Full Text of SB0652 100th General Assembly
SB0652enr 100TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The New Markets Development Program Act is | 5 | | amended by changing Sections 5, 20, 25, 40, and 50 and by | 6 | | adding Sections 43 and 55 as follows: | 7 | | (20 ILCS 663/5)
| 8 | | Sec. 5. Definitions. As used in this Act:
| 9 | | "Applicable percentage" means 0% for each of the first 2 | 10 | | credit allowance dates, 7% for the third credit allowance date, | 11 | | and 8% for the next 4 credit allowance dates. | 12 | | "Credit allowance date" means with respect to any qualified | 13 | | equity investment:
| 14 | | (1) the date on which the investment is initially made; | 15 | | and | 16 | | (2) each of the 6 anniversary dates of that date | 17 | | thereafter. | 18 | | "Department" means the Department of Commerce and Economic | 19 | | Opportunity. | 20 | | "Long-term debt security" means any debt instrument issued | 21 | | by a qualified community development entity, at par value or a | 22 | | premium, with an original maturity date of at least 7 years | 23 | | from the date of its issuance, with no acceleration of |
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| 1 | | repayment, amortization, or prepayment features prior to its | 2 | | original maturity date. Cumulative cash payments of interest on | 3 | | the qualified debt instrument during the period commencing with | 4 | | the issuance of the qualified debt instrument and ending with | 5 | | the seventh anniversary of its issuance shall not exceed the | 6 | | sum of such cash interest payments and the cumulative net | 7 | | income of the issuing community development entity for the same | 8 | | period. This definition in no way limits the holder's ability | 9 | | to accelerate payments on the debt instrument in situations | 10 | | where the issuer has defaulted on covenants designed to ensure | 11 | | compliance with this Act or Section 45D of the Internal Revenue | 12 | | Code of 1986, as amended. | 13 | | "Purchase price" means the amount paid to the issuer of a | 14 | | qualified equity investment for that qualified equity | 15 | | investment. | 16 | | "Qualified active low-income community business" has the | 17 | | meaning given to that term in Section 45D of the Internal | 18 | | Revenue Code of 1986, as amended; except that any business that | 19 | | derives or projects to derive 15% or more of its annual revenue | 20 | | from the rental or sale of real estate is not considered to be | 21 | | a qualified active low-income community business. This | 22 | | exception does not apply to a business that is controlled by or | 23 | | under common control with another business if the second | 24 | | business (i) does not derive or project to derive 15% or more | 25 | | of its annual revenue from the rental or sale of real estate | 26 | | and (ii) is the primary tenant of the real estate leased from |
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| 1 | | the initial business. A business shall be considered a | 2 | | qualified active low-income community business for the | 3 | | duration of the qualified community development entity's | 4 | | investment in or loan to the business if the entity reasonably | 5 | | expects, at the time it makes the investment or loan, that the | 6 | | business will continue to satisfy the requirements for being a | 7 | | qualified active low-income community business throughout the | 8 | | entire period of the investment or loan. | 9 | | "Qualified community development entity" has the meaning | 10 | | given to that term in Section 45D of the Internal Revenue Code | 11 | | of 1986, as amended; provided that such entity has entered | 12 | | into, or is controlled by an entity that has entered into, an | 13 | | allocation agreement with the Community Development Financial | 14 | | Institutions Fund of the U.S. Treasury Department with respect | 15 | | to credits authorized by Section 45D of the Internal Revenue | 16 | | Code of 1986, as amended, that includes the State of Illinois | 17 | | within the service area set forth in that allocation agreement. | 18 | | "Qualified equity investment" means any equity investment | 19 | | in, or long-term debt security issued by, a qualified community | 20 | | development entity that:
| 21 | | (1) is acquired after the effective date of this Act at | 22 | | its original issuance solely in exchange for cash; | 23 | | (2) with respect to qualified equity investments made | 24 | | before January 1, 2017, has at least 85% of its cash | 25 | | purchase price used by the issuer to make qualified | 26 | | low-income community investments in the State of Illinois , |
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| 1 | | and, with respect to qualified equity investments made on | 2 | | or after January 1, 2017, has 100% of the cash purchase | 3 | | price used by the issuer to make qualified low-income | 4 | | community investments in the State of Illinois ; and | 5 | | (3) is designated by the issuer as a qualified equity | 6 | | investment under this
Act ; with respect to qualified equity | 7 | | investments made on or after January 1, 2017, is designated | 8 | | by the issuer as a qualified equity investment under | 9 | | Section 45D of the Internal Revenue Code of 1986, as | 10 | | amended; and is certified by the Department as not | 11 | | exceeding the limitation contained in Section 20. | 12 | | This term includes any qualified equity investment that | 13 | | does not meet the provisions of item (1) of this definition if | 14 | | the investment was a qualified equity investment in the hands | 15 | | of a prior holder. | 16 | | "Qualified low-income community investment" means any | 17 | | capital or equity investment in, or loan to, any qualified | 18 | | active low-income community business. With respect to any one | 19 | | qualified active low-income community business, the maximum | 20 | | amount of qualified low-income community investments made in | 21 | | that business, on a collective basis with all of its affiliates | 22 | | that may be counted towards the satisfaction of paragraph (2) | 23 | | of the definition of qualified equity investment, shall be | 24 | | $10,000,000 whether issued to one or several qualified | 25 | | community development entities. | 26 | | "Tax credit" means a credit against any income, franchise, |
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| 1 | | or insurance premium taxes , including insurance retaliatory | 2 | | taxes, otherwise due under Illinois law.
