|
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1875 Introduced , by Rep. Tom Cross SYNOPSIS AS INTRODUCED:
|
| |
Amends the Illinois Income Tax Act. Raises the limit on angel investment tax credits from $10 million to $20 million in total income tax credits per year. Raises the limit on an applicant's eligible investment from $2 million to $4 million. Effective immediately.
| |
| | |
| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
|
|
| | HB1875 | | LRB097 00257 PJG 40275 b |
|
|
| 1 | | AN ACT concerning revenue.
|
| 2 | | Be it enacted by the People of the State of Illinois,
|
| 3 | | represented in the General Assembly:
|
| 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 a 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
|
| 23 | | investment, is any one of the following: |
|
| | HB1875 | - 2 - | LRB097 00257 PJG 40275 b |
|
|
|
| 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,
|
| 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
|
| 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
|
| 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 |
|
| | HB1875 | - 3 - | LRB097 00257 PJG 40275 b |
|
|
|
| 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, 2016, subject to the |
| 12 | | limitations provided in this Section, a claimant may claim, as |
| 13 | | a credit against the tax imposed under subsections (a) and (b) |
| 14 | | of Section 201 of this Act, an amount equal to 25% of the |
| 15 | | claimant's investment made directly in a qualified new business |
| 16 | | venture. The credit under this Section may not exceed the |
| 17 | | taxpayer's Illinois income tax liability for the taxable year. |
| 18 | | If the amount of the credit exceeds the tax liability for the |
| 19 | | year, the excess may be carried forward and applied to the tax |
| 20 | | liability of the 5 taxable years following the excess credit |
| 21 | | year. The credit shall be applied to the earliest year for |
| 22 | | which there is a tax liability. If there are credits from more |
| 23 | | than one tax year that are available to offset a liability, the |
| 24 | | earlier credit shall be applied first. In the case of a |
| 25 | | partnership or Subchapter S Corporation, the credit is allowed |
| 26 | | to the partners or shareholders in accordance with the |
|
| | HB1875 | - 4 - | LRB097 00257 PJG 40275 b |
|
|
|
| 1 | | determination of income and distributive share of income under |
| 2 | | Sections 702 and 704 and Subchapter S of the Internal Revenue |
| 3 | | Code. |
| 4 | | (c) The maximum amount of an applicant's investment that |
| 5 | | may be used as the basis for a credit under this Section is |
| 6 | | $4,000,000 $2,000,000 for each investment made directly in a |
| 7 | | qualified new business venture. |
| 8 | | (d) The Department shall implement a program to certify an |
| 9 | | applicant for an angel investment credit. Upon satisfactory |
| 10 | | review, the Department shall issue a tax credit certificate |
| 11 | | stating the amount of the tax credit to which the applicant is |
| 12 | | entitled. The Department shall annually certify that the |
| 13 | | claimant's investment has been made and remains in the |
| 14 | | qualified new business venture for no less than 3 years. If an |
| 15 | | investment for which a claimant is allowed a credit under |
| 16 | | subsection (b) is held by the claimant for less than 3 years, |
| 17 | | or, if within that period of time the qualified new business |
| 18 | | venture is moved from the State of Illinois, the claimant shall |
| 19 | | pay to the Department of Revenue, in the manner prescribed by |
| 20 | | the Department of Revenue, the amount of the credit that the |
| 21 | | claimant received related to the investment. |
| 22 | | (e) The Department shall implement a program to register |
| 23 | | qualified new business ventures for purposes of this Section. A |
| 24 | | business desiring registration shall submit an application to |
| 25 | | the Department in each taxable year for which the business |
| 26 | | desires registration. The Department may register the business |
|
| | HB1875 | - 5 - | LRB097 00257 PJG 40275 b |
|
|
|
| 1 | | only if the business satisfies all of the following conditions: |
| 2 | | (1) it has its headquarters in this State; |
