Illinois General Assembly - Full Text of SB2057
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Full Text of SB2057  102nd General Assembly

SB2057 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2057

 

Introduced 2/26/2021, by Sen. Omar Aquino

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/205  from Ch. 120, par. 2-205
35 ILCS 5/232 new

    Creates the Endow Illinois Tax Credit Act and amends the Illinois Income Tax Act. Requires the Department of Revenue to authorize an income tax credit to taxpayers who provide an endowment gift to a permanent endowment fund. Sets forth procedures and criteria for authorizing the credits. Provides that the aggregate amount of all credits that the Department of Revenue may authorize may not exceed $10,000,000 in 2021, $25,000,000 in 2022, or $50,000,000 in 2023 and each calendar year thereafter. Provides conditions for eligibility. Requires the Department of Revenue to make an annual report concerning the credits. Provides that the credit may be carried forward for 5 years. Exempts the credit from the Act's sunset provisions. Further amends the Illinois Income Tax Act to provide that provisions concerning the unrelated business taxable income of an exempt organization apply for taxable years beginning on or after January 1, 2021 (currently, January 1, 2019). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2057LRB102 16358 HLH 21745 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the Endow
5Illinois Tax Credit Act.
 
6    Section 5. Definitions. For the purposes of this Act:
7    "Department" means the Department of Revenue.
8    "Endowment gift" means an irrevocable contribution to a
9permanent endowment fund held by a qualified community
10foundation.
11    "Permanent endowment fund" means a fund that (i) is held
12by a qualified community foundation to provide benefit to
13charitable causes in the State, (ii) is intended to exist in
14perpetuity, and (iii) has an annual spending rate based on the
15foundation spending policy, but not to exceed 7%.
16    "Qualified community foundation" means a community
17foundation or similar publicly-supported organization
18described in Section 170 (b)(1)(A)(vi) of the Internal Revenue
19Code of 1986 that is organized or operating in this State and
20that substantially complies with the national standards for
21U.S. community foundations that are established by the
22National Council on Foundations, as determined by the
23Department.
 

 

 

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1    Section 10. Tax credit awards.
2    (a) The Department shall authorize an income tax credit to
3taxpayers who provide an endowment gift to a permanent
4endowment fund. The amount of the credit that may be
5authorized to a taxpayer by the Department under this Act is an
6amount equal to 50% of the endowment gift. A taxpayer that is a
7business entity is not eligible to receive a credit under this
8Act for the taxable year if the taxpayer's gross business
9receipts exceed $10,000,000 for taxable years ending in 2021,
10$25,000,000 for taxable years ending in 2022, or $50,000,000
11for taxable years ending in 2023 or thereafter.
12    (b) The aggregate amount of all credits that the
13Department may authorize under this Act may not exceed
14$10,000,000 in 2021, $25,000,000 in 2022, or $50,000,000 in
152023 and each calendar year thereafter. The aggregate amount
16of all credits that the Department may authorize to any single
17taxpayer in a calendar year may not exceed 5% of the aggregate
18amount of all credits authorized by the Department in that
19calendar year. The aggregate amount of all credits that the
20Department may authorize in any calendar year based on
21endowment gifts to any specific community foundation may not
22exceed 25% of aggregate credits authorized for that year.
23    (c) If the Department receives applications for tax credit
24in excess of the amount available, then the applications must
25be prioritized by the date that the Department received them.

 

 

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1If the number of applications exceeds the amount of annual tax
2credits available, then the Department must establish a wait
3list for the next year's allocation of tax credits, and
4applications must first be funded in the order listed on that
5wait list.
 
6    Section 15. Applications for tax credits.
7    (a) The Department shall develop and make available a
8standardized application pertaining to the allocation of tax
9credits under this Act.
10    (b) Of the annual amount available for tax credits, 10%
11must be reserved for those endowment gifts of $30,000 or less.
12If the entire 10% that is reserved for permanent endowment
13gifts totalling $30,000 or less is not allocated, then the
14remaining amount is available in the following years for
15endowment gifts of $30,000 or less.
16    (c) The Department must accept applications and authorize
17credits in an ongoing basis. The Department must make public,
18by June 1 and by December 1 of each year, the total number of
19requests for tax credits and the total amount of requested tax
20credits that have been submitted and awarded.
 
21    Section 20. Annual report. By January 31 of each year, the
22Department must submit an annual report to the Governor and
23the General Assembly concerning the activities conduced under
24this Act during the previous calendar year. The report must

 

 

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1include a detailed listing of tax credits authorized under
2this Act by the Department.
 
