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1 AN ACT concerning revenue.

2 Be it enacted by the People of the State of Illinois, 
3represented in the General Assembly:

4 Section 5. The Illinois Income Tax Act is amended by 
5changing 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 
10liability company, or a natural person that makes an 
11investment in a qualified new business venture. The term 
12"applicant" does not include (i) a corporation, partnership, 
13limited liability company, or a natural person who has a 
14direct or indirect ownership interest of at least 51% in the 
15profits, capital, or value of the qualified new business 
16venture receiving the investment or (ii) a related member. 
17 "Claimant" means an applicant certified by the Department 
18who files a claim for a credit under this Section. 
19 "Department" means the Department of Commerce and Economic 
20Opportunity. 
21 "Investment" means money (or its equivalent) given to a 
22qualified new business venture, at a risk of loss, in 
23consideration for an equity interest of the qualified new 
 
 
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1business venture. The Department may adopt rules to permit 
2certain forms of contingent equity investments to be 
3considered eligible for a tax credit under this Section. 
4 "Qualified new business venture" means a business that is 
5registered with the Department under this Section. 
6 "Related member" means a person that, with respect to the 
7applicant, is any one of the following: 
8  (1) An individual, if the individual and the members 
9 of the individual's family (as defined in Section 318 of 
10 the Internal Revenue Code) own directly, indirectly, 
11 beneficially, or constructively, in the aggregate, at 
12 least 50% of the value of the outstanding profits, 
13 capital, stock, or other ownership interest in the 
14 qualified new business venture that is the recipient of 
15 the applicant's investment. 
16  (2) A partnership, estate, or trust and any partner or 
17 beneficiary, if the partnership, estate, or trust and its 
18 partners or beneficiaries own directly, indirectly, 
19 beneficially, or constructively, in the aggregate, at 
20 least 50% of the profits, capital, stock, or other 
21 ownership interest in the qualified new business venture 
22 that is the recipient of the applicant's investment. 
23  (3) A corporation, and any party related to the 
24 corporation in a manner that would require an attribution 
25 of stock from the corporation under the attribution rules 
26 of Section 318 of the Internal Revenue Code, if the 
 
 
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1 applicant and any other related member own, in the 
2 aggregate, directly, indirectly, beneficially, or 
3 constructively, at least 50% of the value of the 
4 outstanding stock of the qualified new business venture 
5 that is the recipient of the applicant's investment. 
6  (4) A corporation and any party related to that 
7 corporation in a manner that would require an attribution 
8 of stock from the corporation to the party or from the 
9 party to the corporation under the attribution rules of 
10 Section 318 of the Internal Revenue Code, if the 
11 corporation and all such related parties own, in the 
12 aggregate, at least 50% of the profits, capital, stock, or 
13 other ownership interest in the qualified new business 
14 venture that is the recipient of the applicant's 
15 investment. 
16  (5) A person to or from whom there is attribution of 
17 ownership of stock in the qualified new business venture 
18 that is the recipient of the applicant's investment in 
19 accordance with Section 1563(e) of the Internal Revenue 
20 Code, except that for purposes of determining whether a 
21 person is a related member under this paragraph, "20%" 
22 shall be substituted for "5%" whenever "5%" appears in 
23 Section 1563(e) of the Internal Revenue Code. 
24 (b) For taxable years beginning after December 31, 2010, 
25and ending on or before December 31, 2026, subject to the 
26limitations provided in this Section, a claimant may claim, as 
 
