Bill Amendment: IL HB1967 | 2021-2022 | 102nd General Assembly

NOTE: For additional amemendments please see the Bill Drafting List

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Bill Title: DCEO-VARIOUS

Status: 2021-03-27 - House Committee Amendment No. 1 Rule 19(c) / Re-referred to Rules Committee [HB1967 Detail]

Download: Illinois-2021-HB1967-House_Amendment_001.html

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Rep. Mark L. Walker

Filed: 3/22/2021

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AMENDMENT TO HOUSE BILL 1967
AMENDMENT NO. ______. Amend House Bill 1967 by replacing
everything after the enacting clause with the following:
"Section 5. The Illinois Income Tax Act is amended by
changing Section 220 and by adding Section 232 as follows:
(35 ILCS 5/220)
Sec. 220. Angel investment credit.
(a) As used in this Section:
"Applicant" means a corporation, partnership, limited
liability company, or a natural person that makes an
investment in a qualified new business venture. The term
"applicant" does not include (i) a corporation, partnership,
limited liability company, or a natural person who has a
direct or indirect ownership interest of at least 33% 51% in
the profits, capital, or value of the qualified new business
venture receiving the investment or (ii) a related member.

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"Claimant" means an applicant certified by the Department
who files a claim for a credit under this Section.
"Department" means the Department of Commerce and Economic
Opportunity.
"Investment" means money (or its equivalent) given to a
qualified new business venture, at a risk of loss, in
consideration for an equity interest of the qualified new
business venture. The Department may adopt rules to permit
certain forms of contingent equity investments to be
considered eligible for a tax credit under this Section.
"Qualified new business venture" means a business that is
registered with the Department under this Section.
"Related member" means a person that, with respect to the
applicant, is any one of the following:
(1) An individual, if the individual and the members
of the individual's family (as defined in Section 318 of
the Internal Revenue Code) own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the value of the outstanding profits,
capital, stock, or other ownership interest in the
qualified new business venture that is the recipient of
the applicant's investment.
(2) A partnership, estate, or trust and any partner or
beneficiary, if the partnership, estate, or trust and its
partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at

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least 50% of the profits, capital, stock, or other
ownership interest in the qualified new business venture
that is the recipient of the applicant's investment.
(3) A corporation, and any party related to the
corporation in a manner that would require an attribution
of stock from the corporation under the attribution rules
of Section 318 of the Internal Revenue Code, if the
applicant and any other related member own, in the
aggregate, directly, indirectly, beneficially, or
constructively, at least 50% of the value of the
outstanding stock of the qualified new business venture
that is the recipient of the applicant's investment.
(4) A corporation and any party related to that
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the
corporation and all such related parties own, in the
aggregate, at least 50% of the profits, capital, stock, or
other ownership interest in the qualified new business
venture that is the recipient of the applicant's
investment.
(5) A person to or from whom there is attribution of
ownership of stock in the qualified new business venture
that is the recipient of the applicant's investment in
accordance with Section 1563(e) of the Internal Revenue

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Code, except that for purposes of determining whether a
person is a related member under this paragraph, "20%"
shall be substituted for "5%" whenever "5%" appears in
Section 1563(e) of the Internal Revenue Code.
"Social equity business" means a business that is a
qualified social equity applicant, as defined in Section 1-10
of the Cannabis Regulation and Tax Act.
(b) For taxable years beginning after December 31, 2010,
and ending on or before December 31, 2021, subject to the
limitations provided in this Section, a claimant may claim, as
a credit against the tax imposed under subsections (a) and (b)
of Section 201 of this Act, an amount equal to 25% of the
claimant's investment made directly in a qualified new
business venture. However, if the investment is made in: (1) a
qualified new business venture that is minority-owned,
women-owned, or is a business owned a person with a disability
(as those terms are used and defined in the Business
Enterprise for Minorities, Women, and Persons with
Disabilities Act); or (2) a qualified new business venture in
which the principal place of business is located in a county
with a population of not more than 250,000, then the amount of
the credit is 35% of the claimant's investment made directly
in a qualified new business venture. In order for an
investment in a qualified new business venture to be eligible
for tax credits, the business must have applied for and
received certification under subsection (e) for the taxable

