stock ownership in accordance with Section 1563(e) of the | 17 |
| Internal Revenue Code, except that for purposes of | 18 |
| determining whether a person is a related member under this | 19 |
| paragraph, "20%" shall be substituted for "5%" whenever | 20 |
| "5%" appears in Section 1563(e) of the Internal Revenue | 21 |
| Code. | 22 |
| (b) For taxable years beginning after December 31, 2010, | 23 |
| and ending on or before December 31, 2016, subject to the | 24 |
| limitations provided in this Section, a claimant may claim, as | 25 |
| a credit against the tax imposed under subsections (a) and (b) | 26 |
| of Section 201 of this Act, an amount equal to 25% of the |
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| claimant's investment made directly in a qualified new business | 2 |
| venture. The credit under this Section may not exceed the | 3 |
| taxpayer's Illinois income tax liability for the taxable year. | 4 |
| If the amount of the credit exceeds the tax liability for the | 5 |
| year, the excess may be carried forward and applied to the tax | 6 |
| liability of the 5 taxable years following the excess credit | 7 |
| year. The credit shall be applied to the earliest year for | 8 |
| which there is a tax liability. If there are credits from more | 9 |
| than one tax year that are available to offset a liability, the | 10 |
| earlier credit shall be applied first. In the case of a | 11 |
| partnership or Subchapter S Corporation, the credit is allowed | 12 |
| to the partners or shareholders in accordance with the | 13 |
| determination of income and distributive share of income under | 14 |
| Sections 702 and 704 and Subchapter S of the Internal Revenue | 15 |
| Code. | 16 |
| (c) The maximum amount of an applicant's investment that | 17 |
| may be used as the basis for a credit under this Section is | 18 |
| $2,000,000 for each investment made directly in a qualified new | 19 |
| business venture. | 20 |
| (d) The Department shall implement a program to certify an | 21 |
| applicant for an angel investment credit. Upon satisfactory | 22 |
| review, the Department shall issue a tax credit certificate | 23 |
| stating the amount of the tax credit to which the applicant is | 24 |
| entitled. The Department shall annually certify that the | 25 |
| claimant's investment has been made and remains in the | 26 |
| qualified new business venture for no less than 3 years. If an |
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| investment for which a claimant is allowed a credit under | 2 |
| subsection (b) is held by the claimant for less than 3 years, | 3 |
| or, if within that period of time the qualified new business | 4 |
| venture is moved from the State of Illinois, the claimant shall | 5 |
| pay to the Department of Revenue, in the manner prescribed by | 6 |
| the Department of Revenue, the amount of the credit that the | 7 |
| claimant received related to the investment. | 8 |
| (e) The Department shall implement a program to register | 9 |
| qualified new business ventures for purposes of this Section. A | 10 |
| business desiring registration shall submit an application to | 11 |
| the Department in each taxable year for which the business | 12 |
| desires registration. The Department may register the business | 13 |
| only if the business satisfies all of the following conditions: | 14 |
| (1) it has its headquarters in this State; | 15 |
| (2) at least 51% of the employees employed by the | 16 |
| business are employed in this State; | 17 |
| (3) it has the potential for increasing jobs in this | 18 |
| State, increasing capital investment in this State, or | 19 |
| both, and either of the following apply: | 20 |
| (A) it is principally engaged in innovation in any | 21 |
| of the following: manufacturing; biotechnology; | 22 |
| nanotechnology; communications; agricultural sciences; | 23 |
| clean energy creation or storage technology; | 24 |
| processing or assembling products, including medical | 25 |
| devices, pharmaceuticals, computer software, computer | 26 |
| hardware, semiconductors, other innovative technology |
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| products, or other products that are produced using | 2 |
| manufacturing methods that are enabled by applying | 3 |
| proprietary technology; or providing services that are | 4 |
| enabled by applying proprietary technology; or | 5 |
| (B) it is undertaking pre-commercialization | 6 |
| activity related to proprietary technology that | 7 |
| includes conducting research, developing a new product | 8 |
| or business process, or developing a service that is | 9 |
| principally reliant on applying proprietary | 10 |
| technology; | 11 |
| (4) it is not principally engaged in real estate | 12 |
| development, insurance, banking, lending, lobbying, | 13 |
| political consulting, professional services provided by | 14 |
| attorneys, accountants, business consultants, physicians, | 15 |
| or health care consultants, wholesale or retail trade, | 16 |
| leisure, hospitality, transportation, or construction, | 17 |
| except construction of power production plants that derive | 18 |
| energy from a renewable energy resource, as defined in | 19 |
| Section 1 of the Illinois Power Agency Act; | 20 |
| (5) it has fewer than 100 employees; | 21 |
| (6) it has been in operation in Illinois for not more | 22 |
| than 10 consecutive years prior to the year of | 23 |
| certification; and | 24 |
| (7) it has received not more than (i) $10,000,000 in | 25 |
| aggregate private equity investment in cash or (ii) | 26 |
| $4,000,000 in investments that qualified for tax credits |
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| under this Section. | 2 |
| (f) The Department, in consultation with the Department of | 3 |
| Revenue, shall adopt rules to administer this Section. The | 4 |
| aggregate amount of the tax credits that may be claimed under | 5 |
| this Section for investments made in qualified new business | 6 |
| ventures shall be limited at $10,000,000 per calendar year. | 7 |
| (g) A claimant may not sell or otherwise transfer a credit | 8 |
| awarded under this Section to another person. | 9 |
| (h) On or before March 1 of each year, the Department shall | 10 |
| report to the Governor and to the General Assembly on the tax | 11 |
| credit certificates awarded under this Section for the prior | 12 |
| calendar year. | 13 |
| (1) This report must include, for each tax credit | 14 |
| certificate awarded: | 15 |
| (A) the name of the claimant and the amount of | 16 |
| credit awarded or allocated to that claimant; | 17 |
| (B) the name and address of the qualified new | 18 |
| business venture that received the investment giving | 19 |
| rise to the credit and the county in which the | 20 |
| qualified new business venture is located; and | 21 |
| (C) the date of approval by the Department of the | 22 |
| applications for the tax credit certificate. | 23 |
| (2) The report must also include: | 24 |
| (A) the total number of applicants and amount for | 25 |
| tax credit certificates awarded under this Section in | 26 |
| the prior calendar year; |
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| (B) the total number of applications and amount for | 2 |
| which tax credit certificates were issued in the prior | 3 |
| calendar year; and | 4 |
| (C) the total tax credit certificates and amount | 5 |
| authorized under this Section for all calendar years.
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| Section 99. Effective date. This Section and Section 5 take | 7 |
| effect on July 1, 2010. Section 10 takes effect on January 1, | 8 |
| 2011.".
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