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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 1. Short title. This Act may be cited as the | ||||||||||||||||||||||||||
5 | Biotechnology Investment Tax Credit Act. | ||||||||||||||||||||||||||
6 | Section 5. Definitions. As used in this Act: | ||||||||||||||||||||||||||
7 | "Biotechnology company" means a company organized for | ||||||||||||||||||||||||||
8 | profit that is primarily engaged in the research, development, | ||||||||||||||||||||||||||
9 | or commercialization of innovative and proprietary technology | ||||||||||||||||||||||||||
10 | that compromises, interacts with, or analyzes biological | ||||||||||||||||||||||||||
11 | material including biomolecules (DNA, RNA, or protein), cells, | ||||||||||||||||||||||||||
12 | tissues, or organs. | ||||||||||||||||||||||||||
13 | "Department" means the Department of Commerce and Economic | ||||||||||||||||||||||||||
14 | Opportunity.
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15 | "Investment" means the contribution of property, at a risk | ||||||||||||||||||||||||||
16 | of loss, to a qualified Illinois biotechnology company in | ||||||||||||||||||||||||||
17 | exchange for stock, a partnership interest, or other ownership | ||||||||||||||||||||||||||
18 | interest in the qualified company. For the purposes of this | ||||||||||||||||||||||||||
19 | definition, an investment is at risk of loss if its repayment | ||||||||||||||||||||||||||
20 | depends entirely upon the success of the business operations of | ||||||||||||||||||||||||||
21 | the qualified Illinois biotechnology company.
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22 | "Qualified investor" means an investor who is: | ||||||||||||||||||||||||||
23 | (1) an individual who invests at least $25,000 in a |
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1 | qualified Illinois biotechnology company; | ||||||
2 | (2) an Illinois corporation that invests at least | ||||||
3 | $250,000 in a qualified Illinois biotechnology company; or | ||||||
4 | (3) a qualified Illinois venture capital firm. | ||||||
5 | "Qualified Illinois biotechnology company" means a company | ||||||
6 | that has:
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7 | (1) its headquarters and base of operations in | ||||||
8 | Illinois;
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9 | (2) fewer than 50 full-time employees;
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10 | (3) been in active business no longer than 10 years; | ||||||
11 | and | ||||||
12 | (4) been certified in writing as a biotechnology | ||||||
13 | company by the Department. | ||||||
14 | "Qualified Illinois venture capital firm" means an entity | ||||||
15 | that:
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16 | (1) is organized for the purpose of investing funds in | ||||||
17 | privately-held companies engaged in the research, | ||||||
18 | development, or commercialization of innovative and | ||||||
19 | propriety technology; | ||||||
20 | (2) has at least 2 principals who each have at least 5 | ||||||
21 | years of venture capital experience; | ||||||
22 | (3) has at least one year of experience investing in | ||||||
23 | biotechnology or biopharmaceutical companies; and | ||||||
24 | (4) has its headquarters and principal place of | ||||||
25 | operations in Illinois. |
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1 | Section 10. Income tax credit. A qualified investor may | ||||||
2 | claim a credit against the tax imposed under subsections (a) | ||||||
3 | and (b) of Section 201 of the Illinois Income Tax Act. The | ||||||
4 | amount of the credit awarded under this Act is an amount equal | ||||||
5 | to the final credit certificate approved by the Department for | ||||||
6 | an investment in a qualified Illinois biotechnology company, as | ||||||
7 | provided under Sections 15 and 20 of this Act. | ||||||
8 | Section 15. Tax credit application; certification. | ||||||
9 | (a) In order to receive the tax credit under this Act, the | ||||||
10 | qualified investor must submit an application to the Department | ||||||
11 | on forms provided by the Department at least 30 days prior to | ||||||
12 | making an investment in a qualified Illinois biotechnology | ||||||
13 | company for which the qualified investor is eligible for an | ||||||
14 | initial tax credit certificate. | ||||||
15 | (b) The Department shall approve all applications that | ||||||
16 | qualify for credits under this Act on a first-come-first-served | ||||||
17 | basis. Within 30 days after its receipt of an application, the | ||||||
18 | Department must certify the amount of any approved tax credits | ||||||
19 | to a qualified investor.