3    Section 90. The Illinois Income Tax Act is amended by
4changing Section 205 and by adding Section 232 as follows:
 
5    (35 ILCS 5/205)  (from Ch. 120, par. 2-205)
6    Sec. 205. Exempt organizations.
7    (a) Charitable, etc. organizations. For tax years
8beginning before January 1, 2021 January 1, 2019, the base
9income of an organization which is exempt from the federal
10income tax by reason of the Internal Revenue Code shall not be
11determined under section 203 of this Act, but shall be its
12unrelated business taxable income as determined under section
13512 of the Internal Revenue Code, without any deduction for
14the tax imposed by this Act. The standard exemption provided
15by section 204 of this Act shall not be allowed in determining
16the net income of an organization to which this subsection
17applies.
18    For tax years beginning on or after January 1, 2021
19January 1, 2019, the base income of an organization which is
20exempt from the federal income tax by reason of the Internal
21Revenue Code shall not be determined under Section 203 of this
22Act, but shall be its unrelated business taxable income as
23determined under Section 512 of the Internal Revenue Code,
24without regard to Section 512(a)(7) of the Internal Revenue

 

 

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1Code and without any deduction for the tax imposed by this Act.
2The standard exemption provided by Section 204 of this Act
3shall not be allowed in determining the net income of an
4organization to which this subsection applies. This exclusion
5is exempt from the provisions of Section 250.
6    (b) Partnerships. A partnership as such shall not be
7subject to the tax imposed by subsection 201 (a) and (b) of
8this Act, but shall be subject to the replacement tax imposed
9by subsection 201 (c) and (d) of this Act and shall compute its
10base income as described in subsection (d) of Section 203 of
11this Act. For taxable years ending on or after December 31,
122004, an investment partnership, as defined in Section
131501(a)(11.5) of this Act, shall not be subject to the tax
14imposed by subsections (c) and (d) of Section 201 of this Act.
15A partnership shall file such returns and other information at
16such time and in such manner as may be required under Article 5
17of this Act. The partners in a partnership shall be liable for
18the replacement tax imposed by subsection 201 (c) and (d) of
19this Act on such partnership, to the extent such tax is not
20paid by the partnership, as provided under the laws of
21Illinois governing the liability of partners for the
22obligations of a partnership. Persons carrying on business as
23partners shall be liable for the tax imposed by subsection 201
24(a) and (b) of this Act only in their separate or individual
25capacities.
26    (c) Subchapter S corporations. A Subchapter S corporation

 

 

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1shall not be subject to the tax imposed by subsection 201 (a)
2and (b) of this Act but shall be subject to the replacement tax
3imposed by subsection 201 (c) and (d) of this Act and shall
4file such returns and other information at such time and in
5such manner as may be required under Article 5 of this Act.
6    (d) Combat zone, terrorist attack, and certain other
7deaths. An individual relieved from the federal income tax for
8any taxable year by reason of section 692 of the Internal
9Revenue Code shall not be subject to the tax imposed by this
10Act for such taxable year.
11    (e) Certain trusts. A common trust fund described in
12Section 584 of the Internal Revenue Code, and any other trust
13to the extent that the grantor is treated as the owner thereof
14under sections 671 through 678 of the Internal Revenue Code
15shall not be subject to the tax imposed by this Act.
16    (f) Certain business activities. A person not otherwise
17subject to the tax imposed by this Act shall not become subject
18to the tax imposed by this Act by reason of:
19        (1) that person's ownership of tangible personal
20    property located at the premises of a printer in this
21    State with which the person has contracted for printing,
22    or
23        (2) activities of the person's employees or agents
24    located solely at the premises of a printer and related to
25    quality control, distribution, or printing services
26    performed by a printer in the State with which the person

 

 

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1    has contracted for printing.
2    (g) A nonprofit risk organization that holds a certificate
3of authority under Article VIID of the Illinois Insurance Code
4is exempt from the tax imposed under this Act with respect to
5its activities or operations in furtherance of the powers
6conferred upon it under that Article VIID of the Illinois
7Insurance Code.
8(Source: P.A. 101-545, eff. 8-23-19.)
 
9    (35 ILCS 5/232 new)
10    Sec. 232. The Endow Illinois tax credit.
11    (a) For taxable years ending on or after December 31,
122021, each taxpayer for whom a tax credit has been authorized
13by the Department of Revenue under the Endow Illinois Tax
14Credit Act, is entitled to a credit against the tax imposed
15under subsections (a) and (b) of Section 201 in an amount equal
16to the amount authorized under that Act.
17    (b) For partners, shareholders of Subchapter S
18corporations, and members of limited liability companies, if
19the liability company is treated as a partnership for purposes
20of federal and State income taxation, there is allowed a
21credit under this Section to be determined in accordance with
22the determination of income and distributive share of income
23under Sections 702 and 704 and Subchapter S of the Internal
24Revenue Code.
25    (c) The credit may not be carried back and may not reduce

 

 

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1the taxpayer's liability to less than zero. If the amount of
2the credit exceeds the tax liability for the year, the excess
3may be carried forward and applied to the tax liability of the
45 taxable years following the excess credit year. The tax
5credit shall be applied to the earliest year for which there is
6a tax liability. If there are credits for more than one year
7that are available to offset a liability, the earlier credit
8shall be applied first.
9    (d) This Section is exempt from the provisions of Section
10250.
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.