Full Text of HB1967 102nd General Assembly
HB1967ham001 102ND GENERAL ASSEMBLY | Rep. Mark L. Walker Filed: 3/22/2021
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| 1 | | AMENDMENT TO HOUSE BILL 1967
| 2 | | AMENDMENT NO. ______. Amend House Bill 1967 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 and by adding Section 232 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 | 11 | | investment in a qualified new business venture. The term | 12 | | "applicant" does not include (i) a corporation, partnership, | 13 | | limited liability company, or a natural person who has a | 14 | | direct or indirect ownership interest of at least 33% 51% in | 15 | | the profits, capital, or value of the qualified new business | 16 | | venture receiving the investment or (ii) a related member. |
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| 1 | | "Claimant" means an applicant certified by the Department | 2 | | who files a claim for a credit under this Section. | 3 | | "Department" means the Department of Commerce and Economic | 4 | | Opportunity. | 5 | | "Investment" means money (or its equivalent) given to a | 6 | | qualified new business venture, at a risk of loss, in | 7 | | consideration for an equity interest of the qualified new | 8 | | business venture. The Department may adopt rules to permit | 9 | | certain forms of contingent equity investments to be | 10 | | considered eligible for a tax credit under this Section. | 11 | | "Qualified new business venture" means a business that is | 12 | | registered with the Department under this Section. | 13 | | "Related member" means a person that, with respect to the
| 14 | | applicant, is any one of the following: | 15 | | (1) An individual, if the individual and the members | 16 | | of the individual's family (as defined in Section 318 of | 17 | | the Internal Revenue Code) own directly, indirectly,
| 18 | | beneficially, or constructively, in the aggregate, at | 19 | | least 50% of the value of the outstanding profits, | 20 | | capital, stock, or other ownership interest in the | 21 | | qualified new business venture that is the recipient of | 22 | | the applicant's investment. | 23 | | (2) A partnership, estate, or trust and any partner or | 24 | | beneficiary, if the partnership, estate, or trust and its | 25 | | partners or beneficiaries own directly, indirectly, | 26 | | beneficially, or constructively, in the aggregate, at |
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| 1 | | least 50% of the profits, capital, stock, or other | 2 | | ownership interest in the qualified new business venture | 3 | | that is the recipient of the applicant's investment. | 4 | | (3) A corporation, and any party related to the | 5 | | corporation in a manner that would require an attribution | 6 | | of stock from the corporation under the attribution rules
| 7 | | of Section 318 of the Internal Revenue Code, if the | 8 | | applicant and any other related member own, in the | 9 | | aggregate, directly, indirectly, beneficially, or | 10 | | constructively, at least 50% of the value of the | 11 | | outstanding stock of the qualified new business venture | 12 | | that is the recipient of the applicant's investment. | 13 | | (4) A corporation and any party related to that | 14 | | corporation in a manner that would require an attribution | 15 | | of stock from the corporation to the party or from the
| 16 | | party to the corporation under the attribution rules of | 17 | | Section 318 of the Internal Revenue Code, if the | 18 | | corporation and all such related parties own, in the | 19 | | aggregate, at least 50% of the profits, capital, stock, or | 20 | | other ownership interest in the qualified new business | 21 | | venture that is the recipient of the applicant's | 22 | | investment. | 23 | | (5) A person to or from whom there is attribution of | 24 | | ownership of stock in the qualified new business venture | 25 | | that is the recipient of the applicant's investment in | 26 | | accordance with Section 1563(e) of the Internal Revenue |
