SB1656sam001 100TH GENERAL ASSEMBLY

Sen. Andy Manar

Filed: 3/9/2017

10000SB1656sam001 LRB100 08447 HLH 22775 a

AMENDMENT TO SENATE BILL 1656

AMENDMENT NO. ______. Amend Senate Bill 1656 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Biobased Manufactured Molecules Production Tax Credit Program Act.

Section 5. Definitions. As used in this Act, unless the context otherwise requires:

"Biobased content percentage" means, with respect to any biobased manufactured molecules, the amount, expressed as a percentage, of renewable organic material present as determined by testing representative samples using the ASTM standard D6866.

"Biomass feedstock" means sugar, polysaccharide, crude glycerin, lignin, fat, grease, or oil derived from an animal or plant (including a protein capable of being converted to a building block molecule by means of a biological or chemical conversion process).

"Building block molecule" means a molecule converted from biomass feedstock as a first product or a secondarily derived product that can be further refined into a higher-value molecule, material, or consumer product. The term "building block molecule" includes, but is not limited to, high purity molecules including enzymes, probiotics, and prebiotics, and chemicals such as phytase, xylanase, cellulase, NSP enzymes, bacillus, lactobacillus, oligosaccharides, glycerol, glycols, oleic acid, lauric acid, methanoic or formic acid, arabonic acid, erythonic acid, glyceric acid, glycolic acid, lactic acid, 3-hydroxypropionate, propionic acid, malonic acid, serine, succinic acid, fumaric acid, malic acid, aspartic acid, 3-hydroxybutyrolactone, acetoin, threonine, itaconic acid, furfural, levulinic acid, glutamic acid, xylonic acid, xylaric acid, xylitol, arabitol, citric acid, aconitic acid, 5-hydroxymethylfurfural, lysine, gluconic acid, glucaric acid, sorbitol, gallic acid, ferulic acid, carboxylic acid methyl esters, nonfuel butanol, nonfuel ethanol, diols, polyols, carotenoids, beta-glucan or such additional molecules as may be included by the Department by rule after consultation with appropriate experts from the Department of Agricultural and Biological Engineering within the University of Illinois College of Agricultural, Consumer, and Environmental Sciences.

"Crude glycerin" means glycerin with a purity level below 95%.

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible business" means a business meeting the requirements of Section 10.

"Food additive" means a building block molecule that is not primarily consumed as food but which, when combined with other components, improves the taste, appearance, odor, texture, health or nutritional content of food. The Department, in its discretion, shall determine whether or not a building block molecule is primarily consumed as food.

"High-purity glycerol" means glycerol with a purity level of 95% or higher.

"Pre-eligibility production threshold" means, with respect to each eligible business, the number of pounds of renewable chemicals produced, if any, by an eligible business during the calendar year prior to the calendar year in which the business first qualified as an eligible business pursuant to Section 10.

"Program" means the biobased manufactured molecules production tax credit program administered pursuant to this Act.

"Biobased manufactured molecule" means a building block molecule with a biobased content percentage of at least 50%. The term "biobased manufactured molecule" does not include a chemical molecule sold or used for the production of food, feed, or fuel. The term "biobased manufactured molecule" includes cellulosic ethanol, starch ethanol, or other ethanol derived from biomass feedstock, fatty acid methyl esters, or butanol, but only to the extent that such molecules are produced and sold for uses other than food, feed, or fuel. The term "biobased manufactured molecule" also includes building block molecules that can be a food or feed additive as long as the building block molecule is not primarily consumed as food and is also sold for uses other than food. The term "biobased manufactured molecule" also includes supplements, vitamins, nutraceuticals, and pharmaceuticals, but only to the extent that such molecules do not provide caloric value so as to be considered sustenance as food or feed.

"Sugar" means the organic compound glucose, fructose, xylose, arabinose, lactose, sucrose, starch, cellulose, or hemicellulose.

Section 10. Eligibility requirements. To be eligible to receive the renewable chemical production tax credit pursuant to the program, a business shall meet all of the following requirements:

(1) the business must be physically located in this State;

(2) the business must be operated for profit and under single management;

(3) the business may not be an entity providing professional services, health care services, or medical treatments or an entity engaged primarily in retail operations;

(4) the business organized, expanded, or located in the State on or after the effective date of this Act;

(5) the business is not relocating or reducing operations within the State; and

(6) the business is in compliance with all agreements entered into under this program or other programs administered by the Department.