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20 | (c) The qualified investor must make an investment in a | ||||||
21 | qualified Illinois biotechnology company within 30 days after | ||||||
22 | the Department has issued a tax credit certificate under | ||||||
23 | subsection (b). Within 10 days after making the investment, the | ||||||
24 | qualified investor must provide written notice to the | ||||||
25 | Department. If the qualified investor fails to provide this |
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1 | written notice within 40 days after the issuance of the tax | ||||||
2 | credit certificate, then the Department shall rescind the | ||||||
3 | certificate. | ||||||
4 | Section 20. Amount of the tax credit. The tax credit | ||||||
5 | allowed in a tax credit certificate issued under this Act is | ||||||
6 | 25% of the investment in a qualified Illinois biotechnology | ||||||
7 | company, but not to exceed: | ||||||
8 | (1) $50,000 for a qualified investor that is an | ||||||
9 | individual; or | ||||||
10 | (2) $250,000 for a qualified investor that is a | ||||||
11 | corporation or a qualified Illinois venture capital firm. | ||||||
12 | Section 30. Recapture of the tax credit. | ||||||
13 | (a) If, within 2 taxable years after the close of the | ||||||
14 | taxable year in which a credit under this Act is approved, the | ||||||
15 | qualified investor sells, transfers, or otherwise disposes of | ||||||
16 | the ownership interest in the qualified Illinois biotechnology | ||||||
17 | company that gave rise to the credit, then the credit must be | ||||||
18 | recaptured. | ||||||
19 | (b) The amount required to be recaptured under this Section | ||||||
20 | is: | ||||||
21 | (1) 100% of the amount of the credit if the disposition | ||||||
22 | occurs during the taxable year in which the tax credit is | ||||||
23 | approved;
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24 | (2) 67% of the amount of the credit if the disposition |
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1 | occurs during the first taxable year after the close of the | ||||||
2 | taxable year for which the tax is approved; or | ||||||
3 | (3) 33% of the amount of the credit if the disposition | ||||||
4 | occurs more than one taxable year but not more than 2 | ||||||
5 | taxable years after the close of the taxable year for which | ||||||
6 | the tax credit is approved. | ||||||
7 | (c) The qualified investor who claimed the credit shall pay | ||||||
8 | the recaptured amount as taxes payable to the State for the | ||||||
9 | taxable year in which the disposition occurred. | ||||||
10 | Section 35. Revocation of the credit. | ||||||
11 | (a) The Department may revoke its certification of an | ||||||
12 | approved credit under this Act if any representation in | ||||||
13 | connection with the application for the certification proves to | ||||||
14 | have been false when made. | ||||||
15 | (b) The revocation may be in full or in part as the | ||||||
16 | Department determines and, subject to subsection (c), must be | ||||||
17 | communicated in writing to the qualified investor and the | ||||||
18 | Department of Revenue. | ||||||
19 | (c) The Department of Revenue may make an assessment | ||||||
20 | against the qualified investor to recapture any amount of the | ||||||
21 | tax credit that the qualified investor has already claimed.
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22 | Section 40. Annual report. | ||||||
23 | (a) On or before January 10 of each year, the Department | ||||||
24 | shall report to the Governor and to the General Assembly on the |
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1 | tax credit certificates awarded under this Act for the prior | ||||||
2 | calendar year. | ||||||
3 | (b) This report must include, for each tax credit | ||||||
4 | certificate awarded: | ||||||
5 | (1) the name of the qualified investor and the amount | ||||||
6 | of credit awarded or allocated to that investor; | ||||||
7 | (2) the name and address of the qualified Illinois | ||||||
8 | biotechnology company that received the investment giving | ||||||
9 | rise to the credit and the county in which the qualified | ||||||
10 | Illinois biotechnology company is located; and | ||||||
11 | (3) The dates of receipt and approval by the Department | ||||||
12 | of the applications for the tax credit certificate. | ||||||
13 | (c) The report must summarize for each category of | ||||||
14 | qualified investors: | ||||||
15 | (1) the total number of applicants for initial tax | ||||||
16 | credit certificates under this Act in the prior calendar | ||||||
17 | year; | ||||||
18 | (2) the total number of applications for which initial | ||||||
19 | tax credit certificates were issued in the prior calendar | ||||||
20 | year; and
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21 | (3) the total tax credit certificates authorized under | ||||||
22 | this Act for all calendar years.
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23 | Section 45. Rules. The Department and the Department of | ||||||
24 | Revenue shall adopt any rule necessary for the administration | ||||||
25 | of this Act. |
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1 | Section 905. The Illinois Income Tax Act is amended by | ||||||
2 | adding Section 218 as follows: | ||||||
3 | (35 ILCS 5/218 new) | ||||||
4 | Sec. 218. Biotechnology Investment Tax Credit. | ||||||
5 | (a) For tax years beginning on or after January 1, 2008, a | ||||||
6 | taxpayer who has been awarded a tax credit under the | ||||||
7 | Biotechnology Investment Tax Credit Act is entitled to a credit | ||||||
8 | against the taxes imposed under subsections (a) and (b) of | ||||||
9 | Section 201 of this Act in an amount determined by the | ||||||
10 | Department of Commerce and Economic Opportunity under the | ||||||
11 | Biotechnology Investment Tax Credit Act. | ||||||
12 | (b) If the taxpayer is a partnership or Subchapter S | ||||||
13 | corporation, the credit is allowed to the partners or | ||||||
14 | shareholders in accordance with the determination of income and | ||||||
15 | distributive share of income under Sections 702 and 704 and | ||||||
16 | Subchapter S of the Internal Revenue Code. | ||||||
17 | (c) The credit may not be carried forward or back. | ||||||
18 | (d) The Department, in cooperation with the Department of | ||||||
19 | Commerce and Economic Opportunity, must prescribe rules to | ||||||
20 | enforce and administer the provisions of this Section. | ||||||
21 | (e) This Section is exempt from the provisions of Section | ||||||
22 | 250 of this Act.
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23 | Section 999. Effective date. This Act takes effect upon | ||||||
24 | becoming law.
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