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| 1 | | Code, except that for purposes of determining whether a | 2 | | person is a related member under this paragraph, "20%" | 3 | | shall be substituted for "5%" whenever "5%" appears in | 4 | | Section 1563(e) of the Internal Revenue Code. | 5 | | "Social equity business" means a business that is a | 6 | | qualified social equity applicant, as defined in Section 1-10 | 7 | | of the Cannabis Regulation and Tax Act. | 8 | | (b) For taxable years beginning after December 31, 2010, | 9 | | and ending on or before December 31, 2021, subject to the | 10 | | limitations provided in this Section, a claimant may claim, as | 11 | | a credit against the tax imposed under subsections (a) and (b) | 12 | | of Section 201 of this Act, an amount equal to 25% of the | 13 | | claimant's investment made directly in a qualified new | 14 | | business venture. However, if the investment is made in: (1) a | 15 | | qualified new business venture that is minority-owned, | 16 | | women-owned, or is a business owned a person with a disability | 17 | | (as those terms are used and defined in the Business | 18 | | Enterprise for Minorities, Women, and Persons with | 19 | | Disabilities Act); or (2) a qualified new business venture in | 20 | | which the principal place of business is located in a county | 21 | | with a population of not more than 250,000, then the amount of | 22 | | the credit is 35% of the claimant's investment made directly | 23 | | in a qualified new business venture. In order for an | 24 | | investment in a qualified new business venture to be eligible | 25 | | for tax credits, the business must have applied for and | 26 | | received certification under subsection (e) for the taxable |
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| 1 | | year in which the investment was made prior to the date on | 2 | | which the investment was made. The credit under this Section | 3 | | may not exceed the taxpayer's Illinois income tax liability | 4 | | for the taxable year. If the amount of the credit exceeds the | 5 | | tax liability for the year, the excess may be carried forward | 6 | | and applied to the tax liability of the 5 taxable years | 7 | | following the excess credit year. The credit shall be applied | 8 | | to the earliest year for which there is a tax liability. If | 9 | | there are credits from more than one tax year that are | 10 | | available to offset a liability, the earlier credit shall be | 11 | | applied first. In the case of a partnership or Subchapter S | 12 | | Corporation, the credit is allowed to the partners or | 13 | | shareholders in accordance with the determination of income | 14 | | and distributive share of income under Sections 702 and 704 | 15 | | and Subchapter S of the Internal Revenue Code. | 16 | | (c) The minimum amount an applicant must invest in any | 17 | | single qualified new business venture in order to be eligible | 18 | | for a credit under this Section is $10,000. The maximum amount | 19 | | of an applicant's total investment made in any single | 20 | | qualified new business venture that may be used as the basis | 21 | | for a credit under this Section is $1,000,000 $2,000,000 . | 22 | | (d) The Department shall implement a program to certify an | 23 | | applicant for an angel investment credit. Upon satisfactory | 24 | | review, the Department shall issue a tax credit certificate | 25 | | stating the amount of the tax credit to which the applicant is | 26 | | entitled. The Department shall annually certify that: (i) each |
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| 1 | | qualified new business venture that receives an angel | 2 | | investment under this Section has maintained a minimum | 3 | | employment threshold, as defined by rule, in the State (and | 4 | | continues to maintain a minimum employment threshold in the | 5 | | State for a period of no less than 3 years from the issue date | 6 | | of the last tax credit certificate issued by the Department | 7 | | with respect to such business pursuant to this Section); and | 8 | | (ii) the claimant's investment has been made and remains, | 9 | | except in the event of a qualifying liquidity event, in the | 10 | | qualified new business venture for no less than 3 years. | 11 | | If an investment for which a claimant is allowed a credit | 12 | | under subsection (b) is held by the claimant for less than 3 | 13 | | years, other than as a result of a permitted sale of the | 14 | | investment to person who is not a related member, the claimant | 15 | | shall pay to the Department of Revenue, in the manner | 16 | | prescribed by the Department of Revenue, the aggregate amount | 17 | | of the disqualified credits that the claimant received related | 18 | | to the subject investment. | 19 | | If the Department determines that a qualified new business | 20 | | venture failed to maintain a minimum employment threshold in | 21 | | the State through the date which is 3 years from the issue date | 22 | | of the last tax credit certificate issued by the Department | 23 | | with respect to the subject business pursuant to this Section, | 24 | | the claimant or claimants shall pay to the Department of | 25 | | Revenue, in the manner prescribed by the Department of | 26 | | Revenue, the aggregate amount of the disqualified credits that |