 
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1a credit against the tax imposed under subsections (a) and (b) 
2of Section 201 of this Act, an amount equal to 25% of the 
3claimant's investment made directly in a qualified new 
4business venture. However, the amount of the credit is 35% of 
5the claimant's investment made directly in the qualified new 
6business venture if the investment is made in: (1) a qualified 
7new business venture that is a minority-owned business, a 
8women-owned business, or a business owned a person with a 
9disability (as those terms are used and defined in the 
10Business Enterprise for Minorities, Women, and Persons with 
11Disabilities Act); or (2) a qualified new business venture in 
12which the principal place of business is located in a county 
13with a population of not more than 250,000. In order for an 
14investment in a qualified new business venture to be eligible 
15for tax credits, the business must have applied for and 
16received certification under subsection (e) for the taxable 
17year in which the investment was made prior to the date on 
18which the investment was made. The credit under this Section 
19may not exceed the taxpayer's Illinois income tax liability 
20for the taxable year. If the amount of the credit exceeds the 
21tax liability for the year, the excess may be carried forward 
22and applied to the tax liability of the 5 taxable years 
23following the excess credit year. The credit shall be applied 
24to the earliest year for which there is a tax liability. If 
25there are credits from more than one tax year that are 
26available to offset a liability, the earlier credit shall be 
 
 
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1applied first. In the case of a partnership or Subchapter S 
2Corporation, the credit is allowed to the partners or 
3shareholders in accordance with the determination of income 
4and distributive share of income under Sections 702 and 704 
5and Subchapter S of the Internal Revenue Code. 
6 (c) The minimum amount an applicant must invest in any 
7single qualified new business venture in order to be eligible 
8for a credit under this Section is $10,000. The maximum amount 
9of an applicant's total investment made in any single 
10qualified new business venture that may be used as the basis 
11for a credit under this Section is $2,000,000. 
12 (d) The Department shall implement a program to certify an 
13applicant for an angel investment credit. Upon satisfactory 
14review, the Department shall issue a tax credit certificate 
15stating the amount of the tax credit to which the applicant is 
16entitled. The Department shall annually certify that: (i) each 
17qualified new business venture that receives an angel 
18investment under this Section has maintained a minimum 
19employment threshold, as defined by rule, in the State (and 
20continues to maintain a minimum employment threshold in the 
21State for a period of no less than 3 years from the issue date 
22of the last tax credit certificate issued by the Department 
23with respect to such business pursuant to this Section); and 
24(ii) the claimant's investment has been made and remains, 
25except in the event of a qualifying liquidity event, in the 
26qualified new business venture for no less than 3 years. 
 
 
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1 If an investment for which a claimant is allowed a credit 
2under subsection (b) is held by the claimant for less than 3 
3years, other than as a result of a permitted sale of the 
4investment to person who is not a related member, the claimant 
5shall pay to the Department of Revenue, in the manner 
6prescribed by the Department of Revenue, the aggregate amount 
7of the disqualified credits that the claimant received related 
8to the subject investment. 
9 If the Department determines that a qualified new business 
10venture failed to maintain a minimum employment threshold in 
11the State through the date which is 3 years from the issue date 
12of the last tax credit certificate issued by the Department 
13with respect to the subject business pursuant to this Section, 
14except for any 3-year reporting period that includes March 13, 
152020 to January 1, 2024, the claimant or claimants shall pay to 
16the Department of Revenue, in the manner prescribed by the 
17Department of Revenue, the aggregate amount of the 
18disqualified credits that claimant or claimants received 
19related to investments in that business. For tax credits under 
20this Section involving a 3-year reporting period that includes 
21March 13, 2020 to January 1, 2024, the repayment of any tax 
22credits issued shall be determined at the discretion of the 
23Department. 
24 (e) The Department shall implement a program to register 
25qualified new business ventures for purposes of this Section. 
26A business desiring registration under this Section shall be 
 
