Bill Amendment: IL SB2012 | 2017-2018 | 100th General Assembly
NOTE: For additional amemendments please see the Bill Drafting List
Bill Title: INC TX-ANGEL CREDIT
Status: 2017-08-24 - Public Act . . . . . . . . . 100-0328 [SB2012 Detail]
Download: Illinois-2017-SB2012-Senate_Amendment_001.html
Bill Title: INC TX-ANGEL CREDIT
Status: 2017-08-24 - Public Act . . . . . . . . . 100-0328 [SB2012 Detail]
Download: Illinois-2017-SB2012-Senate_Amendment_001.html
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1 | AMENDMENT TO SENATE BILL 2012
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2 | AMENDMENT NO. ______. Amend Senate Bill 2012 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Illinois Income Tax Act is amended by | ||||||
5 | changing Section 220 as follows:
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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 | "Investment" means money (or its equivalent) given to a | ||||||
5 | qualified new business venture, at a risk of loss, in | ||||||
6 | consideration for an equity interest of the qualified new | ||||||
7 | business venture. The Department may adopt rules to permit | ||||||
8 | certain forms of contingent equity investments to be considered | ||||||
9 | eligible for a tax credit under this Section. | ||||||
10 | "Qualified new business venture" means a business that is | ||||||
11 | registered with the Department under this Section. | ||||||
12 | "Related member" means a person that, with respect to the
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13 | applicant investment , is any one of the following: | ||||||
14 | (1) An individual, if the individual and the members of | ||||||
15 | the individual's family (as defined in Section 318 of the | ||||||
16 | Internal Revenue Code) own directly, indirectly,
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17 | beneficially, or constructively, in the aggregate, at | ||||||
18 | least 50% of the value of the outstanding profits, capital, | ||||||
19 | stock, or other ownership interest in the applicant. | ||||||
20 | (2) A partnership, estate, or trust and any partner or | ||||||
21 | beneficiary, if the partnership, estate, or trust and its | ||||||
22 | partners or beneficiaries own directly, indirectly, | ||||||
23 | beneficially, or constructively, in the aggregate, at | ||||||
24 | least 50% of the profits, capital, stock, or other | ||||||
25 | ownership interest in the applicant. | ||||||
26 | (3) A corporation, and any party related to the |
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1 | corporation in a manner that would require an attribution | ||||||
2 | of stock from the corporation under the attribution rules
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3 | of Section 318 of the Internal Revenue Code, if the | ||||||
4 | applicant and any other related member own, in the | ||||||
5 | aggregate, directly, indirectly, beneficially, or | ||||||
6 | constructively, at least 50% of the value of the | ||||||
7 | corporation's outstanding stock. | ||||||
8 | (4) A corporation and any party related to that | ||||||
9 | corporation in a manner that would require an attribution | ||||||
10 | of stock from the corporation to the party or from the
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11 | party to the corporation under the attribution rules of | ||||||
12 | Section 318 of the Internal Revenue Code, if the | ||||||
13 | corporation and all such related parties own, in the | ||||||
14 | aggregate, at least 50% of the profits, capital, stock, or | ||||||
15 | other ownership interest in the applicant. | ||||||
16 | (5) A person to or from whom there is attribution of | ||||||
17 | stock ownership in accordance with Section 1563(e) of the | ||||||
18 | Internal Revenue Code, except that for purposes of | ||||||
19 | determining whether a person is a related member under this | ||||||
20 | paragraph, "20%" shall be substituted for "5%" whenever | ||||||
21 | "5%" appears in Section 1563(e) of the Internal Revenue | ||||||
22 | Code. | ||||||
23 | (b) For taxable years beginning after December 31, 2010, | ||||||
24 | and ending on or before December 31, 2021 December 31, 2016 , | ||||||
25 | subject to the limitations provided in this Section, a claimant | ||||||
26 | may claim, as a credit against the tax imposed under |
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1 | subsections (a) and (b) of Section 201 of this Act, an amount | ||||||
2 | equal to 25% of the claimant's investment made directly in a | ||||||
3 | qualified new business venture. In order for an investment in a | ||||||
4 | qualified new business venture to be eligible for tax credits, | ||||||
5 | the business must have applied for and received certification | ||||||
6 | under subsection (e) for the taxable year in which the | ||||||
7 | investment was made prior to the date on which the investment | ||||||
8 | was made. The credit under this Section may not exceed the | ||||||
9 | taxpayer's Illinois income tax liability for the taxable year. | ||||||
