[ Search ] [ Legislation ]
[ Home ] [ Back ] [ Bottom ]
| [ Introduced ] | [ Engrossed ] | [ House Amendment 001 ] |
| [ Senate Amendment 002 ] | [ Senate Amendment 003 ] | [ Senate Amendment 004 ] |
91_SB0011sam001
LRB9101143PTpkam03
1 AMENDMENT TO SENATE BILL 11
2 AMENDMENT NO. . Amend Senate Bill 11 by replacing
3 the title with the following:
4 "AN ACT concerning development of small businesses in
5 Illinois."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 1. Short title. This Act may be cited as the
9 Certified Capital Company Act.
10 Section 5. Policy statement. The primary purpose of the
11 Certified Capital Company Act is to provide assistance in the
12 formation of new and expansion of existing businesses that
13 create jobs in the State by providing an incentive for
14 insurance companies to invest in certified capital companies.
15 Section 10. Definitions. For the purpose of this Act:
16 "Affiliate of a certified capital company or insurance
17 company" means:
18 (a) Any person, directly or indirectly owning,
19 controlling, or holding power to vote 10% or more of the
20 outstanding voting securities or other ownership
-2- LRB9101143PTpkam03
1 interests of the certified capital company or insurance
2 company, as applicable;
3 (b) Any person 10% or more of whose outstanding
4 voting securities or other ownership interest are
5 directly or indirectly owned, controlled, or held with
6 power to vote by the certified capital company or
7 insurance company, as applicable;
8 (c) Any person directly or indirectly controlling,
9 controlled by, or under common control with the certified
10 capital company or insurance company, as applicable;
11 (d) A partnership in which the certified capital
12 company or insurance company, as applicable, is a general
13 partner; or
14 (e) Any person who is an officer, director,
15 employee, or agent of the certified capital company or
16 insurance company, as applicable, or an immediate family
17 member of that officer, director, employee, or agent.
18 "Certification date" means the date on which a certified
19 capital company is so designated by the Department.
20 "Certified capital" means an investment of cash by a
21 certified investor in a certified capital company that fully
22 funds the purchase price of either its equity interest in the
23 certified capital company or a qualified debt instrument
24 issued by the certified capital company.
25 "Certified capital company" means a partnership,
26 corporation, trust, or limited liability company, whether
27 organized on a profit or not-for-profit basis, that has as
28 its primary business activity the investment of cash in
29 qualified businesses and that is certified by the Department
30 as meeting the criteria of this Act.
31 "Certified investor" means any insurance company that (A)
32 contributes certified capital pursuant to an allocation of
33 privilege tax credits under Section 25 of this Act or (B)
34 becomes irrevocably committed to contribute certified capital
-3- LRB9101143PTpkam03
1 by preparing and executing a privilege tax credit allocation
2 claim.
3 "Department" means the Department of Commerce and
4 Community Affairs.
5 "Person" means any natural person or entity, including a
6 corporation, general or limited partnership, trust, or
7 limited liability company.
8 "Privilege tax credit allocation claim" means a claim for
9 allocation of privilege tax credits prepared and executed by
10 a certified investor on a form provided by the Department and
11 filed by a certified capital company with the Department.
12 The form shall include an affidavit of the certified investor
13 under which the certified investor shall become legally bound
14 and irrevocably committed to make an investment of certified
15 capital in a certified capital company in the amount
16 allocated (even if such amount is less than the amount of the
17 claim), subject only to the receipt of an allocation pursuant
18 to Section 25 of this Act.
19 "Qualified business" means a new or expanding existing
20 business that meets all of the following conditions as of the
21 time of a certified capital company's first investment in the
22 business:
23 (a) It is headquartered in this State, and its
24 principal business operations are located in this State;
25 (b) It is a small business concern as defined in
26 Section 121.201 of the small business size regulations of
27 the U.S. Small Business Administration, 13 CFR 121.201.
