Full Text of HB3527 100th General Assembly
HB3527ham001 100TH GENERAL ASSEMBLY | Rep. Grant Wehrli Filed: 3/24/2017
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| 1 | | AMENDMENT TO HOUSE BILL 3527
| 2 | | AMENDMENT NO. ______. Amend House Bill 3527 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Section 220 as follows: | 6 | | (35 ILCS 5/220) | 7 | | Sec. 220. Angel investment credit. | 8 | | (a) As used in this Section: | 9 | | "Applicant" means a corporation, partnership, limited | 10 | | liability company, or a natural person that makes an investment | 11 | | in a qualified new business venture. The term "applicant" does | 12 | | not include a corporation, partnership, limited liability | 13 | | company, or a natural person who has a direct or indirect | 14 | | ownership interest of at least 51% in the profits, capital, or | 15 | | value of the investment or a related member. | 16 | | "Claimant" means an applicant certified by the Department |
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| 1 | | who files a claim for a credit under this Section. | 2 | | "Department" means the Department of Commerce and Economic | 3 | | Opportunity. | 4 | | "Qualified new business venture" means a business that is | 5 | | registered with the Department under this Section. | 6 | | "Related member" means a person that, with respect to the
| 7 | | investment, is any one of the following: | 8 | | (1) An individual, if the individual and the members of | 9 | | the individual's family (as defined in Section 318 of the | 10 | | Internal Revenue Code) own directly, indirectly,
| 11 | | beneficially, or constructively, in the aggregate, at | 12 | | least 50% of the value of the outstanding profits, capital, | 13 | | stock, or other ownership interest in the applicant. | 14 | | (2) A partnership, estate, or trust and any partner or | 15 | | beneficiary, if the partnership, estate, or trust and its | 16 | | partners or beneficiaries own directly, indirectly, | 17 | | beneficially, or constructively, in the aggregate, at | 18 | | least 50% of the profits, capital, stock, or other | 19 | | ownership interest in the applicant. | 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 | | corporation's outstanding stock. | 2 | | (4) A corporation and any party related to that | 3 | | corporation in a manner that would require an attribution | 4 | | of stock from the corporation to the party or from the
| 5 | | party to the corporation under the attribution rules of | 6 | | Section 318 of the Internal Revenue Code, if the | 7 | | corporation and all such related parties own, in the | 8 | | aggregate, at least 50% of the profits, capital, stock, or | 9 | | other ownership interest in the applicant. | 10 | | (5) A person to or from whom there is attribution of | 11 | | stock ownership in accordance with Section 1563(e) of the | 12 | | Internal Revenue Code, except that for purposes of | 13 | | determining whether a person is a related member under this | 14 | | paragraph, "20%" shall be substituted for "5%" whenever | 15 | | "5%" appears in Section 1563(e) of the Internal Revenue | 16 | | Code. | 17 | | (b) For taxable years beginning after December 31, 2010, | 18 | | and ending on or before December 31, 2021 2016, subject to the | 19 | | limitations provided in this Section, a claimant may claim, as | 20 | | a credit against the tax imposed under subsections (a) and (b) | 21 | | of Section 201 of this Act, an amount equal to 25% of the | 22 | | claimant's investment made directly in a qualified new business | 23 | | venture. In order for an investment in a qualified new business | 24 | | venture to be eligible for tax credits, the business must have | 25 | | applied for and received certification under subsection (e) for | 26 | | the taxable year in which the investment was made prior to the |
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| 1 | | date on which the investment was made. The credit under this | 2 | | Section may not exceed the taxpayer's Illinois income tax | 3 | | liability for the taxable year. If the amount of the credit | 4 | | exceeds the tax liability for the year, the excess may be | 5 | | carried forward and applied to the tax liability of the 5 | 6 | | taxable years following the excess credit year. The credit | 7 | | shall be applied to the earliest year for which there is a tax | 8 | | liability. If there are credits from more than one tax year | 9 | | that are available to offset a liability, the earlier credit | 10 | | shall be applied first. In the case of a partnership or | 11 | | Subchapter S Corporation, the credit is allowed to the partners | 12 | | or shareholders in accordance with the determination of income | 13 | | and distributive share of income under Sections 702 and 704 and | 14 | | Subchapter S of the Internal Revenue Code. | 15 | | (c) The maximum amount of an applicant's investment that | 16 | | may be used as the basis for a credit under this Section is | 17 | | $2,000,000 for each investment made directly in a qualified new | 18 | | business venture. For taxable years ending on or after December | 19 | | 31, 2017, the applicant must make a minimum investment of | 20 | | $10,000 in a qualified new business venture. | 21 | | (d) The Department shall implement a program to certify an | 22 | | applicant for an angel investment credit. Upon satisfactory | 23 | | review, the Department shall issue a tax credit certificate | 24 | | stating the amount of the tax credit to which the applicant is | 25 | | entitled. The Department shall annually certify that (i) each | 26 | | approved applicant remains in the State (and continues to |