Section 15. Eligible business application and agreement; maximum tax credits.

(a) An eligible business that produces a biobased manufactured molecule in this State from biomass feedstock during a calendar year may apply to the Department for the tax credit provided in Section 20. The application shall be made to the Department in the manner prescribed by the Department. The application shall be made during the calendar year following the calendar year in which the renewable chemicals are produced. The Department may accept applications on a continuous basis or may establish, by rule, an annual application deadline.

(b) The application shall include all of the following information:

(1) the amount of biobased manufactured molecule produced in the State from biomass feedstock by the eligible business during the calendar year, measured in pounds; and

(2) any other information reasonably required by the Department in order to establish and verify eligibility under the program.

(b) Before being issued a tax credit under Section 20, an eligible business shall enter into an agreement with the Department for the successful completion of all requirements of the program. As part of the agreement, the eligible business shall agree to collect and provide any information reasonably required by the Department in order to allow the Department to fulfill its reporting obligation under Section 25. An eligible business shall fulfill all the requirements of the program and the agreement before receiving a tax credit or entering into a subsequent agreement under this Section. The Department may decline to enter into a subsequent agreement under this Section or issue a tax credit if an agreement is not successfully fulfilled. Upon establishing that all requirements of the program and the agreement have been fulfilled, the Department shall issue a tax credit and related tax credit certificate to the eligible business stating the amount of renewable chemical production tax credit the eligible business may claim.

(c) The maximum amount of tax credit that may be issued under Section 20 to an eligible business for the production of renewable chemicals in a calendar year shall not exceed the following:

(1) in the case of an eligible business that has been in operation in the state for 5 years or less at the time of application, $1,000,000; and

(2)in the case of an eligible business that has been in operation in the state for more than 5 years at the time of application, $500,000.

(d) An eligible business shall not receive a tax credit for a biobased manufactured molecule produced before the date the business first qualified as an eligible business pursuant to Section 10.

(e) An eligible business shall receive a tax credit for a biobased manufactured molecule produced in a calendar year only to the extent such production exceeds the pre-eligibility production threshold for the eligible business.

(f) An eligible business shall not receive more than 5 tax credits under the program.

(g) The Department shall issue tax credits under the program on a first-come, first-served basis until the maximum amount of $25,000,000 of tax credits are allocated in any given calendar year. The Department shall maintain a list of successful applicants under the program, so that if the maximum aggregate amount of tax credits is reached in a given year, eligible businesses that successfully applied but for which tax credits were not issued in a prior year shall be placed on a wait list in the order in which the eligible businesses applied and shall be given priority for receiving tax credits in succeeding years. Placement on a wait list pursuant to this paragraph shall not constitute a promise binding the State. The availability of a tax credit and issuance of a tax credit certificate pursuant to this subsection in a future year is contingent upon the availability of tax credits in that particular year.

(h) The failure by an eligible business in fulfilling any requirement of the program or any of the terms and obligations of an agreement entered into pursuant to this Section may result in the reduction, termination, or recision of the tax credits under Section 20 and may subject the eligible business to the repayment or recapture of tax credits claimed.

Section 17. Confidentiality.

(a) Except as provided in subsection (b), any information or record in the possession of the Department with respect to the program shall be presumed by the Department to be a trade secret and shall be kept confidential by the Department unless otherwise ordered by a court.

(b) The identity of a tax credit recipient and the amount of the tax credit shall be considered public information.

Section 20. Biobased manufactured molecule production tax credit.

(a) An eligible business that has entered into an agreement pursuant to Section 15 may claim a tax credit in an amount equal to the product of $0.05 multiplied by the number of pounds of renewable chemicals produced in this State from biomass feedstock by the eligible business during the calendar year in excess of the eligible business's pre-eligibility production threshold. However, an eligible business shall not receive a tax credit for the production of a secondarily derived building block chemical if that chemical is also the subject of a credit at the time of production as a first product.The renewable chemical production tax credit shall not be available for any renewable chemical produced before the 2018 calendar year.

(b) The tax credit shall be allowed against taxes imposed on corporations under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act.

(c) The tax credit shall be claimed for the tax year during which the eligible business was issued the tax credit.

(d) An individual may claim a tax credit under this Section against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act for a partnership, limited liability company, S corporation, cooperative organized under chapter 501 and filing as a partnership for federal tax purposes, estate, or trust electing to have income taxed directly to the individual. The amount claimed by the individual shall be based upon the pro rata share of the individual's earnings from the partnership, limited liability company, S corporation, cooperative, estate, or trust.