28 A business predominantly engaged in professional services
29 provided by accountants, lawyers, or physicians shall not
30 constitute a qualified business.
31 "Qualified debt instrument" means a debt instrument
32 issued by a certified capital company, at par value or a
33 premium, with an original maturity date of at least 5 years
34 from date of issuance, a repayment schedule that is no faster
-4- LRB9101143PTpkam03
1 than a level principal amortization over 5 years, and
2 contains no equity component or interest, distribution, or
3 payment features that are related to the profitability of the
4 certified capital company or the performance of the certified
5 capital company's investment portfolio (whether the component
6 or features are a part of or attached to the debt instrument
7 or are distributed or sold separately and purchased or
8 obtained by the holder of the debt instrument or any of its
9 affiliates).
10 "Qualified Distribution" means any distribution or
11 payment to equity holders of a certified capital company in
12 connection with the following:
13 (a) Costs and expenses of forming, syndicating,
14 managing, and operating the certified capital company,
15 including reasonable and necessary fees paid for
16 professional services (such as legal and accounting
17 services) related to the formation and operation of the
18 certified capital company and an annual management fee in
19 an amount that does not exceed 2% of the value of the
20 assets of the certified capital company; and
21 (b) Any projected increase in federal or State
22 taxes, including penalties and interest related to State
23 and federal income taxes, of the equity owners of a
24 certified capital company resulting from the earnings or
25 other tax liability of the certified capital company to
26 the extent that the increase is related to the ownership,
27 management, or operation of a certified capital company.
28 "Qualified Investment" means the investment of cash by a
29 certified capital company in a qualified business for the
30 purchase of any debt, equity, or hybrid security, of any
31 nature and description whatsoever, including a debt
32 instrument or security that has the characteristics of debt
33 but that provides for conversion into equity or equity
34 participation instruments such as options or warrants.
-5- LRB9101143PTpkam03
1 "State privilege tax liability" means any liability
2 incurred by an insurance company under the provisions of
3 Section 409 of the Illinois Insurance Code.
4 Section 15. Certification.
5 (a) The Department shall establish by rule or regulation
6 the procedures for making an application to become a
7 certified capital company. The applicant shall pay a
8 non-refundable application fee of $7,500 at the time of
9 filing the application with the Department.
10 (b) A certified capital company's equity capitalization
11 at the time of seeking certification must be $500,000 or more
12 and must be in the form of unencumbered cash, marketable
13 securities, or other liquid assets. The applicant shall
14 submit with its initial application an audited balance sheet
15 with an unqualified opinion from a firm of independent
16 certified public accountants as of a date no more than 35
17 days prior to the date of the application.
18 (c) The Department shall review the organizational
19 documents of each applicant for certification and the
20 business history of the applicant and shall determine that
21 the applicant's cash, marketable securities, and other liquid
22 assets are at least $500,000.
23 (d) The Department shall verify that at least 2
24 principals of the certified capital company or at least 2
25 persons employed to manage the funds of the certified capital
26 company have not less than 2 years of experience in the
27 venture capital industry.
28 (e) Any offering material involving the sale of
29 securities of the certified capital company shall include the
30 following statement: "By authorizing the formation of a
31 certified capital company, the State does not necessarily
32 endorse the quality of management or the potential for
33 earnings of such company and is not liable for damages or
-6- LRB9101143PTpkam03
1 losses to a certified investor in the company. Use of the
2 word 'certified' in an offering does not constitute a
3 recommendation or endorsement of the investment by the
4 Securities Department of the Office of the Secretary of
5 State. In the event applicable provisions of this Act are
6 violated, the State may require forfeiture of unused
7 privilege tax credits and repayment of used privilege tax
8 credits."