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year in which the investment was made prior to the date on
which the investment was made. The credit under this Section
may not exceed the taxpayer's Illinois income tax liability
for the taxable year. If the amount of the credit exceeds the
tax liability for the year, the excess may be carried forward
and applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be applied
to the earliest year for which there is a tax liability. If
there are credits from more than one tax year that are
available to offset a liability, the earlier credit shall be
applied first. In the case of a partnership or Subchapter S
Corporation, the credit is allowed to the partners or
shareholders in accordance with the determination of income
and distributive share of income under Sections 702 and 704
and Subchapter S of the Internal Revenue Code.
(c) The minimum amount an applicant must invest in any
single qualified new business venture in order to be eligible
for a credit under this Section is $10,000. The maximum amount
of an applicant's total investment made in any single
qualified new business venture that may be used as the basis
for a credit under this Section is $1,000,000 $2,000,000.
(d) The Department shall implement a program to certify an
applicant for an angel investment credit. Upon satisfactory
review, the Department shall issue a tax credit certificate
stating the amount of the tax credit to which the applicant is
entitled. The Department shall annually certify that: (i) each

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qualified new business venture that receives an angel
investment under this Section has maintained a minimum
employment threshold, as defined by rule, in the State (and
continues to maintain a minimum employment threshold in the
State for a period of no less than 3 years from the issue date
of the last tax credit certificate issued by the Department
with respect to such business pursuant to this Section); and
(ii) the claimant's investment has been made and remains,
except in the event of a qualifying liquidity event, in the
qualified new business venture for no less than 3 years.
If an investment for which a claimant is allowed a credit
under subsection (b) is held by the claimant for less than 3
years, other than as a result of a permitted sale of the
investment to person who is not a related member, the claimant
shall pay to the Department of Revenue, in the manner
prescribed by the Department of Revenue, the aggregate amount
of the disqualified credits that the claimant received related
to the subject investment.
If the Department determines that a qualified new business
venture failed to maintain a minimum employment threshold in
the State through the date which is 3 years from the issue date
of the last tax credit certificate issued by the Department
with respect to the subject business pursuant to this Section,
the claimant or claimants shall pay to the Department of
Revenue, in the manner prescribed by the Department of
Revenue, the aggregate amount of the disqualified credits that

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claimant or claimants received related to investments in that
business.
(e) The Department shall implement a program to register
qualified new business ventures for purposes of this Section.
A business desiring registration under this Section shall be
required to submit a full and complete application to the
Department. A submitted application shall be effective only
for the taxable year in which it is submitted, and a business
desiring registration under this Section shall be required to
submit a separate application in and for each taxable year for
which the business desires registration. Further, if at any
time prior to the acceptance of an application for
registration under this Section by the Department one or more
events occurs which makes the information provided in that
application materially false or incomplete (in whole or in
part), the business shall promptly notify the Department of
the same. Any failure of a business to promptly provide the
foregoing information to the Department may, at the discretion
of the Department, result in a revocation of a previously
approved application for that business, or disqualification of
the business from future registration under this Section, or
both. The Department may register the business only if all of
the following conditions are satisfied:
(1) it has its principal place of business in this
State;
(2) at least 51% of the employees employed by the

