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| | 99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016 HB3844 Introduced , by Rep. Elgie R. Sims, Jr. SYNOPSIS AS INTRODUCED: |
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Amends the Illinois Income Tax Act. Extends the angel investment credit for taxable years ending on or before December 31, 2021 (currently, December 31, 2016). Provides that the aggregate amount of angel investment tax credits shall be limited to $20,000,000 per calendar year (currently, $10,000,000).
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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1 | | AN ACT concerning revenue.
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2 | | Be it enacted by the People of the State of Illinois,
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3 | | represented in the General Assembly:
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4 | | Section 5. The Illinois Income Tax Act is amended by |
5 | | changing Section 220 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 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 |
17 | | who files a claim for a credit under this Section. |
18 | | "Department" means the Department of Commerce and Economic |
19 | | Opportunity. |
20 | | "Qualified new business venture" means a business that is |
21 | | registered with the Department under this Section. |
22 | | "Related member" means a person that, with respect to the
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23 | | investment, is any one of the following: |
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1 | | (1) An individual, if the individual and the members of |
2 | | the individual's family (as defined in Section 318 of the |
3 | | Internal Revenue Code) own directly, indirectly,
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4 | | beneficially, or constructively, in the aggregate, at |
5 | | least 50% of the value of the outstanding profits, capital, |
6 | | stock, or other ownership interest in the applicant. |
7 | | (2) A partnership, estate, or trust and any partner or |
8 | | beneficiary, if the partnership, estate, or trust and its |
9 | | partners or beneficiaries own directly, indirectly, |
10 | | beneficially, or constructively, in the aggregate, at |
11 | | least 50% of the profits, capital, stock, or other |
12 | | ownership interest in the applicant. |
13 | | (3) A corporation, and any party related to the |
14 | | corporation in a manner that would require an attribution |
15 | | of stock from the corporation under the attribution rules
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16 | | of Section 318 of the Internal Revenue Code, if the |
17 | | applicant and any other related member own, in the |
18 | | aggregate, directly, indirectly, beneficially, or |
19 | | constructively, at least 50% of the value of the |
20 | | corporation's outstanding stock. |
21 | | (4) A corporation and any party related to that |
22 | | corporation in a manner that would require an attribution |
23 | | of stock from the corporation to the party or from the
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24 | | party to the corporation under the attribution rules of |
25 | | Section 318 of the Internal Revenue Code, if the |
26 | | corporation and all such related parties own, in the |
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1 | | aggregate, at least 50% of the profits, capital, stock, or |
2 | | other ownership interest in the applicant. |
3 | | (5) A person to or from whom there is attribution of |
4 | | stock ownership in accordance with Section 1563(e) of the |
5 | | Internal Revenue Code, except that for purposes of |
6 | | determining whether a person is a related member under this |
7 | | paragraph, "20%" shall be substituted for "5%" whenever |
8 | | "5%" appears in Section 1563(e) of the Internal Revenue |
9 | | Code. |
10 | | (b) For taxable years beginning after December 31, 2010, |
11 | | and ending on or before December 31, 2021 December 31, 2016 , |
12 | | subject to the limitations provided in this Section, a claimant |
13 | | may claim, as a credit against the tax imposed under |
14 | | subsections (a) and (b) of Section 201 of this Act, an amount |
15 | | equal to 25% of the claimant's investment made directly in a |
16 | | qualified new business venture. In order for an investment in a |
17 | | qualified new business venture to be eligible for tax credits, |
18 | | the business must have applied for and received certification |
19 | | under subsection (e) for the taxable year in which the |
20 | | investment was made prior to the date on which the investment |
21 | | was made. The credit under this Section may not exceed the |
22 | | taxpayer's Illinois income tax liability for the taxable year. |
23 | | If the amount of the credit exceeds the tax liability for the |
24 | | year, the excess may be carried forward and applied to the tax |
25 | | liability of the 5 taxable years following the excess credit |
26 | | year. The credit shall be applied to the earliest year for |
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1 | | which there is a tax liability. If there are credits from more |
2 | | than one tax year that are available to offset a liability, the |
3 | | earlier credit shall be applied first. In the case of a |
4 | | partnership or Subchapter S Corporation, the credit is allowed |