9 (f) Within 30 days of application, the Department shall
10 issue the certification or shall refuse the certification and
11 communicate in detail to the applicant the grounds for the
12 refusal, including suggestions for the removal of those
13 grounds. The Department shall review and approve or reject
14 applications in the order submitted, and in the event more
15 than one application is received by the Department on any
16 date, all such applications shall be reviewed and approved
17 simultaneously, except in the case of incomplete applications
18 or applications for which additional information is requested
19 by the Department and is not supplied by the applicant within
20 the allowable time limits established by the Department.
21 (g) No insurance company or any affiliate of an
22 insurance company shall, directly or indirectly, manage a
23 certified capital company, own 10% or more of the
24 outstanding voting securities of a certified capital company,
25 or control the direction of investments for a certified
26 capital company. This provision shall not preclude an
27 certified investor, insurance company, or any other party
28 from exercising its legal rights and remedies (which may
29 include interim management of a certified capital company) in
30 the event that a certified capital company is in default of
31 its statutory obligations or its contractual obligations to
32 such certified investor, insurance company, or other party.
33 Section 20. Privilege tax credit.
-7- LRB9101143PTpkam03
1 (a) Any certified investor who makes an investment of
2 certified capital pursuant to an allocation of privilege tax
3 credits under Section 25 of this Act shall, in the year of
4 investment, earn a vested credit against State privilege tax
5 liability levied pursuant to Section 409 of the Illinois
6 Insurance Code equal to 100% of the certified investor's
7 investment of certified capital. A certified investor shall
8 be entitled to take up to 10% of the vested privilege tax
9 credit in any taxable year of the certified investor.
10 (b) The credit to be applied against State privilege tax
11 liability in any one year may not exceed the State privilege
12 tax liability of the certified investor for that taxable
13 year. All unused credits against State privilege tax
14 liability may be carried forward until the privilege tax
15 credits are utilized or privilege tax filings for the
16 calendar year 2020; provided that in no one taxable year may
17 the certified investor together with its affilliates utilize
18 privilege tax credits which in the aggregate equal more than
19 10% of the certified investor's total vested privilege tax
20 credit.
21 (c) A certified investor claiming a credit against State
22 privilege tax liability earned through an investment in a
23 certified capital company shall not be required to pay any
24 additional retaliatory tax levied pursuant to Section 444 of
25 the Illinois Insurance Code as a result of claiming that
26 credit.
27 (d) A certified investor or any holder of a transferred
28 credit claiming a credit against State privilege tax
29 liability shall provide to the Department of Insurance
30 information, including, but not limited to, the amount of
31 certified capital investment and the certified capital
32 company where investment was made, as may be required by the
33 Department of Insurance by regulation adopted pursuant to the
34 authority set forth in Section 55 of this Act and Section 401
-8- LRB9101143PTpkam03
1 of the Illinois Insurance Code.
2 Section 25. Aggregate limitations on credits.
3 (a) The aggregate amount of certified capital for which
4 privilege tax credits shall be allowed for all certified
5 investors under this Act shall not exceed the amount that
6 would entitle all certified investors in certified capital
7 companies to take aggregate credits of $30,000,000 per year.
8 No certified capital company (together with its affiliates)
9 may file privilege tax credit allocation claims in excess of
10 the maximum amount of certified capital for which privilege
11 tax credits may be allowed as provided in this subsection.
12 (b) Certified capital for which privilege tax credits
13 are allowed will be allocated to certified investors in
14 certified capital companies in the order that privilege tax
15 credit allocation claims are filed with the Department by
16 such certified capital companies on behalf of their certified
17 investors. All filings made on the same day shall be treated
18 as having been made contemporaneously.