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| 1 | | remain in the State for a period of not less than 3 years from | 2 | | the issue date of the last tax credit certificate issued by the | 3 | | Department with respect to that business); and (ii) the | 4 | | claimant's investment has been made and remains in the | 5 | | qualified new business venture for no less than 3 years . | 6 | | If an investment for which a claimant is allowed a credit | 7 | | under subsection (b) is held by the claimant for less than 3 | 8 | | years, other than as a result of a permitted sale of such | 9 | | investment to a person that is not a related member, or, if | 10 | | within that period of time the qualified new business venture | 11 | | is moved from the State of Illinois, the claimant shall pay to | 12 | | the Department of Revenue, in the manner prescribed by the | 13 | | Department of Revenue, the aggregate amount of the disqualified | 14 | | credit that the claimant received related to the subject | 15 | | investment. | 16 | | If the Department determines that a previously approved | 17 | | applicant has moved from the State prior to the date that | 18 | | occurs 3 years from the issue date of the last tax credit | 19 | | certificate issued by the Department with respect to the | 20 | | subject business, that business must pay to the Department of | 21 | | Revenue, in the manner prescribed by the Department of Revenue, | 22 | | the aggregate amount of the disqualified credits that claimants | 23 | | received related to investments in that business. | 24 | | (e) The Department shall implement a program to register | 25 | | qualified new business ventures for purposes of this Section. A | 26 | | business desiring registration shall submit an application to |
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| 1 | | the Department in each taxable year for which the business | 2 | | desires registration. The Department may register the business | 3 | | only if the business satisfies all of the following conditions: | 4 | | (1) it has its headquarters in this State; | 5 | | (2) at least 51% of the employees employed by the | 6 | | business are employed in this State; | 7 | | (3) it has the potential for increasing jobs in this | 8 | | State, increasing capital investment in this State, or | 9 | | both, and either of the following apply: | 10 | | (A) it is principally engaged in innovation in any | 11 | | of the following: manufacturing; biotechnology; | 12 | | nanotechnology; communications; agricultural sciences; | 13 | | clean energy creation or storage technology; | 14 | | processing or assembling products, including medical | 15 | | devices, pharmaceuticals, computer software, computer | 16 | | hardware, semiconductors, other innovative technology | 17 | | products, or other products that are produced using | 18 | | manufacturing methods that are enabled by applying | 19 | | proprietary technology; or providing services that are | 20 | | enabled by applying proprietary technology; or | 21 | | (B) it is undertaking pre-commercialization | 22 | | activity related to proprietary technology that | 23 | | includes conducting research, developing a new product | 24 | | or business process, or developing a service that is | 25 | | principally reliant on applying proprietary | 26 | | technology; |
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| 1 | | (4) it is not principally engaged in real estate | 2 | | development, insurance, banking, lending, lobbying, | 3 | | political consulting, professional services provided by | 4 | | attorneys, accountants, business consultants, physicians, | 5 | | or health care consultants, wholesale or retail trade, | 6 | | leisure, hospitality, transportation, or construction, | 7 | | except construction of power production plants that derive | 8 | | energy from a renewable energy resource, as defined in | 9 | | Section 1 of the Illinois Power Agency Act; | 10 | | (5) at the time it is first certified: | 11 | | (A) it has fewer than 100 employees; | 12 | | (B) it has been in operation in Illinois for not | 13 | | more than 10 consecutive years prior to the year of | 14 | | certification; and | 15 | | (C) it has received not more than $10,000,000 in | 16 | | aggregate private equity investment in cash; | 17 | | (6) (blank); and | 18 | | (7) it has received not more than $4,000,000 in | 19 | | investments that qualified for tax credits under this | 20 | | Section. | 21 | | The Department shall require each qualified new business | 22 | | venture to renew its registration on an annual basis. If, at | 23 | | the time of the renewal, the business fails to satisfy any of | 24 | | the conditions of this subsection, or if the business fails to | 25 | | renew its registration, then the business shall no longer be | 26 | | considered a qualified new business venture. |
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| 1 | | (f) The Department, in consultation with the Department of | 2 | | Revenue, shall adopt rules to administer this Section. The | 3 | | aggregate amount of the tax credits that may be claimed under | 4 | | this Section for investments made in qualified new business | 5 | | ventures shall be limited at $25,000,000 $10,000,000 per | 6 | | calendar year , of which $2,500,000 is reserved for investments | 7 | | made in minority owned businesses, female owned businesses, or | 8 | | businesses owned by a person with a disability, and an | 9 | | additional $2,500,000 is reserved for investments made in | 10 | | businesses headquartered in counties with a population of not | 11 | | more than 250,000. As used in this subsection (f), "minority | 12 | | owned business", "female owned business", and "business owned | 13 | | by a person with a disability" have the meanings given to those | 14 | | terms in the Business Enterprise for Minorities, Females, and | 15 | | Persons with Disabilities Act. The aggregate amount of tax | 16 | | credits allocated by the Department for any one of the first 3 | 17 | | calendar quarters of any year shall not exceed $7,000,000; | 18 | | however, any portion of that amount remaining unused as of the | 19 | | end of any of the first 3 calendar quarters of a given calendar | 20 | | year shall be rolled into, and added to, the total allocated | 21 | | amount available for the next calendar quarter. If any of the | 22 | | $2,500,000 that is reserved for investments made in minority | 23 | | owned businesses, female owned businesses, or businesses owned | 24 | | by a person with a disability or any of the $2,500,000 that is | 25 | | reserved for investments made in businesses headquartered in | 26 | | counties with a population of not more than 250,000 remains |