(e) For any tax credit in excess of the tax liability, the taxpayer may elect to have the overpayment shown on the taxpayer's final, completed return credited to the tax liability for the following tax year.

(f) To claim a tax credit under this Section, the taxpayer shall include one or more tax credit certificates with the taxpayer's tax return. The tax credit certificate shall contain the taxpayer's name, address, tax identification number, the amount of the credit, the name of the eligible business, and any other information required by the Department of Revenue. The tax credit certificate, unless rescinded by the Department, shall be accepted by the Department of Revenue as payment for taxes imposed pursuant to the Illinois Income Tax Act, subject to any conditions or restrictions placed by the Department upon the face of the tax credit certificate and subject to the limitations of the program. Tax credit certificates issued pursuant to this section shall not be transferred to any other person.

Section 25. Reports to General Assembly.

(a) For purposes of this Section, "successful tax credit applicant" includes, with respect to each calendar year, an eligible taxpayer that was issued a tax credit for production of biobased manufactured molecule during that calendar year, and an eligible taxpayer that successfully applied for a tax credit for the production of a biobased manufactured molecule during that calendar year, but was not issued a tax credit and was instead placed on a wait list pursuant to subsection (g) of Section 15.

(b) By January 31, 2019, and by the same date each year thereafter, the Department, in cooperation with the Department of Revenue, shall submit to the General Assembly and the Governor a report describing the activities of the program for the most recent calendar year for which the tax credit application period has ended pursuant to Section 15. The report shall at a minimum include the following information:

(1) the aggregate number of pounds, and a list of each type, of biobased manufactured molecules produced in Illinois by all successful tax credit applicants during the calendar year prior to the calendar year for which the successful applicants first applied for a tax credit under the program;

(2) the aggregate number of pounds, and a list of each type, of biobased manufactured molecules produced in Illinois by all successful tax credit applicants during each calendar year;

(3) the aggregate sales of all biobased manufactured molecules produced by all successful tax credit applicants in each calendar year for which there are at least 5 successful tax credit applicants;

(4) the aggregate number of pounds, and a list of each type, of biomass feedstock used in the production of biobased manufactured molecules in Illinois by all successful tax credit applicants during the calendar year prior to the calendar year for which the successful applicants first applied for a tax credit under the program;

(5) the aggregate number of pounds, and a list of each type, of biomass feedstock used in the production of biobased manufactured molecules in Illinois by all successful tax credit applicants during each calendar year;

(6) the number of employees located in Illinois of all successful tax credit applicants during the calendar year prior to the calendar year for which the successful applicants first applied for a tax credit under the program;

(7) the number of employees located in Illinois of all successful tax credit applicants during each calendar year;

(8) the number and aggregate amount of tax credits issued under the program for each calendar year;

(9) the number of eligible businesses placed on the wait list for each calendar year and the total number of eligible businesses remaining on the wait list at the end of that calendar year;

(10) the dollar amount of tax credit claims placed on the wait list for each calendar year and the total dollar amount of tax credit claims remaining on the wait list at the end of that calendar year;

(11) for each eligible business issued a biobased manufactured molecules production tax credit during each calendar year:

(A) the identity of the eligible business;

(B) the amount of the tax credit; and

(C) the manner in which the eligible business first qualified as an eligible business under Section 10; and

(12) the total amount of all biobased manufactured molecules production tax credits claimed during each calendar year and the portion of the claims issued as refunds.

(c) To protect the presumption of confidentiality established in Section 17, the Department shall report all information in an aggregate form to prevent, as much as possible, information being attributable to any particular eligible business.

Section 30. Rules. The Department and the Illinois Department of Revenue shall each adopt rules as necessary for the implementation and administration of this Act.

Section 35. Repeal. This Act is repealed on January 1, 2024.

Section 900. The Illinois Income Tax Act is amended by adding Section 224 as follows:

(35 ILCS 5/224 new)

Sec. 224. Biobased Manufactured Molecules Production Tax Credit Program Act. A taxpayer is entitled to a credit against the taxes imposed by subsections (a) and (b) of Section 201 of this Act as provided in the Biobased Manufactured Molecules Production Tax Credit Program Act. This Section is repealed on December 31, 2025.

Section 999. Effective date. This Act takes effect upon becoming law.".