19 (c) In the event that 2 or more certified capital
20 companies file privilege tax credit allocation claims with
21 the Department on behalf of their respective certified
22 investors on the same day, and the amount of such privilege
23 tax credit allocation claims exceeds in the aggregate the
24 remaining amount of available tax credits under the
25 provisions of this Section after giving effect to all
26 privilege tax credit allocation claims filed (and not
27 forfeited) prior to the claims, capital for which privilege
28 tax credits are allowed shall be allocated among the
29 certified investors of the submitting certified capital
30 companies on a pro rata basis with respect to the amounts
31 claimed. The pro rata allocation for any one certified
32 investor shall be the product of a fraction, the numerator of
33 which is the amount of the privilege tax credit allocation
-9- LRB9101143PTpkam03
1 claim filed on behalf of such certified investor and the
2 denominator of which is the total of all privilege tax credit
3 allocation claims filed on behalf of all certified investors
4 on the same day, multiplied by the remaining amount of
5 available tax credits under the provisions of this Section
6 after giving effect to all privilege tax credit allocation
7 claims filed (and not forfeited) prior to the claims.
8 (d) Within 5 business days after the Department receives
9 a privilege tax credit allocation claim filed by a certified
10 capital company on behalf of one or more of its certified
11 investors, the Department shall notify the certified capital
12 company of the amount of tax credits allocated to each of the
13 certified investors in the certified capital company.
14 (e) In the event a certified capital company does not
15 receive an investment of certified capital equaling the
16 amount of privilege tax credits allocated to a certified
17 investor for which it filed a privilege tax credit allocation
18 claim within 5 business days of its receipt of notice of
19 allocation, that portion of the privilege tax credits
20 allocated to the certified investor in the certified capital
21 company will be forfeited, and the Department will reallocate
22 that certified capital among the other certified investors in
23 all certified capital companies on a pro rata basis with
24 respect to the privilege tax credit allocation claims filed
25 on behalf of such certified investors by all certified
26 capital companies.
27 (f) The maximum amount of certified capital for which
28 privileges tax credits shall be allowed to any one certified
29 investor (and its affiliates) in one or more certified
30 capital companies in any year shall not exceed 10% of the
31 aggregate limitation as provided in subsection (a).
32 Section 30. Requirements for continuance of
33 certification.
-10- LRB9101143PTpkam03
1 (a) To continue to be certified, a certified capital
2 company must make qualified investments according to the
3 following schedule:
4 (1) Within the period ending 3 years after its
5 certification date, a certified capital company must have
6 made qualified investments cumulatively equal to 30% of
7 its certified capital.
8 (2) Within the period ending 5 years after its
9 certification date, a certified capital company must have
10 made qualified investments cumulatively equal to 50% of
11 its certified capital.
12 (b) The aggregate cumulative amount of all qualified
13 investments made by the certified capital company from its
14 certification date will be considered in the calculation of
15 the percentage requirements under this Act. Any proceeds
16 received from a qualified investment may be invested in
17 another qualified investment and shall count toward any
18 requirement in this Act with respect to investments of
19 certified capital.
20 (c) Any business that is classified as a qualified
21 business at the time of the first investment in the business
22 by a certified capital company shall remain classified as a
23 qualified business and may receive follow-on investments from
24 any certified capital company or any of its affiliates, and
25 such follow-on investments shall be qualified investments
26 even though such business may not meet the definition of a
27 qualified business at the time of such follow-on investments;
28 provided that at the time of the follow-on investment the
29 business is headquartered and has its principal business
30 operations located in the State.
31 (d) No qualified investment may be made at a cost to a
32 certified capital company greater than 15% of the total
33 certified capital of the certified capital company at the
34 time of investment.
-11- LRB9101143PTpkam03
1 (e) At its option, a certified capital company, prior to
2 making a proposed investment in a specific business, may
3 request from the Department a written opinion that the
4 business in which it proposes to invest should be considered
5 a qualified business. Upon receiving such a request, the
6 Department shall determine whether or not the business meets
7 the definition of a qualified business and notify the
8 certified capital company of its determination and an
9 explanation thereof.
10 (f) All certified capital not currently invested in
11 qualified investments by the certified capital company must
12 be invested in cash deposited with a federally-insured
13 financial institution, certificates of deposit in a
14 federally-insured financial institution, investment
15 securities that are obligations of the United States, its
16 agencies or instrumentalities, or obligations that are
17 guaranteed fully as to principal and interest by the United
18 States, investment-grade instruments (rated in the top 4
19 rating categories by a nationally recognized rating
20 organization), obligations of this State, any municipality in
21 this State, or any political subdivision of this State; or
22 any other investments approved in advance and in writing by
23 the Department.