| 3 | | "Taxpayer" means any individual or entity subject to any | 4 | | income, franchise, or insurance premium tax under Illinois law.
| 5 | | (Source: P.A. 95-1024, eff. 12-31-08.) | 6 | | (20 ILCS 663/20)
| 7 | | Sec. 20. Annual cap on credits. The Department shall limit | 8 | | the monetary amount of qualified equity investments permitted | 9 | | under this Act to a level necessary to limit tax credit use at | 10 | | no more than $20,000,000 of tax credits in any fiscal year. | 11 | | This limitation on qualified equity investments shall be based | 12 | | on the anticipated use of credits without regard to the | 13 | | potential for taxpayers to carry forward tax credits to later | 14 | | tax years.
| 15 | | (Source: P.A. 95-1024, eff. 12-31-08; 96-939, eff. 7-1-10.) | 16 | | (20 ILCS 663/25)
| 17 | | Sec. 25. Certification of qualified equity investments. | 18 | | (a) A qualified community development entity that seeks to | 19 | | have an equity investment or long-term debt security designated | 20 | | as a qualified equity investment and eligible for tax credits | 21 | | under this Section shall apply to the Department. The qualified | 22 | | community development entity must submit an application on a | 23 | | form that the Department provides that includes: | 24 | | (1) The name, address, tax identification number of the |
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| 1 | | entity, and evidence of the entity's certification as a | 2 | | qualified community development entity. | 3 | | (2) A copy of the allocation agreement executed by the | 4 | | entity, or its controlling entity, and the Community | 5 | | Development Financial Institutions Fund. | 6 | | (3) A certificate executed by an executive officer of | 7 | | the entity attesting that the allocation agreement remains | 8 | | in effect and has not been revoked or cancelled by the | 9 | | Community Development Financial Institutions Fund. | 10 | | (4) A description of the proposed amount, structure, | 11 | | and purchaser of the equity investment or long-term debt | 12 | | security. | 13 | | (5) The name and tax identification number of any | 14 | | taxpayer eligible to utilize tax credits earned as a result | 15 | | of the issuance of the qualified equity investment. | 16 | | (6) Information regarding the proposed use of proceeds | 17 | | from the issuance of the qualified equity investment. | 18 | | (7) A nonrefundable application fee of $5,000. This fee | 19 | | shall be paid to the Department and shall be required of | 20 | | each application submitted. | 21 | | (8) With respect to qualified equity investments made | 22 | | on or after January 1, 2017, the amount of qualified equity | 23 | | investment authority the applicant agrees to designate as a | 24 | | federal qualified equity investment under Section 45D of | 25 | | the Internal Revenue Code, including a copy of the screen | 26 | | shot from the Community Development Financial Institutions |
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| 1 | | Fund's Allocation Tracking System of the applicant's | 2 | | remaining federal qualified equity investment authority. | 3 | | (b) Within 30 days after receipt of a completed application | 4 | | containing the information necessary for the Department to | 5 | | certify a potential qualified equity investment, including the | 6 | | payment of the application fee, the Department shall grant or | 7 | | deny the application in full or in part. If the Department | 8 | | denies any part of the application, it shall inform the | 9 | | qualified community development entity of the grounds for the | 10 | | denial. If the qualified community development entity provides | 11 | | any additional information required by the Department or | 12 | | otherwise completes its application within 15 days of the | 13 | | notice of denial, the application shall be considered completed | 14 | | as of the original date of submission. If the qualified | 15 | | community development entity fails to provide the information | 16 | | or complete its application within the 15-day period, the | 17 | | application remains denied and must be resubmitted in full with | 18 | | a new submission date. | 19 | | (c) If the application is deemed complete, the Department | 20 | | shall certify the proposed equity investment or long-term debt | 21 | | security as a qualified equity investment that is eligible for | 22 | | tax credits under this Section, subject to the limitations | 23 | | contained in Section 20. The Department shall provide written | 24 | | notice of the certification to the qualified community | 25 | | development entity. The notice shall include the names of those | 26 | | taxpayers who are eligible to utilize the credits and their |
