Bill Text: IL HB3318 | 2019-2020 | 101st General Assembly | Introduced
Bill Title: Amends the Illinois Income Tax Act. Provides for a credit in an amount equal to 25% of the taxpayer's equity investment in a qualified new business venture, including investments made through a certified fund manager. Sets forth limitations on the credit.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2020-06-23 - House Committee Amendment No. 1 Rule 19(c) / Re-referred to Rules Committee [HB3318 Detail]
Download: Illinois-2019-HB3318-Introduced.html
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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 5. The Illinois Income Tax Act is amended by adding | ||||||||||||||||||||||||
5 | Section 229 as follows:
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6 | (35 ILCS 5/229 new) | ||||||||||||||||||||||||
7 | Sec. 229. Venture capital investment credit. | ||||||||||||||||||||||||
8 | (a) Definitions. As used in this Section: | ||||||||||||||||||||||||
9 | "Certified investment fund manager" means a business that | ||||||||||||||||||||||||
10 | is certified under subsection (e). | ||||||||||||||||||||||||
11 | "Claimant" means an individual who files a claim for credit | ||||||||||||||||||||||||
12 | under this Section. | ||||||||||||||||||||||||
13 | "Department" means the Department of Commerce and Economic | ||||||||||||||||||||||||
14 | Opportunity, unless otherwise specifically provided. | ||||||||||||||||||||||||
15 | "Equity investment" means a purchase of an equity interest, | ||||||||||||||||||||||||
16 | or any other investment expenditure, in a qualified new | ||||||||||||||||||||||||
17 | business venture either directly or through a certified | ||||||||||||||||||||||||
18 | investment fund manager as determined by subsection (e). | ||||||||||||||||||||||||
19 | "Qualified new business venture" means a business that is | ||||||||||||||||||||||||
20 | certified under subsection (d). | ||||||||||||||||||||||||
21 | (b) Filing claims for credit. A claimant may claim as a | ||||||||||||||||||||||||
22 | credit against the tax imposed under subsections (a) and (b) of | ||||||||||||||||||||||||
23 | Section 201 of this Act an amount equal to 25% of the |
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1 | claimant's equity investment made directly to a qualified new | ||||||
2 | business venture in the taxable year, or made to a certified | ||||||
3 | fund manager if the fund manager invests in a business | ||||||
4 | certified under subsection (d). | ||||||
5 | (c) Limitations. | ||||||
6 | (1) The maximum amount of the credits that may be | ||||||
7 | claimed under this Section for all taxable years combined | ||||||
8 | is $50,000,000. | ||||||
9 | (2) The maximum amount of a claimant's investment that | ||||||
10 | may be used as the basis for a credit under this Section is | ||||||
11 | $500,000 for each investment made directly to a business | ||||||
12 | certified under subsection (d). | ||||||
13 | (3) If an investment for which a claimant claims a | ||||||
14 | credit under subsection (b) is held by the claimant for | ||||||
15 | less than one year, then the claimant shall pay to the | ||||||
16 | Department, in the manner prescribed by the Department, the | ||||||
17 | amount of the credit that the claimant received related to | ||||||
18 | the investment. | ||||||
19 | (4) Any credit allowed under this Section that is | ||||||
20 | unused in the year the credit is earned may be carried | ||||||
21 | forward to each of the 5 taxable years following the year | ||||||
22 | for which the credit is first computed until it is used. | ||||||
23 | This credit shall be applied first to the earliest year for | ||||||
24 | which there is a liability. If there is a credit under this | ||||||
25 | Section from more than one tax year that is available to | ||||||
26 | offset a liability, then the earliest credit arising under |
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1 | this Section shall be applied first. | ||||||
2 | (5) A partnership may elect to pass through to its | ||||||
3 | partners the credits to which the partnership is entitled | ||||||
4 | under this Section for the taxable year. A partner may use | ||||||
5 | the credit allocated to him or her under this paragraph | ||||||
6 | only against the tax imposed in subsections (a) and (b) of | ||||||
7 | Section 201 of this Act. If the
partnership makes that | ||||||
8 | election, those credits shall be allocated among the | ||||||