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business are employed in this State;
(3) the business has the potential for increasing jobs
in this State, increasing capital investment in this
State, or both, as determined by the Department, and any
either of the following apply:
(A) it is principally engaged in innovation in any
of the following: manufacturing; biotechnology;
nanotechnology; communications; agricultural
sciences; clean energy creation or storage technology;
processing or assembling products, including medical
devices, pharmaceuticals, computer software, computer
hardware, semiconductors, other innovative technology
products, or other products that are produced using
manufacturing methods that are enabled by applying
proprietary technology; or providing services that are
enabled by applying proprietary technology; or
(B) it is undertaking pre-commercialization
activity related to proprietary technology that
includes conducting research, developing a new product
or business process, or developing a service that is
principally reliant on applying proprietary
technology; or
(C) the business is a social equity business and
is engaged in innovation in the field of cannabis
cultivation, extraction, processing, distribution,
infusion, or dispensing, or is undertaking

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pre-commercialization activity within the adult use
cannabis industry related to proprietary technology
that includes conducting research, developing a new
product or business process, or developing a service
that is principally reliant on applying proprietary
technology;
(4) it is not principally engaged in real estate
development, insurance, banking, lending, lobbying,
political consulting, professional services provided by
attorneys, accountants, business consultants, physicians,
or health care consultants, wholesale or retail trade,
leisure, hospitality, transportation, or construction,
except construction of power production plants that derive
energy from a renewable energy resource, as defined in
Section 1 of the Illinois Power Agency Act; however, the
restrictions in this Section relating to wholesale or
retail trade and transportation shall not apply to social
equity businesses;
(5) at the time it is first certified:
(A) it has fewer than 100 employees;
(B) it has been in operation in Illinois for not
more than 10 consecutive years prior to the year of
certification; and
(C) it has received not more than $5,000,000
$10,000,000 in aggregate investments;
(5.1) it agrees to maintain a minimum employment

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threshold in the State of Illinois prior to the date which
is 3 years from the issue date of the last tax credit
certificate issued by the Department with respect to that
business pursuant to this Section;
(6) (blank); and
(7) it has received not more than $2,000,000
$4,000,000 in investments that qualified for tax credits
under this Section.
(f) The Department, in consultation with the Department of
Revenue, shall adopt rules to administer this Section. The
aggregate amount of the tax credits that may be claimed under
this Section for investments made in qualified new business
ventures shall be limited at $10,000,000 per calendar year, of
which $1,500,000 $500,000 shall be reserved for investments
made in qualified new business ventures which are
minority-owned businesses, women-owned businesses, or
businesses owned by a person with a disability (as those terms
are used and defined in the Business Enterprise for
Minorities, Women, and Persons with Disabilities Act), and an
additional $1,500,000 $500,000 shall be reserved for
investments made in qualified new business ventures with their
principal place of business in counties with a population of
not more than 250,000. The foregoing annual allowable amounts
shall be allocated by the Department, on a per calendar
quarter basis and prior to the commencement of each calendar
year, in such proportion as determined by the Department,

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provided that: (i) the amount initially allocated by the
Department for any one calendar quarter shall not exceed 35%
of the total allowable amount; (ii) any portion of the
allocated allowable amount remaining unused as of the end of
any of the first 3 calendar quarters of a given calendar year
shall be rolled into, and added to, the total allocated amount
for the next available calendar quarter; and (iii) the
reservation of tax credits for investments in minority-owned
businesses, women-owned businesses, businesses owned by a
person with a disability, and in businesses in counties with a
population of not more than 250,000 is limited to the first 3
calendar quarters of a given calendar year, after which they
may be claimed by investors in any qualified new business
venture.
(g) A claimant may not sell or otherwise transfer a credit
awarded under this Section to another person.
(h) On or before March 1 of each year, the Department shall
report to the Governor and to the General Assembly on the tax
credit certificates awarded under this Section for the prior
calendar year.
(1) This report must include, for each tax credit
certificate awarded:
(A) the name of the claimant and the amount of
credit awarded or allocated to that claimant;
(B) the name and address (including the county) of
the qualified new business venture that received the