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| 1 | | claimant or claimants received related to investments in that | 2 | | business. | 3 | | (e) The Department shall implement a program to register | 4 | | qualified new business ventures for purposes of this Section. | 5 | | A business desiring registration under this Section shall be | 6 | | required to submit a full and complete application to the | 7 | | Department. A submitted application shall be effective only | 8 | | for the taxable year in which it is submitted, and a business | 9 | | desiring registration under this Section shall be required to | 10 | | submit a separate application in and for each taxable year for | 11 | | which the business desires registration. Further, if at any | 12 | | time prior to the acceptance of an application for | 13 | | registration under this Section by the Department one or more | 14 | | events occurs which makes the information provided in that | 15 | | application materially false or incomplete (in whole or in | 16 | | part), the business shall promptly notify the Department of | 17 | | the same. Any failure of a business to promptly provide the | 18 | | foregoing information to the Department may, at the discretion | 19 | | of the Department, result in a revocation of a previously | 20 | | approved application for that business, or disqualification of | 21 | | the business from future registration under this Section, or | 22 | | both. The Department may register the business only if all of | 23 | | the following conditions are satisfied: | 24 | | (1) it has its principal place of business in this | 25 | | State; | 26 | | (2) at least 51% of the employees employed by the |
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| 1 | | business are employed in this State; | 2 | | (3) the business has the potential for increasing jobs | 3 | | in this State, increasing capital investment in this | 4 | | State, or both, as determined by the Department, and any | 5 | | either of the following apply: | 6 | | (A) it is principally engaged in innovation in any | 7 | | of the following: manufacturing; biotechnology; | 8 | | nanotechnology; communications; agricultural | 9 | | sciences; clean energy creation or storage technology; | 10 | | processing or assembling products, including medical | 11 | | devices, pharmaceuticals, computer software, computer | 12 | | hardware, semiconductors, other innovative technology | 13 | | products, or other products that are produced using | 14 | | manufacturing methods that are enabled by applying | 15 | | proprietary technology; or providing services that are | 16 | | enabled by applying proprietary technology; or | 17 | | (B) it is undertaking pre-commercialization | 18 | | activity related to proprietary technology that | 19 | | includes conducting research, developing a new product | 20 | | or business process, or developing a service that is | 21 | | principally reliant on applying proprietary | 22 | | technology; or | 23 | | (C) the business is a social equity business and | 24 | | is engaged in innovation in the field of cannabis | 25 | | cultivation, extraction, processing, distribution, | 26 | | infusion, or dispensing, or is undertaking |
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| 1 | | pre-commercialization activity within the adult use | 2 | | cannabis industry related to proprietary technology | 3 | | that includes conducting research, developing a new | 4 | | product or business process, or developing a service | 5 | | that is principally reliant on applying proprietary | 6 | | technology; | 7 | | (4) it is not principally engaged in real estate | 8 | | development, insurance, banking, lending, lobbying, | 9 | | political consulting, professional services provided by | 10 | | attorneys, accountants, business consultants, physicians, | 11 | | or health care consultants, wholesale or retail trade, | 12 | | leisure, hospitality, transportation, or construction, | 13 | | except construction of power production plants that derive | 14 | | energy from a renewable energy resource, as defined in | 15 | | Section 1 of the Illinois Power Agency Act; however, the | 16 | | restrictions in this Section relating to wholesale or | 17 | | retail trade and transportation shall not apply to social | 18 | | equity businesses; | 19 | | (5) at the time it is first certified: | 20 | | (A) it has fewer than 100 employees; | 21 | | (B) it has been in operation in Illinois for not | 22 | | more than 10 consecutive years prior to the year of | 23 | | certification; and | 24 | | (C) it has received not more than $5,000,000 | 25 | | $10,000,000 in aggregate investments; | 26 | | (5.1) it agrees to maintain a minimum employment |