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| 1 | | respective credit amounts. If the names of the taxpayers who | 2 | | are eligible to utilize the credits change due to a transfer of | 3 | | a qualified equity investment or a change in an allocation | 4 | | pursuant to Section 15, the qualified community development | 5 | | entity shall notify the Department of such change. | 6 | | (d) With respect to applications received before January 1, | 7 | | 2017, the The Department shall certify qualified equity | 8 | | investments in the order applications are received by the | 9 | | Department. Applications received on the same day shall be | 10 | | deemed to have been received simultaneously. For applications | 11 | | received on the same day and deemed complete, the Department | 12 | | shall certify, consistent with remaining tax credit capacity, | 13 | | qualified equity investments in proportionate percentages | 14 | | based upon the ratio of the amount of qualified equity | 15 | | investment requested in an application to the total amount of | 16 | | qualified equity investments requested in all applications | 17 | | received on the same day. | 18 | | (d-5) With respect to applications received on or after | 19 | | January 1, 2017, the Department shall certify applications by | 20 | | applicants that agree to designate qualified equity | 21 | | investments as federal qualified equity investments in | 22 | | accordance with item (8) of subsection (a) of this Section in | 23 | | proportionate percentages based upon the ratio of the amount of | 24 | | qualified equity investments requested in an application to be | 25 | | designated as federal qualified equity investments to the total | 26 | | amount of qualified equity investments to be designated as |
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| 1 | | federal qualified equity investments requested in all | 2 | | applications received on the same day. | 3 | | (d-10) With respect to applications received on or after | 4 | | January 1, 2017, after complying with subsection (d-5), the | 5 | | Department shall certify the qualified equity investments of | 6 | | all other applicants, including the remaining qualified equity | 7 | | investment authority requested by applicants not designated as | 8 | | federal qualified equity investments in accordance with item | 9 | | (8) of subsection (a) of this Section, in proportionate | 10 | | percentages based upon the ratio of the amount of qualified | 11 | | equity investments requested in the applications to the total | 12 | | amount of qualified equity investments requested in all | 13 | | applications received on the same day. | 14 | | (e) Once the Department has certified qualified equity | 15 | | investments that, on a cumulative basis, are eligible for | 16 | | $20,000,000 in tax credits, the Department may not certify any | 17 | | more qualified equity investments. If a pending request cannot | 18 | | be fully certified, the Department shall certify the portion | 19 | | that may be certified unless the qualified community | 20 | | development entity elects to withdraw its request rather than | 21 | | receive partial credit. | 22 | | (f) Within 30 days after receiving notice of certification, | 23 | | the qualified community development entity shall (i) issue the | 24 | | qualified equity investment and receive cash in the amount of | 25 | | the certified amount and (ii) with respect to qualified equity | 26 | | investments made on or after January 1, 2017, if applicable, |
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| 1 | | designate the required amount of qualified equity investment | 2 | | authority as a federal qualified equity investment . The | 3 | | qualified community development entity must provide the | 4 | | Department with evidence of the receipt of the cash investment | 5 | | within 10 business days after receipt and, with respect to | 6 | | qualified equity investments made on or after January 1, 2017, | 7 | | if applicable, provide evidence that the required amount of | 8 | | qualified equity investment authority was designated as a | 9 | | federal qualified equity investment . If the qualified | 10 | | community development entity does not receive the cash | 11 | | investment and issue the qualified equity investment within 30 | 12 | | days following receipt of the certification notice, the | 13 | | certification shall lapse and the entity may not issue the | 14 | | qualified equity investment without reapplying to the | 15 | | Department for certification. A certification that lapses | 16 | | reverts back to the Department and may be reissued only in | 17 | | accordance with the application process outline in this Section | 18 | | 25.