 
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1required to submit a full and complete application to the 
2Department. A submitted application shall be effective only 
3for the taxable year in which it is submitted, and a business 
4desiring registration under this Section shall be required to 
5submit a separate application in and for each taxable year for 
6which the business desires registration. Further, if at any 
7time prior to the acceptance of an application for 
8registration under this Section by the Department one or more 
9events occurs which makes the information provided in that 
10application materially false or incomplete (in whole or in 
11part), the business shall promptly notify the Department of 
12the same. Any failure of a business to promptly provide the 
13foregoing information to the Department may, at the discretion 
14of the Department, result in a revocation of a previously 
15approved application for that business, or disqualification of 
16the business from future registration under this Section, or 
17both. The Department may register the business only if all of 
18the following conditions are satisfied: 
19  (1) it has its principal place of business in this 
20 State; 
21  (2) at least 51% of the employees employed by the 
22 business are employed in this State; 
23  (3) the business has the potential for increasing jobs 
24 in this State, increasing capital investment in this 
25 State, or both, as determined by the Department, and 
26 either of the following apply: 
 
 
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1   (A) it is principally engaged in innovation in any 
2 of the following: manufacturing; biotechnology; 
3 nanotechnology; communications; agricultural 
4 sciences; clean energy creation or storage technology; 
5 processing or assembling products, including medical 
6 devices, pharmaceuticals, computer software, computer 
7 hardware, semiconductors, other innovative technology 
8 products, or other products that are produced using 
9 manufacturing methods that are enabled by applying 
10 proprietary technology; or providing services that are 
11 enabled by applying proprietary technology; or 
12   (B) it is undertaking pre-commercialization 
13 activity related to proprietary technology that 
14 includes conducting research, developing a new product 
15 or business process, or developing a service that is 
16 principally reliant on applying proprietary 
17 technology; 
18  (4) it is not principally engaged in real estate 
19 development, insurance, banking, lending, lobbying, 
20 political consulting, professional services provided by 
21 attorneys, accountants, business consultants, physicians, 
22 or health care consultants, wholesale or retail trade, 
23 leisure, hospitality, transportation, or construction, 
24 except construction of power production plants that derive 
25 energy from a renewable energy resource, as defined in 
26 Section 1 of the Illinois Power Agency Act;
 
 
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1  (5) at the time it is first certified: 
2   (A) it has fewer than 100 employees; 
3   (B) it has been in operation in Illinois for not 
4 more than 10 consecutive years prior to the year of 
5 certification; and
6   (C) it has received not more than $10,000,000 in 
7 aggregate investments; 
8  (5.1) it agrees to maintain a minimum employment 
9 threshold in the State of Illinois prior to the date which 
10 is 3 years from the issue date of the last tax credit 
11 certificate issued by the Department with respect to that 
12 business pursuant to this Section; 
13  (6) (blank); and 
14  (7) it has received not more than $4,000,000 in 
15 investments that qualified for tax credits under this 
16 Section. 
17 (f) The Department, in consultation with the Department of 
18Revenue, shall adopt rules to administer this Section. For 
19taxable years beginning before January 1, 2024, the aggregate 
20amount of the tax credits that may be claimed under this 
21Section for investments made in qualified new business 
22ventures shall be limited to $10,000,000 per calendar year, of 
23which $500,000 shall be reserved for investments made in 
24qualified new business ventures which are minority-owned 
25businesses, women-owned businesses, or businesses owned by a 
26person with a disability (as those terms are used and defined 
 
 
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1in the Business Enterprise for Minorities, Women, and Persons 
2with Disabilities Act), and an additional $500,000 shall be 
3reserved for investments made in qualified new business 
4ventures with their principal place of business in counties 
5with a population of not more than 250,000. For taxable years 
6beginning on or after January 1, 2024, the aggregate amount of 
7the tax credits that may be claimed under this Section for 
8investments made in qualified new business ventures shall be 
9limited to $15,000,000 per calendar year, of which $2,500,000 
10shall be reserved for investments made in qualified new 
11business ventures that are minority-owned businesses (as the 
12term is defined in the Business Enterprise for Minorities, 
13Women, and Persons with Disabilities Act), $1,250,000 shall be 
14reserved for investments made in qualified new business 
15ventures that are women-owned businesses or businesses owned 
16by a person with a disability (as those terms are defined in 
17the Business Enterprise for Minorities, Women, and Persons 
18with Disabilities Act), and $1,250,000 shall be reserved for 
19investments made in qualified new business ventures with their 
20principal place of business in a county with a population of 
21not more than 250,000. The annual allowable amounts set forth 
22in this Section shall be allocated by the Department, on a per 
23calendar quarter basis and prior to the commencement of each 
24calendar year, in such proportion as determined by the 
25Department, provided that: (i) the amount initially allocated 
26by the Department for any one calendar quarter shall not 
 