9 | partners in the partnership in accordance with the rules | ||||||
10 | set forth in Section 704(b) of the Internal Revenue Code, | ||||||
11 | and the rules promulgated under that Section, and the | ||||||
12 | allocated amount of the credits shall be allowed to the | ||||||
13 | partners for that taxable year. | ||||||
14 | (d) Qualified new business ventures. The Department shall | ||||||
15 | implement a program to certify businesses for purposes of this | ||||||
16 | credit. A business desiring certification shall submit an | ||||||
17 | application to the Department in each taxable year for which | ||||||
18 | the business desires certification. Unless otherwise provided | ||||||
19 | under the rules of the Department, a business may be certified | ||||||
20 | under this subsection and may maintain that certification only | ||||||
21 | if the business satisfies all of the following conditions: | ||||||
22 | (1) it has its headquarters in this State; | ||||||
23 | (2) at least 51% of the employees employed by the | ||||||
24 | business are employed in this State; | ||||||
25 | (3) it is engaged in, or has committed to engage in, | ||||||
26 | manufacturing, agriculture, or processing or assembling |
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1 | products and conducting research and development or | ||||||
2 | developing a new product or business process; | ||||||
3 | (4) it is not engaged in real estate development, | ||||||
4 | insurance, banking, lending, lobbying, political | ||||||
5 | consulting, professional services provided by attorneys, | ||||||
6 | accountants, business consultants, physicians, or health | ||||||
7 | care consultants, wholesale or retail trade, leisure, | ||||||
8 | hospitality, transportation, or construction; | ||||||
9 | (5) it has fewer than 100 employees; | ||||||
10 | (6) it has been in operation in this State for not more | ||||||
11 | than 7 consecutive years; and | ||||||
12 | (7) it has not received more than $1,000,000 in | ||||||
13 | investments that have qualified for tax credits under this | ||||||
14 | Section. | ||||||
15 | The Department shall maintain a list of certified | ||||||
16 | businesses and shall permit public access to the lists through | ||||||
17 | the Department's Internet website. | ||||||
18 | (e) Certified investment fund managers. The Department | ||||||
19 | shall implement a program to certify investment fund managers | ||||||
20 | for purposes of this Section. An investment fund manager | ||||||
21 | desiring certification shall submit an application to the | ||||||
22 | Department. In determining whether to certify an investment | ||||||
23 | fund manager, the Department shall consider the investment fund | ||||||
24 | manager's experience in managing venture capital funds, the | ||||||
25 | past performance of investment funds managed by the applicant, | ||||||
26 | the expected level of investment in the investment fund to be |
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1 | managed by the applicant, and any other relevant factors. The | ||||||
2 | Department may certify only investment fund managers that | ||||||
3 | commit to placing investments in businesses certified under | ||||||
4 | subsection (d). The Department shall maintain a list of | ||||||
5 | certified investment fund managers and shall permit public | ||||||
6 | access to the lists through the Department's Internet website. | ||||||
7 | (f) The Department shall notify the Department of Revenue | ||||||
8 | of every certification issued under this Section and the date | ||||||
9 | on which any such certification is revoked or expires. | ||||||
10 | (g) Annual report. Annually, no later than February 1, the | ||||||
11 | Department shall submit a report to the General Assembly for | ||||||
12 | distribution to legislators, listing all of the following | ||||||
13 | information: | ||||||
14 | (1) the total amount of tax credits claimed under this | ||||||
15 | Section; | ||||||
16 | (2) the name of each business in which investments | ||||||
17 | qualifying for those tax credits were made, the amount of | ||||||
18 | the tax credits, and the amount of the investment; and | ||||||
19 | (3) any other information the Department considers | ||||||
20 | reasonable to include. | ||||||
21 | (h) Rules. The Department, in consultation with the | ||||||
22 | Department of Revenue, shall adopt rules to administer this | ||||||
23 | Section.
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