10 | If the amount of the credit exceeds the tax liability for the | ||||||
11 | year, the excess may be carried forward and applied to the tax | ||||||
12 | liability of the 5 taxable years following the excess credit | ||||||
13 | year. The credit shall be applied to the earliest year for | ||||||
14 | which there is a tax liability. If there are credits from more | ||||||
15 | than one tax year that are available to offset a liability, the | ||||||
16 | earlier credit shall be applied first. In the case of a | ||||||
17 | partnership or Subchapter S Corporation, the credit is allowed | ||||||
18 | to the partners or shareholders in accordance with the | ||||||
19 | determination of income and distributive share of income under | ||||||
20 | Sections 702 and 704 and Subchapter S of the Internal Revenue | ||||||
21 | Code. | ||||||
22 | (c) The minimum amount an applicant must invest in any | ||||||
23 | single qualified new business venture in order to be eligible | ||||||
24 | for a credit under this Section is $10,000. The maximum amount | ||||||
25 | of an applicant's total investment made in any single qualified | ||||||
26 | new business venture that may be used as the basis for a credit |
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1 | under this Section is $2,000,000 for each investment made | ||||||
2 | directly in a qualified new business venture . | ||||||
3 | (d) The Department shall implement a program to certify an | ||||||
4 | applicant for an angel investment credit. Upon satisfactory | ||||||
5 | review, the Department shall issue a tax credit certificate | ||||||
6 | stating the amount of the tax credit to which the applicant is | ||||||
7 | entitled. The Department shall annually certify that : (i) each | ||||||
8 | qualified new business venture that receives an angel | ||||||
9 | investment under this Section has maintained a minimum | ||||||
10 | employment threshold, as defined by rule, in the State (and | ||||||
11 | continues to maintain a minimum employment threshold in the | ||||||
12 | State for a period of no less than 3 years from the issue date | ||||||
13 | of the last tax credit certificate issued by the Department | ||||||
14 | with respect to such business pursuant to this Section); and | ||||||
15 | (ii) the claimant's investment has been made and remains , | ||||||
16 | except in the event of a qualifying liquidity event, in the | ||||||
17 | qualified new business venture for no less than 3 years. | ||||||
18 | If an investment for which a claimant is allowed a credit | ||||||
19 | under subsection (b) is held by the claimant for less than 3 | ||||||
20 | years, other than as a result of a permitted sale of the | ||||||
21 | investment to person who is not a related member, or, if within | ||||||
22 | that period of time the qualified new business venture is moved | ||||||
23 | from the State of Illinois, the claimant shall pay to the | ||||||
24 | Department of Revenue, in the manner prescribed by the | ||||||
25 | Department of Revenue, the aggregate amount of the disqualified | ||||||
26 | credits credit that the claimant received related to the |
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1 | subject investment. | ||||||
2 | If the Department determines that a qualified new business | ||||||
3 | venture failed to maintain a minimum employment threshold in | ||||||
4 | the State through the date which is 3 years from the issue date | ||||||
5 | of the last tax credit certificate issued by the Department | ||||||
6 | with respect to the subject business pursuant to this Section, | ||||||
7 | the claimant or claimants shall pay to the Department of | ||||||
8 | Revenue, in the manner prescribed by the Department of Revenue, | ||||||
9 | the aggregate amount of the disqualified credits that claimant | ||||||
10 | or claimants received related to investments in that business. | ||||||
11 | (e) The Department shall implement a program to register | ||||||
12 | qualified new business ventures for purposes of this Section. A | ||||||
13 | business desiring registration under this Section shall be | ||||||
14 | required to submit a full and complete an application to the | ||||||
15 | Department in each taxable year for which the business desires | ||||||
16 | registration . A submitted application shall be effective only | ||||||
17 | for the taxable year in which it is submitted, and a business | ||||||
18 | desiring registration under this Section shall be required to | ||||||
19 | submit a separate application in and for each taxable year for | ||||||
20 | which the business desires registration. Further, if at any | ||||||
21 | time prior to the acceptance of an application for registration | ||||||
22 | under this Section by the Department one or more events occurs | ||||||
23 | which makes the information provided in that application | ||||||
24 | materially false or incomplete (in whole or in part) the | ||||||
25 | business shall promptly notify the Department of the same. Any | ||||||
26 | failure of a business to promptly provide the foregoing |