24 (g) Each certified capital company shall report the
25 following to the Department:
26 (1) As soon as practicable after the receipt of
27 certified capital, each certified capital company shall
28 report the following to the Department: (A) the name of
29 each certified investor from which the certified capital
30 was received, including such certified investor's
31 insurance privilege tax identification number, (B) the
32 amount of each certified investor's investment of
33 certified capital and privilege tax credits, and (C) the
34 date on which the certified capital was received.
-12- LRB9101143PTpkam03
1 (2) On an annual basis, on or before January 31st,
2 (A) the amount of the certified capital company's
3 certified capital at the end of the immediately preceding
4 year, (B) whether or not the certified capital company
5 has invested more than 15% of its total certified capital
6 in any one business, and (C) all qualified investments
7 that the certified capital company made during the
8 previous calendar year.
9 (3) Each certified capital company shall provide to
10 the Department annual audited financial statements, which
11 shall include the opinion of an independent certified
12 public accountant, within 90 days of the close of the
13 fiscal year. The audit shall address the methods of
14 operation and conduct of the business of the certified
15 capital company to determine if the certified capital
16 company is complying with the statutes and program rules
17 and that the funds received by the certified capital
18 company have been invested as required within the time
19 limits provided by subsection (a) of Section 30.
20 (4) On or before January 31 of each year, each
21 certified capital company shall pay an annual,
22 non-refundable certification fee of $5,000 to the
23 Department; provided, that no such fee shall be required
24 within 6 months of the initial certification date of a
25 certified capital company.
26 Section 35. Distributions. A certified capital company
27 may make qualified distributions at any time. In order to
28 make a distribution to its equity holders, other than a
29 qualified distribution, a certified capital company must have
30 made qualified investments in an amount cumulatively equal to
31 100% of its certified capital. A certified capital company
32 may, however, make repayments of principal and interest on
33 its indebtedness without any restriction whatsoever,
-13- LRB9101143PTpkam03
1 including repayments of indebtedness of the certified capital
2 company on which certified investors earned privilege tax
3 credits.
4 Section 40. Decertification.
5 (a) The Department shall conduct an annual review of
6 each certified capital company to determine if the certified
7 capital company is abiding by the requirements of
8 certification, to advise the certified capital company as to
9 the eligibility status of its qualified investments, and to
10 ensure that no investment has been made in violation of this
11 Act. The cost of the annual review shall be paid by each
12 certified capital company according to a reasonable fee
13 schedule adopted by the Department.
14 (b) Any material violation of Section 30 shall be
15 grounds for decertification of the certified capital company.
16 If the Department determines that a certified capital company
17 is not in compliance with the requirements of Section 30, it
18 shall, by written notice, inform the officers of the
19 certified capital company that the certified capital company
20 may be subject to decertification in 120 days from the date
21 of mailing of the notice, unless the deficiencies are
22 corrected and the certified capital company is again in
23 compliance with all requirements for certification.
24 (c) At the end of the 120-day grace period, if the
25 certified capital company is still not in compliance with
26 Section 30, the Department may send a notice of
27 decertification to the certified capital company and to all
28 other appropriate State agencies.
29 (d) Decertification of a certified capital company may
30 cause the recapture of privilege tax credits previously
31 claimed and the forfeiture of future privilege tax credits to
32 be claimed by certified investors with respect to such
33 certified capital company, as follows:
-14- LRB9101143PTpkam03
1 (1) Decertification of a certified capital company
2 within 3 years of its certification date shall cause the
3 recapture of all privilege tax credits previously claimed
4 and the forfeiture of all future privilege tax credits to
5 be claimed by certified investors with respect to such
6 certified capital company.