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investment giving rise to the credit, the North
American Industry Classification System (NAICS) code
applicable to that qualified new business venture, and
the number of employees of the qualified new business
venture; and
(C) the date of approval by the Department of each
claimant's tax credit certificate.
(2) The report must also include:
(A) the total number of applicants and the total
number of claimants, including the amount of each tax
credit certificate awarded to a claimant under this
Section in the prior calendar year;
(B) the total number of applications from
businesses seeking registration under this Section,
the total number of new qualified business ventures
registered by the Department, and the aggregate amount
of investment upon which tax credit certificates were
issued in the prior calendar year; and
(C) the total amount of tax credit certificates
sought by applicants, the amount of each tax credit
certificate issued to a claimant, the aggregate amount
of all tax credit certificates issued in the prior
calendar year and the aggregate amount of tax credit
certificates issued as authorized under this Section
for all calendar years.
(i) For each business seeking registration under this

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Section after December 31, 2016, the Department shall require
the business to include in its application the North American
Industry Classification System (NAICS) code applicable to the
business and the number of employees of the business at the
time of application. Each business registered by the
Department as a qualified new business venture that receives
an investment giving rise to the issuance of a tax credit
certificate pursuant to this Section shall, for each of the 3
years following the issue date of the last tax credit
certificate issued by the Department with respect to such
business pursuant to this Section, report to the Department
the following:
(1) the number of employees and the location at which
those employees are employed, both as of the end of each
year;
(2) the amount of additional new capital investment
raised as of the end of each year, if any; and
(3) the terms of any liquidity event occurring during
such year; for the purposes of this Section, a "liquidity
event" means any event that would be considered an exit
for an illiquid investment, including any event that
allows the equity holders of the business (or any material
portion thereof) to cash out some or all of their
respective equity interests.
(Source: P.A. 100-328, eff. 1-1-18; 100-686, eff. 1-1-19;
100-863, eff. 8-14-18; 101-81, eff. 7-12-19.)

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(35 ILCS 5/232 new)
Sec. 232. Credit for full-time employees in a county with
fewer than 250,000 inhabitants.
(a) For taxable years beginning on or after January 1,
2021, each taxpayer that hires a full-time employee to fill a
position at a location in a county with fewer than 250,000
inhabitants is entitled to a credit against the taxes imposed
by subsections (a) and (b) of Section 201 of this Act in an
amount not to exceed $5,000 per eligible employee in any
taxable year. The credit may be taken for the taxable year in
which the employee is hired and for the next taxable year if
the employee remains employed with that taxpayer in the next
taxable year. The amount of the credit shall be $5,000 in each
taxable year, multiplied by a fraction the numerator of which
is the number of days the employee is employed by the taxpayer
during the taxable year and the denominator of which is 365.
(b) For partners, shareholders of Subchapter S
corporations, and owners of limited liability companies, if
the liability company is treated as a partnership for purposes
of federal and State income taxation, there shall be allowed a
credit under this Section to be determined in accordance with
the determination of income and distributive share of income
under Sections 702 and 704 and Subchapter S of the Internal
Revenue Code.
(c) In no event shall a credit under this Section reduce

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the taxpayer's liability to less than zero. If the amount of
the credit exceeds the tax liability for the year, the excess
may be carried forward and applied to the tax liability of the
5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is
a tax liability. If there are credits for more than one year
that are available to offset a liability, the earlier credit
shall be applied first.
(d) As used in this Section, "full-time employee" means an
individual who is employed for consideration for at least 35
hours each week or who renders any other standard of service
generally accepted by industry custom or practice as full-time
employment. An individual for whom a W-2 is issued by a
Professional Employer Organization (PEO) is a full-time
employee if employed in the service of the taxpayer for
consideration for at least 35 hours each week or who renders
any other standard of service generally accepted by industry
custom or practice as full-time employment to the taxpayer.
(e) This Section is exempt from the provisions of Section
250.
Section 99. Effective date. This Act takes effect upon
becoming law.".