Bill Text: IL SB3619 | 2011-2012 | 97th General Assembly | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Illinois Income Tax Act. Makes a technical change in a Section concerning the short title.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Passed) 2012-08-24 - Public Act . . . . . . . . . 97-1097 [SB3619 Detail]

Download: Illinois-2011-SB3619-Engrossed.html

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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Section 220 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 a corporation, partnership, limited liability
company, or a natural person who has a direct or indirect
ownership interest of at least 51% in the profits, capital, or
value of the investment or a related member.
"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.
"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
investment, is any one of the following:

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(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 applicant.
(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
least 50% of the profits, capital, stock, or other
ownership interest in the applicant.
(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
corporation's outstanding stock.
(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

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aggregate, at least 50% of the profits, capital, stock, or
other ownership interest in the applicant.
(5) A person to or from whom there is attribution of
stock ownership in accordance with Section 1563(e) of the
Internal Revenue 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.
(b) For taxable years beginning after December 31, 2010,
and ending on or before December 31, 2016, 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. 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 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

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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 maximum amount of an applicant's investment that
may be used as the basis for a credit under this Section is
$2,000,000 for each investment made directly in a qualified new
business venture.
(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 the
claimant's investment has been made and remains in the
qualified new business venture for no less than 3 years.
(d-5) If an investment for which a claimant is allowed a
credit under subsection (b) is held by the claimant for less
than 3 years, or, if within that period of time the qualified
new business venture is moved from the State of Illinois, the
claimant shall pay to the Department of Revenue, in the manner
prescribed by the Department of Revenue, the amount of the
credit that the claimant received related to the investment.
Repayment of the credit shall not be required under this

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paragraph if, prior to the time the claimant disposes of its
investment or the business venture is moved from the State of
Illinois:
(1) the investment by the claimant becomes worthless;
(2) 80% or more of the assets of the qualified new
business venture are sold to a party that is not related to
the qualified new business venture or to the claimant;
(3) bankruptcy or insolvency proceedings are commenced
for the qualified new business venture; or
(4) the qualified new business venture's common stock
begins trading on an established securities market.
If the Department determines that the qualified new
business venture did not meet the requirement that at least 51%
of the employees employed by the business are employed in this
State in any of the 3 years following the date on which an
investment in the qualified new business venture was made, the
claimant shall pay to the Department of Revenue, in the manner
prescribed by the Department of Revenue, the following
percentage of the credits allowed for qualified investments in
the qualified new business venture:
Year following the date on which Percentage of credit required
the investment was made: to be repaid:
First 100%
Second 66%
Third 33%
Fourth and later 0%

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The Department must notify the Department of Revenue of
every credit revoked and subject to full or partial repayment
under this subsection.
(e) The Department shall implement a program to register
qualified new business ventures for purposes of this Section. A
business desiring registration shall submit an application to
the Department in each taxable year for which the business
desires registration. The Department may register the business
only if the business satisfies all of the following conditions:
(1) it has its headquarters in this State;
(2) at least 51% of the employees employed by the
business are employed in this State;
(3) it has the potential for increasing jobs in this
State, increasing capital investment in this State, or
both, and 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

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(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;
(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;
(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 $10,000,000 in
aggregate private equity investment in cash;
(6) (blank); it has been in operation in Illinois for
not more than 10 consecutive years prior to the year of
certification; and
(7) it has received not more than (i) $10,000,000 in

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aggregate private equity investment in cash or (ii)
$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.
(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 of the qualified new
business venture that received the investment giving
rise to the credit and the county in which the
qualified new business venture is located; and
(C) the date of approval by the Department of the
applications for the tax credit certificate.
(2) The report must also include:
(A) the total number of applicants and amount for

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tax credit certificates awarded under this Section in
the prior calendar year;
(B) the total number of applications and amount for
which tax credit certificates were issued in the prior
calendar year; and
(C) the total tax credit certificates and amount
authorized under this Section for all calendar years.
(Source: P.A. 96-939, eff. 1-1-11; 97-507, eff. 8-23-11.)