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| 1 | | threshold in the State of Illinois prior to the date which | 2 | | is 3 years from the issue date of the last tax credit | 3 | | certificate issued by the Department with respect to that | 4 | | business pursuant to this Section; | 5 | | (6) (blank); and | 6 | | (7) it has received not more than $2,000,000 | 7 | | $4,000,000 in investments that qualified for tax credits | 8 | | under this Section. | 9 | | (f) The Department, in consultation with the Department of | 10 | | Revenue, shall adopt rules to administer this Section. The | 11 | | aggregate amount of the tax credits that may be claimed under | 12 | | this Section for investments made in qualified new business | 13 | | ventures shall be limited at $10,000,000 per calendar year, of | 14 | | which $1,500,000 $500,000 shall be reserved for investments | 15 | | made in qualified new business ventures which are | 16 | | minority-owned businesses, women-owned businesses, or | 17 | | businesses owned by a person with a disability (as those terms | 18 | | are used and defined in the Business Enterprise for | 19 | | Minorities, Women, and Persons with Disabilities Act), and an | 20 | | additional $1,500,000 $500,000 shall be reserved for | 21 | | investments made in qualified new business ventures with their | 22 | | principal place of business in counties with a population of | 23 | | not more than 250,000. The foregoing annual allowable amounts | 24 | | shall be allocated by the Department, on a per calendar | 25 | | quarter basis and prior to the commencement of each calendar | 26 | | year, in such proportion as determined by the Department, |
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| 1 | | provided that: (i) the amount initially allocated by the | 2 | | Department for any one calendar quarter shall not exceed 35% | 3 | | of the total allowable amount; (ii) any portion of the | 4 | | allocated allowable amount remaining unused as of the end of | 5 | | any of the first 3 calendar quarters of a given calendar year | 6 | | shall be rolled into, and added to, the total allocated amount | 7 | | for the next available calendar quarter; and (iii) the | 8 | | reservation of tax credits for investments in minority-owned | 9 | | businesses, women-owned businesses, businesses owned by a | 10 | | person with a disability, and in businesses in counties with a | 11 | | population of not more than 250,000 is limited to the first 3 | 12 | | calendar quarters of a given calendar year, after which they | 13 | | may be claimed by investors in any qualified new business | 14 | | venture. | 15 | | (g) A claimant may not sell or otherwise transfer a credit | 16 | | awarded under this Section to another person. | 17 | | (h) On or before March 1 of each year, the Department shall | 18 | | report to the Governor and to the General Assembly on the tax | 19 | | credit certificates awarded under this Section for the prior | 20 | | calendar year. | 21 | | (1) This report must include, for each tax credit | 22 | | certificate awarded: | 23 | | (A) the name of the claimant and the amount of | 24 | | credit awarded or allocated to that claimant; | 25 | | (B) the name and address (including the county) of | 26 | | the qualified new business venture that received the |
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| 1 | | investment giving rise to the credit, the North | 2 | | American Industry Classification System (NAICS) code | 3 | | applicable to that qualified new business venture, and | 4 | | the number of employees of the qualified new business | 5 | | venture; and | 6 | | (C) the date of approval by the Department of each | 7 | | claimant's tax credit certificate. | 8 | | (2) The report must also include: | 9 | | (A) the total number of applicants and the total | 10 | | number of claimants, including the amount of each tax | 11 | | credit certificate awarded to a claimant under this | 12 | | Section in the prior calendar year; | 13 | | (B) the total number of applications from | 14 | | businesses seeking registration under this Section, | 15 | | the total number of new qualified business ventures | 16 | | registered by the Department, and the aggregate amount | 17 | | of investment upon which tax credit certificates were | 18 | | issued in the prior calendar year; and | 19 | | (C) the total amount of tax credit certificates | 20 | | sought by applicants, the amount of each tax credit | 21 | | certificate issued to a claimant, the aggregate amount | 22 | | of all tax credit certificates issued in the prior | 23 | | calendar year and the aggregate amount of tax credit | 24 | | certificates issued as authorized under this Section | 25 | | for all calendar years.