7 (2) When a certified capital company meets all
8 requirements for continued certification under paragraph
9 (1) of subsection (a) of Section 30 and subsequently
10 fails to meet the requirements for continued
11 certification under the provisions of paragraph (2) of
12 subsection (a) of Section 30, those privilege tax credits
13 that have been or will be taken by certified investors
14 within 3 years from the certification date of the
15 certified capital company will not be subject to
16 recapture or forfeiture; however, all privilege tax
17 credits that have been or will be taken by certified
18 investors after the third anniversary of the
19 certification date of the certified capital company shall
20 be subject to recapture or forfeiture.
21 (3) Once a certified capital company has met all
22 requirements for continued certification under paragraphs
23 (1) and (2) of subsection (a) of Section 30, and is
24 subsequently decertified, those privilege tax credits
25 that have been or will be taken by certified investors
26 within 5 years from the certification date of the
27 certified capital company will not be subject to
28 recapture or forfeiture. Those privilege tax credits to
29 be taken subsequent to the fifth year of certification
30 shall be subject to forfeiture only if the certified
31 capital company is decertified within 5 years from its
32 certification date.
33 (4) Once a certified capital company has invested
34 an amount cumulatively equal to 100% of its certified
-15- LRB9101143PTpkam03
1 capital in qualified investments, all privilege tax
2 credits claimed or to be claimed by its certified
3 investors shall no longer be subject to recapture or
4 forfeiture.
5 (e) The Department shall send written notice to the
6 address of each certified investor whose privilege tax credit
7 has been subject to recapture or forfeiture, using the
8 address last shown on the last privilege tax filing.
9 (f) The Department shall have the authority to waive any
10 recapture or forfeiture of credits if, after considering all
11 facts and circumstances, it determines that such waiver will
12 have the effect of furthering State economic development.
13 Section 45. Transferability. The privilege tax credit
14 established by this Act may be transferred or sold. The
15 Department shall adopt rules to facilitate the transfer or
16 sale of the privilege tax credits. Any transfer or sale
17 shall not affect the time schedule for taking the privilege
18 tax credit as provided in this Act or the limitation of using
19 10% of the certified investor's investment as credit in any
20 year as provided in Section 20 of this Act. Any privilege
21 tax credits recaptured under Section 40 shall be the
22 liability of the taxpayer that actually claimed the privilege
23 tax credits.
24 Section 50. Impact of tax credits claimed by a certified
25 investor on insurance rates. A certified investor shall not
26 be required to reduce the provision for privilege tax
27 included in ratemaking for any insurance contract written in
28 Illinois on account of a reduction in its Illinois privilege
29 tax derived from the tax credit granted under this Act.
30 Section 55. Rules.
31 (a) The Department shall adopt rules necessary to carry
-16- LRB9101143PTpkam03
1 out the provisions of this Act within 60 days after the
2 effective date of this Act. The rules shall provide that the
3 Department shall begin accepting applications for
4 certification as a certified capital company not later than
5 90 days after the effective date of this Act. The rules shall
6 further provide that any certified capital company may file
7 privilege tax credit allocation claims on behalf of its
8 certified investors at any time on or after its certification
9 date and that privilege tax credits shall be earned by and
10 vested in certified investors at the time of such investment
11 of certified capital, although the privilege tax credits may
12 not be claimed or utilized until 2000.
13 (b) The Department of Insurance shall adopt rules to
14 carry out the collection of State privilege tax as it is
15 associated with the credit provided in Section 20 of this
16 Act. Such authority is limited to the collection of
17 information necessary to maintain the proper use of vested
18 credits generated pursuant to this Act.
