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* Crain’s…
A tax break designed to coax wealthy individuals to put their money into startups is coming back to bite some of those investors in the wallet.
The state of Illinois is poised to claw back tax breaks from investors who backed fledgling companies that now are failing to meet in-state hiring requirements, largely because of a surge in remote work that resulted from the COVID-19 pandemic. […]
The Illinois Department of Revenue says that so far 25 investors will have to pay back nearly $1 million in tax credits because several startups no longer comply with the law’s requirement that 51% of a company’s jobs and 75% of the new positions created during the three years following an investment be located in Illinois. […]
Among them is Chicago-based Rheaply, which operates an online platform that helps companies reuse and sell used laboratory and office equipment. About 60% of its roughly 60 employees are in Illinois.
The company meets the 51% threshold specified in the statute but not the 75% requirement for new jobs, which was created in 2018 by the Legislature’s 12-member Joint Commission on Administrative Rules.
JCAR doesn’t create rules, of course, but some backers of the Illinois angel tax-credit program want those administrative rules changed.
* During a recent Crain’s podcast, the author of the piece John Pletz explained that several other nearby states have a similar tax credit program, including Wisconsin, Indiana and Kentucky. But their rules are limited to at least 50 percent or 51 percent of employees who must live in-state. Illinois’ 75 percent in-state threshold for new hires is unique, he said, and is “causing people problems.”
Thoughts?
posted by Rich Miller
Monday, Dec 4, 23 @ 1:02 pm
Sorry, comments are closed at this time.
Previous Post: State/charitable migrant food money runs out January 1, but city won’t say what will happen during two weeks of no funding
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Last I checked, ignorance of the law is no excuse.
Comment by The Dude Abides Monday, Dec 4, 23 @ 2:59 pm
It’s not ignorance of the law - its the fact that the global pandemic changed work patterns. Only 55 percent of Chicago employees have returned to work in an office for example.
Comment by Anonymous Monday, Dec 4, 23 @ 3:19 pm
Rules might have to be adjusted for changed economic realities.
Comment by walker Monday, Dec 4, 23 @ 3:19 pm
The rule for the credit eligibility to an individual investor in both Wisconsin and Kentucky is limited to a 20% ownership share of the company invested, while Illinois sets that limit over twice that at 51%.
Which rule did these down-on-their-luck investors want to change again?
Comment by TheInvisibleMan Monday, Dec 4, 23 @ 3:26 pm
=It’s not ignorance of the law - its the fact that the global pandemic changed work patterns. Only 55 percent of Chicago employees have returned to work in an office for example.=
That still does not minimize the failure of the parties involved to ensure that everything was in line with the rules as written at the time.
If you want to eat at the state’s trough, then you have to follow the state’s rules.
Comment by The Dude Abides Monday, Dec 4, 23 @ 3:42 pm
They could change the rules going forward and give the companies that are out of bounds some path to compliance in a reasonable time under reasonable guidelines.
Comment by Osocanoso Monday, Dec 4, 23 @ 4:14 pm