| 26 | | (i) For each business seeking registration under this |
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| 1 | | Section after December 31, 2016, the Department shall require | 2 | | the business to include in its application the North American | 3 | | Industry Classification System (NAICS) code applicable to the | 4 | | business and the number of employees of the business at the | 5 | | time of application. Each business registered by the | 6 | | Department as a qualified new business venture that receives | 7 | | an investment giving rise to the issuance of a tax credit | 8 | | certificate pursuant to this Section shall, for each of the 3 | 9 | | years following the issue date of the last tax credit | 10 | | certificate issued by the Department with respect to such | 11 | | business pursuant to this Section, report to the Department | 12 | | the following: | 13 | | (1) the number of employees and the location at which | 14 | | those employees are employed, both as of the end of each | 15 | | year; | 16 | | (2) the amount of additional new capital investment | 17 | | raised as of the end of each year, if any; and | 18 | | (3) the terms of any liquidity event occurring during | 19 | | such year; for the purposes of this Section, a "liquidity | 20 | | event" means any event that would be considered an exit | 21 | | for an illiquid investment, including any event that | 22 | | allows the equity holders of the business (or any material | 23 | | portion thereof) to cash out some or all of their | 24 | | respective equity interests. | 25 | | (Source: P.A. 100-328, eff. 1-1-18; 100-686, eff. 1-1-19; | 26 | | 100-863, eff. 8-14-18; 101-81, eff. 7-12-19.) |
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| 1 | | (35 ILCS 5/232 new) | 2 | | Sec. 232. Credit for full-time employees in a county with | 3 | | fewer than 250,000 inhabitants. | 4 | | (a) For taxable years beginning on or after January 1, | 5 | | 2021, each taxpayer that hires a full-time employee to fill a | 6 | | position at a location in a county with fewer than 250,000 | 7 | | inhabitants is entitled to a credit against the taxes imposed | 8 | | by subsections (a) and (b) of Section 201 of this Act in an | 9 | | amount not to exceed $5,000 per eligible employee in any | 10 | | taxable year. The credit may be taken for the taxable year in | 11 | | which the employee is hired and for the next taxable year if | 12 | | the employee remains employed with that taxpayer in the next | 13 | | taxable year. The amount of the credit shall be $5,000 in each | 14 | | taxable year, multiplied by a fraction the numerator of which | 15 | | is the number of days the employee is employed by the taxpayer | 16 | | during the taxable year and the denominator of which is 365. | 17 | | (b) For partners, shareholders of Subchapter S | 18 | | corporations, and owners of limited liability companies, if | 19 | | the liability company is treated as a partnership for purposes | 20 | | of federal and State income taxation, there shall be allowed a | 21 | | credit under this Section to be determined in accordance with | 22 | | the determination of income and distributive share of income | 23 | | under Sections 702 and 704 and Subchapter S of the Internal | 24 | | Revenue Code. | 25 | | (c) In no event shall a credit under this Section reduce |
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| 1 | | the taxpayer's liability to less than zero. If the amount of | 2 | | the credit exceeds the tax liability for the year, the excess | 3 | | may be carried forward and applied to the tax liability of the | 4 | | 5 taxable years following the excess credit year. The tax | 5 | | credit shall be applied to the earliest year for which there is | 6 | | a tax liability. If there are credits for more than one year | 7 | | that are available to offset a liability, the earlier credit | 8 | | shall be applied first. | 9 | | (d) As used in this Section, "full-time employee" means an | 10 | | individual who is employed for consideration for at least 35 | 11 | | hours each week or who renders any other standard of service | 12 | | generally accepted by industry custom or practice as full-time | 13 | | employment. An individual for whom a W-2 is issued by a | 14 | | Professional Employer Organization (PEO) is a full-time | 15 | | employee if employed in the service of the taxpayer for | 16 | | consideration for at least 35 hours each week or who renders | 17 | | any other standard of service generally accepted by industry | 18 | | custom or practice as full-time employment to the taxpayer. | 19 | | (e) This Section is exempt from the provisions of Section | 20 | | 250. | 21 | | Section 99. Effective date. This Act takes effect upon | 22 | | becoming law.".
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