19 Section 60. Reporting. Within 90 days of the fifth
20 anniversary of the effective date of this Act, the Department
21 shall prepare and present a report to the General Assembly of
22 this State that sets forth the following:
23 (a) the total dollar amount each certified capital
24 company received from all certified investors, the identity
25 of certified investors, and the total amount of privilege tax
26 credits used by each certified investor through the date of
27 the report;
28 (b) the total dollar amount invested by each certified
29 capital company and that portion invested in qualified
30 businesses, the identity and location of those businesses,
31 the amount invested in each qualified business, and the total
32 number of total permanent, full-time jobs created or retained
33 by each qualified business; and
-17- LRB9101143PTpkam03
1 (c) such other information with respect to the economic
2 benefits to the State that have resulted from investments by
3 certified capital companies as the Department deems
4 appropriate and informative.
5 Section 105. The Illinois Insurance Code is amended by
6 changing Section 409 as follows:
7 (215 ILCS 5/409) (from Ch. 73, par. 1021)
8 Sec. 409. Annual privilege tax payable by companies.
9 (1) As of January 1, 1999 for all health maintenance
10 organization premiums written; as of July 1, 1998 for all
11 premiums written as accident and health business, voluntary
12 health service plan business, dental service plan business,
13 or limited health service organization business; and as of
14 January 1, 1998 for all other types of insurance premiums
15 written, every company doing any form of insurance business
16 in this State, including, but not limited to, every risk
17 retention group, and excluding all fraternal benefit
18 societies, all farm mutual companies, all religious
19 charitable risk pooling trusts, and excluding all statutory
20 residual market and special purpose entities in which
21 companies are statutorily required to participate, whether
22 incorporated or otherwise, shall pay, for the privilege of
23 doing business in this State, to the Director for the State
24 treasury a State tax equal to 0.5% of the net taxable premium
25 written, together with any amounts due under Section 444 of
26 this Code, except that the tax to be paid on any premium
27 derived from any accident and health insurance or on any
28 insurance business written by any company operating as a
29 health maintenance organization, voluntary health service
30 plan, dental service plan, or limited health service
31 organization shall be equal to 0.4% of such net taxable
32 premium written, together with any amounts due under Section
-18- LRB9101143PTpkam03
1 444. Upon the failure of any company to pay any such tax
2 due, the Director may, by order, revoke or suspend the
3 company's certificate of authority after giving 20 days
4 written notice to the company, or commence proceedings for
5 the suspension of business in this State under the procedures
6 set forth by Section 401.1 of this Code. The gross taxable
7 premium written shall be the gross amount of premiums
8 received on direct business during the calendar year on
9 contracts covering risks in this State, except premiums on
10 annuities, premiums on which State premium taxes are
11 prohibited by federal law, premiums paid by the State for
12 health care coverage for Medicaid eligible insureds as
13 described in Section 5-2 of the Illinois Public Aid Code,
14 premiums paid for health care services included as an element
15 of tuition charges at any university or college owned and
16 operated by the State of Illinois, premiums on group
17 insurance contracts under the State Employees Group Insurance
18 Act of 1971, and except premiums for deferred compensation
19 plans for employees of the State, units of local government,
20 or school districts. The net taxable premium shall be the
21 gross taxable premium written reduced only by the following:
22 (a) the amount of premiums returned thereon which
23 shall be limited to premiums returned during the same
24 preceding calendar year and shall not include the return
25 of cash surrender values or death benefits on life
26 policies including annuities;
27 (b) dividends on such direct business that have
28 been paid in cash, applied in reduction of premiums or
29 left to accumulate to the credit of policyholders or
30 annuitants. In the case of life insurance, no deduction
31 shall be made for the payment of deferred dividends paid
32 in cash to policyholders on maturing policies; dividends
33 left to accumulate to the credit of policyholders or
34 annuitants shall be included as gross taxable premium
-19- LRB9101143PTpkam03
1 written when such dividend accumulations are applied to
2 purchase paid-up insurance or to shorten the endowment or
3 premium paying period.