| 19 | | (g) Allocation rounds enabled by this Act shall be applied | 20 | | for according to the following schedule: | 21 | | (1) on January 2, 2019, $125,000,000 of qualified | 22 | | equity investments; and | 23 | | (2) on January 2, 2020, $125,000,000 of qualified | 24 | | equity investments. | 25 | | (Source: P.A. 95-1024, eff. 12-31-08; 96-939, eff. 7-1-10.) |
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| 1 | | (20 ILCS 663/40)
| 2 | | Sec. 40. Recapture. The Department of Revenue shall | 3 | | recapture, from the taxpayer that claimed the credit on a | 4 | | return, the tax credit allowed under this Act if: | 5 | | (1) any amount of the federal tax credit available with | 6 | | respect to a qualified equity investment that is eligible | 7 | | for a tax credit under this Act is recaptured under Section | 8 | | 45D of the Internal Revenue Code of 1986, as amended. In | 9 | | that case, the Department of Revenue's recapture shall be | 10 | | proportionate to the federal recapture with respect to that | 11 | | qualified equity investment; | 12 | | (2) the issuer redeems or makes principal repayment | 13 | | with respect to a qualified equity investment prior to the | 14 | | 7th anniversary of the issuance of the qualified equity | 15 | | investment. In that case, the Department of Revenue's | 16 | | recapture shall be proportionate to the amount of the | 17 | | redemption or repayment with respect to the qualified | 18 | | equity investment; or | 19 | | (3) the issuer fails to invest at least 85% of the cash | 20 | | purchase price of the qualified equity investment with | 21 | | respect to qualified equity investments made before | 22 | | January 1, 2017 and 100% of the cash purchase price of the | 23 | | qualified equity investment with respect to qualified | 24 | | equity investments made on or after January 1, 2017 in | 25 | | qualified low-income community investments in the State of | 26 | | Illinois within 12 months of the issuance of the qualified |
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| 1 | | equity investment and maintain such level of investment in | 2 | | qualified low-income community investments in Illinois | 3 | | until the last credit allowance date for such qualified | 4 | | equity investment ; or . | 5 | | (4) with respect to qualified equity investments made | 6 | | on or after January 1, 2017, the issuer violates Section 43 | 7 | | of this Act. | 8 | | For purposes of this Section, an investment shall be | 9 | | considered held by an issuer even if the investment has been | 10 | | sold or repaid; provided that the issuer reinvests an amount | 11 | | equal to the capital returned to or recovered by the issuer | 12 | | from the original investment, exclusive of any profits | 13 | | realized, in another qualified low-income community investment | 14 | | in this State within 12 months after the receipt of that | 15 | | capital. An issuer is not required to reinvest capital returned | 16 | | from qualified low-income community investments after the 6th | 17 | | anniversary of the issuance of the qualified equity investment, | 18 | | the proceeds of which were used to make the qualified | 19 | | low-income community investment, and the qualified low-income | 20 | | community investment shall be considered held by the issuer | 21 | | through the 7th anniversary of the qualified equity | 22 | | investment's issuance. | 23 | | The Department of Revenue shall provide notice to the | 24 | | qualified community development entity of any proposed | 25 | | recapture of tax credits pursuant to this Section. The entity | 26 | | shall have 90 days to cure any deficiency indicated in the |
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| 1 | | Department of Revenue's original recapture notice and avoid | 2 | | such recapture. If the entity fails or is unable to cure such | 3 | | deficiency with the 90-day period, the Department of Revenue | 4 | | shall provide the entity and the taxpayer from whom the credit | 5 | | is to be recaptured with a final order of recapture. Any tax | 6 | | credit for which a final recapture order has been issued shall | 7 | | be recaptured by the Department of Revenue from the taxpayer | 8 | | who claimed the tax credit on a tax return.