| 3 | | (2) at least 51% of the employees employed by the |
| 4 | | business are employed in this State; |
| 5 | | (3) it has the potential for increasing jobs in this |
| 6 | | State, increasing capital investment in this State, or |
| 7 | | both, and either of the following apply: |
| 8 | | (A) it is principally engaged in innovation in any |
| 9 | | of the following: manufacturing; biotechnology; |
| 10 | | nanotechnology; communications; agricultural sciences; |
| 11 | | clean energy creation or storage technology; |
| 12 | | processing or assembling products, including medical |
| 13 | | devices, pharmaceuticals, computer software, computer |
| 14 | | hardware, semiconductors, other innovative technology |
| 15 | | products, or other products that are produced using |
| 16 | | manufacturing methods that are enabled by applying |
| 17 | | proprietary technology; or providing services that are |
| 18 | | enabled by applying proprietary technology; or |
| 19 | | (B) it is undertaking pre-commercialization |
| 20 | | activity related to proprietary technology that |
| 21 | | includes conducting research, developing a new product |
| 22 | | or business process, or developing a service that is |
| 23 | | principally reliant on applying proprietary |
| 24 | | technology; |
| 25 | | (4) it is not principally engaged in real estate |
| 26 | | development, insurance, banking, lending, lobbying, |
|
| | HB1875 | - 6 - | LRB097 00257 PJG 40275 b |
|
|
|
| 1 | | political consulting, professional services provided by |
| 2 | | attorneys, accountants, business consultants, physicians, |
| 3 | | or health care consultants, wholesale or retail trade, |
| 4 | | leisure, hospitality, transportation, or construction, |
| 5 | | except construction of power production plants that derive |
| 6 | | energy from a renewable energy resource, as defined in |
| 7 | | Section 1 of the Illinois Power Agency Act; |
| 8 | | (5) it has fewer than 100 employees; |
| 9 | | (6) it has been in operation in Illinois for not more |
| 10 | | than 10 consecutive years prior to the year of |
| 11 | | certification; and |
| 12 | | (7) it has received not more than (i) $10,000,000 in |
| 13 | | aggregate private equity investment in cash or (ii) |
| 14 | | $4,000,000 in investments that qualified for tax credits |
| 15 | | under this Section. |
| 16 | | (f) The Department, in consultation with the Department of |
| 17 | | Revenue, shall adopt rules to administer this Section. The |
| 18 | | aggregate amount of the tax credits that may be claimed under |
| 19 | | this Section for investments made in qualified new business |
| 20 | | ventures shall be limited at $20,000,000 $10,000,000 per |
| 21 | | calendar year. |
| 22 | | (g) A claimant may not sell or otherwise transfer a credit |
| 23 | | awarded under this Section to another person. |
| 24 | | (h) On or before March 1 of each year, the Department shall |
| 25 | | report to the Governor and to the General Assembly on the tax |
| 26 | | credit certificates awarded under this Section for the prior |
|
| | HB1875 | - 7 - | LRB097 00257 PJG 40275 b |
|
|
|
| 1 | | calendar year. |
| 2 | | (1) This report must include, for each tax credit |
| 3 | | certificate awarded: |
| 4 | | (A) the name of the claimant and the amount of |
| 5 | | credit awarded or allocated to that claimant; |
| 6 | | (B) the name and address of the qualified new |
| 7 | | business venture that received the investment giving |
| 8 | | rise to the credit and the county in which the |
| 9 | | qualified new business venture is located; and |
| 10 | | (C) the date of approval by the Department of the |
| 11 | | applications for the tax credit certificate. |
| 12 | | (2) The report must also include: |
| 13 | | (A) the total number of applicants and amount for |
| 14 | | tax credit certificates awarded under this Section in |
| 15 | | the prior calendar year; |
| 16 | | (B) the total number of applications and amount for |
| 17 | | which tax credit certificates were issued in the prior |
| 18 | | calendar year; and |
| 19 | | (C) the total tax credit certificates and amount |
| 20 | | authorized under this Section for all calendar years.
|
| 21 | | (Source: P.A. 96-939, eff. 1-1-11.)
|
| 22 | | Section 99. Effective date. This Act takes effect upon |
| 23 | | becoming law.
|