 
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1exceed 35% of the total allowable amount; (ii) any portion of 
2the allocated allowable amount remaining unused as of the end 
3of any of the first 3 calendar quarters of a given calendar 
4year shall be rolled into, and added to, the total allocated 
5amount for the next available calendar quarter; and (iii) the 
6reservation of tax credits for investments in minority-owned 
7businesses, women-owned businesses, businesses owned by a 
8person with a disability, and in businesses in counties with a 
9population of not more than 250,000 is limited to the first 3 
10calendar quarters of a given calendar year, after which they 
11may be claimed by investors in any qualified new business 
12venture. 
13 (g) A claimant may not sell or otherwise transfer a credit 
14awarded under this Section to another person. 
15 (h) On or before March 1 of each year, the Department shall 
16report to the Governor and to the General Assembly on the tax 
17credit certificates awarded under this Section for the prior 
18calendar year. 
19  (1) This report must include, for each tax credit 
20 certificate awarded: 
21   (A) the name of the claimant and the amount of 
22 credit awarded or allocated to that claimant; 
23   (B) the name and address (including the county) of 
24 the qualified new business venture that received the 
25 investment giving rise to the credit, the North 
26 American Industry Classification System (NAICS) code 
 
 
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1 applicable to that qualified new business venture, and 
2 the number of employees of the qualified new business 
3 venture; and 
4   (C) the date of approval by the Department of each 
5 claimant's tax credit certificate. 
6  (2) The report must also include: 
7   (A) the total number of applicants and the total 
8 number of claimants, including the amount of each tax 
9 credit certificate awarded to a claimant under this 
10 Section in the prior calendar year; 
11   (B) the total number of applications from 
12 businesses seeking registration under this Section, 
13 the total number of new qualified business ventures 
14 registered by the Department, and the aggregate amount 
15 of investment upon which tax credit certificates were 
16 issued in the prior calendar year; and 
17   (C) the total amount of tax credit certificates 
18 sought by applicants, the amount of each tax credit 
19 certificate issued to a claimant, the aggregate amount 
20 of all tax credit certificates issued in the prior 
21 calendar year and the aggregate amount of tax credit 
22 certificates issued as authorized under this Section 
23 for all calendar years. 
24 (i) For each business seeking registration under this 
25Section after December 31, 2016, the Department shall require 
26the business to include in its application the North American 
 
 
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1Industry Classification System (NAICS) code applicable to the 
2business and the number of employees of the business at the 
3time of application. Each business registered by the 
4Department as a qualified new business venture that receives 
5an investment giving rise to the issuance of a tax credit 
6certificate pursuant to this Section shall, for each of the 3 
7years following the issue date of the last tax credit 
8certificate issued by the Department with respect to such 
9business pursuant to this Section, report to the Department 
10the following: 
11  (1) the number of employees and the location at which 
12 those employees are employed, both as of the end of each 
13 year; 
14  (2) the amount of additional new capital investment 
15 raised as of the end of each year, if any; and 
16  (3) the terms of any liquidity event occurring during 
17 such year; for the purposes of this Section, a "liquidity 
18 event" means any event that would be considered an exit 
19 for an illiquid investment, including any event that 
20 allows the equity holders of the business (or any material 
21 portion thereof) to cash out some or all of their 
22 respective equity interests. 
23(Source: P.A. 102-16, eff. 6-17-21; 103-9, eff. 1-1-24.)