| 9 | | (Source: P.A. 95-1024, eff. 12-31-08.) | 10 | | (20 ILCS 663/43 new) | 11 | | Sec. 43. Prohibited activities and interests. For | 12 | | qualified equity investments made on or after January 1, 2017, | 13 | | no qualified active low-income community business that | 14 | | receives a qualified low-income community investment from a | 15 | | qualified community development entity that issues qualified | 16 | | equity investments under this Act, or any affiliates of such a | 17 | | qualified active low-income community business, may directly | 18 | | or indirectly (i) own or have the right to acquire an ownership | 19 | | interest in a qualified community development entity or member | 20 | | or affiliate of a qualified community development entity, | 21 | | including, but not limited to, a holder of a qualified equity | 22 | | investment issued by the qualified community development | 23 | | entity or (ii) loan to or invest in a qualified community | 24 | | development entity or member or affiliate of a qualified | 25 | | community development entity, including, but not limited to, a |
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| 1 | | holder of a qualified equity investment issued by a qualified | 2 | | community development entity, where the proceeds of such loan | 3 | | or investment are directly or indirectly used to fund or | 4 | | refinance the purchase of a qualified equity investment under | 5 | | this Act. For purposes of this Section, "affiliate" means an | 6 | | entity that directly, or indirectly through one or more | 7 | | intermediaries, controls, is controlled by, or is under common | 8 | | control with another entity. For purposes of this Section, an | 9 | | entity is "controlled by" another entity if the controlling | 10 | | person holds, directly or indirectly, the majority voting or | 11 | | ownership interest in the controlled person or has control over | 12 | | the day-to-day operations of the controlled person by contract | 13 | | or law, provided that a qualified community development entity | 14 | | shall not be considered an affiliate of a qualified active | 15 | | low-income community business solely as a result of its | 16 | | qualified low-income community investment in such business. | 17 | | This Section is not intended to affect ownership or affiliate | 18 | | interests that arise following the sixth anniversary of the | 19 | | issuance of the qualified equity investment. | 20 | | (20 ILCS 663/50)
| 21 | | Sec. 50. Sunset. For fiscal years following fiscal year | 22 | | 2021 2017 , qualified equity investments shall not be made under | 23 | | this Act unless reauthorization is made pursuant to this | 24 | | Section. For all fiscal years following fiscal year 2021 2017 , | 25 | | unless the General Assembly adopts a joint resolution granting |
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| 1 | | authority to the Department to approve qualified equity | 2 | | investments for the Illinois new markets development program | 3 | | and clearly describing the amount of tax credits available for | 4 | | the next fiscal year, or otherwise complies with the provisions | 5 | | of this Section, no qualified equity investments may be | 6 | | permitted to be made under this Act. The amount of available | 7 | | tax credits contained in such a resolution shall not exceed the | 8 | | limitation provided under Section 20. Nothing in this Section | 9 | | precludes a taxpayer who makes a qualified equity investment | 10 | | prior to the expiration of authority to make qualified equity | 11 | | investments from claiming tax credits relating to that | 12 | | qualified equity investment for each applicable credit | 13 | | allowance date.
| 14 | | (Source: P.A. 97-636, eff. 6-1-12 .) | 15 | | (20 ILCS 663/55 new) | 16 | | Sec. 55. Annual report. Each qualified community | 17 | | development entity shall submit an annual report to the | 18 | | Department within 45 days after the beginning of each calendar | 19 | | year during the compliance period. No annual report shall be | 20 | | due prior to the first anniversary of the initial credit | 21 | | allowance date. The report shall include, but is not limited | 22 | | to, the following: | 23 | | (1) an attestation from an authorized officer of the | 24 | | qualified community development entity that the entity has | 25 | | not been the subject of any investigation by a government |
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| 1 | | agency relating to tax credits or financial services during | 2 | | the preceding calendar year; | 3 | | (2) information with respect to all qualified | 4 | | low-income community investments made by the qualified | 5 | | community development entity, including: | 6 | | (A) the date and amount of, and bank statements or | 7 | | wire transfer reports documenting, such qualified | 8 | | low-income community investments; | 9 | | (B) the name, address, and EIN of each qualified | 10 | | active low-income community business funded by the | 11 | | qualified community development entity, the number of | 12 | | persons employed by such business at the time of the | 13 | | initial investment, and a brief description of the | 14 | | business, the financing, and community benefits of the | 15 | | financing; and | 16 | | (C) the number of employment positions maintained | 17 | | by each qualified active low-income community business | 18 | | as of the date of report or the end of the preceding | 19 | | calendar year and the average annual salaries of such | 20 | | positions; and | 21 | | (D) the total number of employment positions | 22 | | created and retained as a result of qualified | 23 | | low-income community investments and the average | 24 | | annual salaries of those positions; and | 25 | | (3) any changes with respect to the taxpayers entitled | 26 | | to claim tax credits with respect to qualified equity |
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| 1 | | investments issued by the qualified community development | 2 | | entity since its last report pursuant to this Section. | 3 | | The qualified community development entity is not required | 4 | | to provide the annual report set forth in this Section for | 5 | | qualified low-income community investments that have been | 6 | | redeemed or repaid.
| 7 | | Section 99. Effective date. This Act takes effect upon | 8 | | becoming law.
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