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1 | information to the Department may, at the discretion of the | ||||||
2 | Department, result in a revocation of a previously approved | ||||||
3 | application for that business, or disqualification of the | ||||||
4 | business from future registration under this Section, or both. | ||||||
5 | The Department may register the business only if the business | ||||||
6 | satisfies all of the following conditions are satisfied : | ||||||
7 | (1) it has its principal place of business headquarters | ||||||
8 | in this State; | ||||||
9 | (2) at least 51% of the employees employed by the | ||||||
10 | business are employed in this State; | ||||||
11 | (3) the business it has the potential for increasing | ||||||
12 | jobs in this State, increasing capital investment in this | ||||||
13 | State, or both, as determined by the Department, and either | ||||||
14 | of the following apply: | ||||||
15 | (A) it is principally engaged in innovation in any | ||||||
16 | of the following: manufacturing; biotechnology; | ||||||
17 | nanotechnology; communications; agricultural sciences; | ||||||
18 | clean energy creation or storage technology; | ||||||
19 | processing or assembling products, including medical | ||||||
20 | devices, pharmaceuticals, computer software, computer | ||||||
21 | hardware, semiconductors, other innovative technology | ||||||
22 | products, or other products that are produced using | ||||||
23 | manufacturing methods that are enabled by applying | ||||||
24 | proprietary technology; or providing services that are | ||||||
25 | enabled by applying proprietary technology; or | ||||||
26 | (B) it is undertaking pre-commercialization |
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1 | activity related to proprietary technology that | ||||||
2 | includes conducting research, developing a new product | ||||||
3 | or business process, or developing a service that is | ||||||
4 | principally reliant on applying proprietary | ||||||
5 | technology; | ||||||
6 | (4) it is not principally engaged in real estate | ||||||
7 | development, insurance, banking, lending, lobbying, | ||||||
8 | political consulting, professional services provided by | ||||||
9 | attorneys, accountants, business consultants, physicians, | ||||||
10 | or health care consultants, wholesale or retail trade, | ||||||
11 | leisure, hospitality, transportation, or construction, | ||||||
12 | except construction of power production plants that derive | ||||||
13 | energy from a renewable energy resource, as defined in | ||||||
14 | Section 1 of the Illinois Power Agency Act; | ||||||
15 | (5) at the time it is first certified: | ||||||
16 | (A) it has fewer than 100 employees; | ||||||
17 | (B) it has been in operation in Illinois for not | ||||||
18 | more than 10 consecutive years prior to the year of | ||||||
19 | certification; and | ||||||
20 | (C) it has received not more than $10,000,000 in | ||||||
21 | aggregate investments private equity investment in | ||||||
22 | cash ; | ||||||
23 | (5.1) it agrees to maintain a minimum employment | ||||||
24 | threshold in the State of Illinois prior to the date which | ||||||
25 | is 3 years from the issue date of the last tax credit | ||||||
26 | certificate issued by the Department with respect to that |
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1 | business pursuant to this Section; | ||||||
2 | (6) (blank); and | ||||||
3 | (7) it has received not more than $4,000,000 in | ||||||
4 | investments that qualified for tax credits under this | ||||||
5 | Section. | ||||||
6 | (f) The Department, in consultation with the Department of | ||||||
7 | Revenue, shall adopt rules to administer this Section. The | ||||||
8 | aggregate amount of the tax credits that may be claimed under | ||||||
9 | this Section for investments made in qualified new business | ||||||
10 | ventures shall be limited at $10,000,000 per calendar year , of | ||||||
11 | which $500,000 shall be reserved for investments made in | ||||||
12 | qualified new business ventures which are "minority owned | ||||||
13 | businesses", "female owned businesses", or "businesses owned | ||||||
14 | by a person with a disability" (as those terms are used and | ||||||
15 | defined in the Business Enterprise for Minorities, Females, and | ||||||
16 | Persons with Disabilities Act), and an additional $500,000 | ||||||
17 | shall be reserved for investments made in qualified new | ||||||
18 | business ventures with their principal place of business in | ||||||
19 | counties with a population of not more than 250,000. The | ||||||
20 | foregoing annual allowable amounts shall be allocated by the | ||||||
21 | Department, on a per calendar quarter basis and prior to the | ||||||
22 | commencement of each calendar year, in such proportion as | ||||||
23 | determined by the Department, provided that: (i) the amount | ||||||
24 | initially allocated by the Department for any one calendar | ||||||