5 | | to the partners or shareholders in accordance with the |
6 | | determination of income and distributive share of income under |
7 | | Sections 702 and 704 and Subchapter S of the Internal Revenue |
8 | | Code. |
9 | | (c) The maximum amount of an applicant's investment that |
10 | | may be used as the basis for a credit under this Section is |
11 | | $2,000,000 for each investment made directly in a qualified new |
12 | | business venture. |
13 | | (d) The Department shall implement a program to certify an |
14 | | applicant for an angel investment credit. Upon satisfactory |
15 | | review, the Department shall issue a tax credit certificate |
16 | | stating the amount of the tax credit to which the applicant is |
17 | | entitled. The Department shall annually certify that the |
18 | | claimant's investment has been made and remains in the |
19 | | qualified new business venture for no less than 3 years. |
20 | | If an investment for which a claimant is allowed a credit |
21 | | under subsection (b) is held by the claimant for less than 3 |
22 | | years, or, if within that period of time the qualified new |
23 | | business venture is moved from the State of Illinois, the |
24 | | claimant shall pay to the Department of Revenue, in the manner |
25 | | prescribed by the Department of Revenue, the amount of the |
26 | | credit that the claimant received related to the investment. |
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1 | | (e) The Department shall implement a program to register |
2 | | qualified new business ventures for purposes of this Section. A |
3 | | business desiring registration shall submit an application to |
4 | | the Department in each taxable year for which the business |
5 | | desires registration. The Department may register the business |
6 | | only if the business satisfies all of the following conditions: |
7 | | (1) it has its headquarters in this State; |
8 | | (2) at least 51% of the employees employed by the |
9 | | business are employed in this State; |
10 | | (3) it has the potential for increasing jobs in this |
11 | | State, increasing capital investment in this State, or |
12 | | both, and either of the following apply: |
13 | | (A) it is principally engaged in innovation in any |
14 | | of the following: manufacturing; biotechnology; |
15 | | nanotechnology; communications; agricultural sciences; |
16 | | clean energy creation or storage technology; |
17 | | processing or assembling products, including medical |
18 | | devices, pharmaceuticals, computer software, computer |
19 | | hardware, semiconductors, other innovative technology |
20 | | products, or other products that are produced using |
21 | | manufacturing methods that are enabled by applying |
22 | | proprietary technology; or providing services that are |
23 | | enabled by applying proprietary technology; or |
24 | | (B) it is undertaking pre-commercialization |
25 | | activity related to proprietary technology that |
26 | | includes conducting research, developing a new product |
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1 | | or business process, or developing a service that is |
2 | | principally reliant on applying proprietary |
3 | | technology; |
4 | | (4) it is not principally engaged in real estate |
5 | | development, insurance, banking, lending, lobbying, |
6 | | political consulting, professional services provided by |
7 | | attorneys, accountants, business consultants, physicians, |
8 | | or health care consultants, wholesale or retail trade, |
9 | | leisure, hospitality, transportation, or construction, |
10 | | except construction of power production plants that derive |
11 | | energy from a renewable energy resource, as defined in |
12 | | Section 1 of the Illinois Power Agency Act; |
13 | | (5) at the time it is first certified: |
14 | | (A) it has fewer than 100 employees; |
15 | | (B) it has been in operation in Illinois for not |
16 | | more than 10 consecutive years prior to the year of |
17 | | certification; and |
18 | | (C) it has received not more than $10,000,000 in |
19 | | aggregate private equity investment in cash; |
20 | | (6) (blank); and |
21 | | (7) it has received not more than $4,000,000 in |
22 | | investments that qualified for tax credits under this |
23 | | Section. |
24 | | (f) The Department, in consultation with the Department of |
25 | | Revenue, shall adopt rules to administer this Section. The |
26 | | aggregate amount of the tax credits that may be claimed under |
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1 | | this Section for investments made in qualified new business |
2 | | ventures shall be limited at $20,000,000 $10,000,000 per |
3 | | calendar year. |
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 of the qualified new |
15 | | business venture that received the investment giving |
16 | | rise to the credit and the county in which the |
17 | | qualified new business venture is located; and |
18 | | (C) the date of approval by the Department of the |
19 | | applications for the tax credit certificate. |
20 | | (2) The report must also include: |
21 | | (A) the total number of applicants and amount for |
22 | | tax credit certificates awarded under this Section in |
23 | | the prior calendar year; |
24 | | (B) the total number of applications and amount for |
25 | | which tax credit certificates were issued in the prior |
26 | | calendar year; and |