4 (2) The annual privilege tax payment due from a company
5 under subsection (4) of this Section may be reduced by: (a)
6 the excess amount, if any, by which the aggregate income
7 taxes paid by the company, on a cash basis, for the preceding
8 calendar year under subsections (a) through (d) of Section
9 201 of the Illinois Income Tax Act exceed 1.5% of the
10 company's net taxable premium written for that prior calendar
11 year, as determined under subsection (1) of this Section; and
12 (b) the amount of any fire department taxes paid by the
13 company during the preceding calendar year under Section
14 11-10-1 of the Illinois Municipal Code. Any deductible
15 amount or offset allowed under items (a) and (b) of this
16 subsection for any calendar year will not be allowed as a
17 deduction or offset against the company's privilege tax
18 liability for any other taxing period or calendar year. In
19 addition, there shall be deducted from the tax payment due
20 the tax credit provided for in Section 20 of the Certified
21 Capital Company Act.
22 (3) If a company survives or was formed by a merger,
23 consolidation, reorganization, or reincorporation, the
24 premiums received and amounts returned or paid by all
25 companies party to the merger, consolidation, reorganization,
26 or reincorporation shall, for purposes of determining the
27 amount of the tax imposed by this Section, be regarded as
28 received, returned, or paid by the surviving or new company.
29 (4)(a) All companies subject to the provisions of this
30 Section shall make an annual return for the preceding
31 calendar year on or before March 15 setting forth such
32 information on such forms as the Director may reasonably
33 require. Payments of quarterly installments of the
34 taxpayer's total estimated tax for the current calendar year
-20- LRB9101143PTpkam03
1 shall be due on or before April 15, June 15, September 15,
2 and December 15 of such year, except that all companies
3 transacting insurance in this State whose annual tax for the
4 immediately preceding calendar year was less than $5,000
5 shall make only an annual return. Failure of a company to
6 make the annual payment, or to make the quarterly payments,
7 if required, of at least 25% of either (i) the total tax paid
8 during the previous calendar year or (ii) 80% of the actual
9 tax for the current calendar year shall subject it to the
10 penalty provisions set forth in Section 412 of this Code.
11 (b) Notwithstanding the foregoing provisions, no annual
12 return shall be required or made on March 15, 1998, under
13 this subsection. For the calendar year 1998:
14 (i) each health maintenance organization shall have
15 no estimated tax installments;
16 (ii) all companies subject to the tax as of July 1,
17 1998 as set forth in subsection (1) shall have estimated
18 tax installments due on September 15 and December 15 of
19 1998 which installments shall each amount to no less than
20 one-half of 80% of the actual tax on its net taxable
21 premium written during the period July 1, 1998, through
22 December 31, 1998; and
23 (iii) all other companies shall have estimated tax
24 installments due on June 15, September 15, and December
25 15 of 1998 which installments shall each amount to no
26 less than one-third of 80% of the actual tax on its net
27 taxable premium written during the calendar year 1998.
28 In the year 1999 and thereafter all companies shall make
29 annual and quarterly installments of their estimated tax as
30 provided by paragraph (a) of this subsection.
31 (5) In addition to the authority specifically granted
32 under Article XXV of this Code, the Director shall have such
33 authority to adopt rules and establish forms as may be
34 reasonably necessary for purposes of determining the
-21- LRB9101143PTpkam03
1 allocation of Illinois corporate income taxes paid under
2 subsections (a) through (d) of Section 201 of the Illinois
3 Income Tax Act amongst members of a business group that files
4 an Illinois corporate income tax return on a unitary basis,
5 for purposes of regulating the amendment of tax returns, for
6 purposes of defining terms, and for purposes of enforcing the
7 provisions of Article XXV of this Code. The Director shall
8 also have authority to defer, waive, or abate the tax imposed
9 by this Section if in his opinion the company's solvency and
10 ability to meet its insured obligations would be immediately
11 threatened by payment of the tax due.
12 (Source: P.A. 90-583, eff. 5-29-98.)
13 Section 999. Effective date. This Act takes effect upon
14 becoming law.".