25 | quarter shall not exceed 35% of the total allowable amount; and | ||||||
26 | (ii) any portion of the allocated allowable amount remaining |
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1 | unused as of the end of any of the first 2 calendar quarters of | ||||||
2 | a given calendar year shall be rolled into, and added to, the | ||||||
3 | total allocated amount for the next available calendar quarter . | ||||||
4 | (g) A claimant may not sell or otherwise transfer a credit | ||||||
5 | awarded under this Section to another person. | ||||||
6 | (h) On or before March 1 of each year, the Department shall | ||||||
7 | report to the Governor and to the General Assembly on the tax | ||||||
8 | credit certificates awarded under this Section for the prior | ||||||
9 | calendar year. | ||||||
10 | (1) This report must include, for each tax credit | ||||||
11 | certificate awarded: | ||||||
12 | (A) the name of the claimant and the amount of | ||||||
13 | credit awarded or allocated to that claimant; | ||||||
14 | (B) the name and address (including the county) of | ||||||
15 | the qualified new business venture that received the | ||||||
16 | investment giving rise to the credit, the North | ||||||
17 | American Industry Classification System (NAICS) | ||||||
18 | applicable to that qualified new business venture, and | ||||||
19 | the number of employees of the the qualified new | ||||||
20 | business venture that received the investment giving | ||||||
21 | rise to the credit and the county in which the | ||||||
22 | qualified new business venture is located ; and | ||||||
23 | (C) the date of approval by the Department of each | ||||||
24 | claimant's the applications for the tax credit | ||||||
25 | certificate. | ||||||
26 | (2) The report must also include: |
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1 | (A) the total number of applicants and the total | ||||||
2 | number of claimants, including the amount of each tax | ||||||
3 | credit certificate and amount for tax credit | ||||||
4 | certificates awarded to a claimant under this Section | ||||||
5 | in the prior calendar year; | ||||||
6 | (B) the total number of applications from | ||||||
7 | businesses seeking registration under this Section, | ||||||
8 | the total number of new qualified business ventures | ||||||
9 | registered by the Department, and the aggregate amount | ||||||
10 | of investment upon which tax credit certificates were | ||||||
11 | issued in the prior calendar year the total number of | ||||||
12 | applications and amount for which tax credit | ||||||
13 | certificates were issued in the prior calendar year ; | ||||||
14 | and | ||||||
15 | (C) the total amount of tax credit certificates | ||||||
16 | sought by applicants, the amount of each tax credit | ||||||
17 | certificate issued to a claimant, the aggregate amount | ||||||
18 | of all tax credit certificates issued in the prior | ||||||
19 | calendar year and the aggregate amount of tax credit | ||||||
20 | certificates issued as authorized under this Section | ||||||
21 | for all calendar years the total tax credit | ||||||
22 | certificates and amount authorized under this Section | ||||||
23 | for all calendar years .
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24 | (i) For each businesses seeking registration under this | ||||||
25 | Section after December 31, 2016, the Department shall require | ||||||
26 | the business to include in its application the North American |
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1 | Industry Classification System (NAICS) code applicable to the | ||||||
2 | business and the number of employees of the business at the | ||||||
3 | time of application. Each business registered by the Department | ||||||
4 | as a qualified new business venture that receives an investment | ||||||
5 | giving rise to the issuance of a tax credit certificate | ||||||
6 | pursuant to this Section shall, for each of the 3 years | ||||||
7 | following the issue date of the last tax credit certificate | ||||||
8 | issued by the Department with respect to such business pursuant | ||||||
9 | to this Section, report to the Department the following: | ||||||
10 | (1) the number of employees and the location at which | ||||||
11 | those employees are employed, both as of the end of each | ||||||
12 | year; | ||||||
13 | (2) the amount of additional new capital investment | ||||||
14 | raised as of the end of each year, if any; and | ||||||
15 | (3) the terms of any liquidity event occurring during | ||||||
16 | such year; for the purposes of this Section, a "liquidity | ||||||
17 | event" means any event that would be considered an exit for | ||||||
18 | an illiquid investment, including any event that allows the | ||||||
19 | equity holders of the business (or any material portion | ||||||
20 | thereof) to cash out some or all of their respective equity | ||||||
21 | interests. | ||||||
22 | (Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11; | ||||||
23 | 97-1097, eff. 8-24-12.)".
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