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| 1 | | unused at the end of the third calendar quarter of any year, | 2 | | then those amounts may be claimed in the fourth quarter of that | 3 | | calendar year for investments in qualified new business | 4 | | ventures that are not minority owned businesses, female owned | 5 | | businesses, businesses owned by a person with a disability, or | 6 | | businesses headquartered in a county with a population of not | 7 | | more than 250,000 . | 8 | | (g) A claimant may not sell or otherwise transfer a credit | 9 | | awarded under this Section to another person. | 10 | | (h) On or before March 1 of each year, the Department shall | 11 | | report to the Governor and to the General Assembly on the tax | 12 | | credit certificates awarded under this Section for the prior | 13 | | calendar year. | 14 | | (1) This report must include, for each tax credit | 15 | | certificate awarded: | 16 | | (A) the name of the claimant , and the amount of | 17 | | credit awarded or allocated to that claimant , and the | 18 | | name of the recipient qualified new business venture | 19 | | that received the investment ; | 20 | | (B) the name and address, including the county, the | 21 | | North American Industry Classification System (NAICS) | 22 | | code, and the number of employees of the qualified new | 23 | | business venture that received an investment giving | 24 | | rise to the credit the name and address of the | 25 | | qualified new business venture that received the | 26 | | investment giving rise to the credit and the county in |
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| 1 | | which the qualified new business venture is located ; | 2 | | and | 3 | | (C) the date of approval by the Department of each | 4 | | claimant's the applications for the tax credit | 5 | | certificate. | 6 | | (2) The report must also include: | 7 | | (A) the total number of applicants and the total | 8 | | number of claimants, including the amount of each tax | 9 | | credit certificate and amount for tax credit | 10 | | certificates awarded to a claimant under this Section | 11 | | in the prior calendar year; | 12 | | (B) the total number of applications from | 13 | | businesses seeking registration, the total number of | 14 | | new qualified business ventures registered by the | 15 | | Department, and the aggregate amount of investment | 16 | | upon which tax credit certificates were issued in the | 17 | | prior calendar year the total number of applications | 18 | | and amount for which tax credit certificates were | 19 | | issued in the prior calendar year ; and | 20 | | (C) the total amount of tax credit certificates | 21 | | sought by applicants, the amount of each tax credit | 22 | | certificate issued to a claimant, the aggregate amount | 23 | | of all tax credit certificates issued in the prior | 24 | | calendar year and the aggregate amount of tax credit | 25 | | certificates issued as authorized under this Section | 26 | | for all calendar years. the total tax credit |
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| 1 | | certificates and amount authorized under this Section | 2 | | for all calendar years.
| 3 | | (3) On and after the effective date of this amendatory | 4 | | Act of the 100th General Assembly, the Department shall | 5 | | require a business seeking registration as a qualified new | 6 | | business venture to include in its application the North | 7 | | American Industry Classification System (NAICS) code | 8 | | associated with the business and the number of employees at | 9 | | the time of application. Each business registered by the | 10 | | Department as a qualified new business venture that | 11 | | receives an investment giving rise to the issuance of a tax | 12 | | credit certificate shall, for each of the 3 subsequent | 13 | | years, report to the Department the following: | 14 | | (A) the number of employees at the end of each | 15 | | year; | 16 | | (B) the amount of additional new capital | 17 | | investment raised within each year; and | 18 | | (C) any liquidity event transpiring within the | 19 | | 3-year period; for purposes of this paragraph (C), a | 20 | | liquidity event shall mean an event that allows some or | 21 | | all investors in a company to cash out some or all of | 22 | | their ownership shares or that is considered an exit | 23 | | strategy for an illiquid investment. | 24 | | It is the intent of the General Assembly that the credit | 25 | | under this Section applies continuously for all taxable years | 26 | | beginning after December 31, 2010 and ending on or before |
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| 1 | | December 31, 2021. Any actions taken in reliance on the | 2 | | continuation of the credit under this Section are hereby | 3 | | validated. | 4 | | (Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11; | 5 | | 97-1097, eff. 8-24-12.)
| 6 | | Section 99. Effective date. This Act takes effect upon | 7 | | becoming law.".
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