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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 | ||||||
5 | changing Section 221 as follows: | ||||||
6 | (35 ILCS 5/221) | ||||||
7 | Sec. 221. Rehabilitation costs; qualified historic | ||||||
8 | properties; River Edge Redevelopment Zone. | ||||||
9 | (a) For taxable years that begin beginning on or after | ||||||
10 | January 1, 2012 and begin ending prior to January 1, 2018 | ||||||
11 | January 1, 2022 , there shall be allowed a tax credit against | ||||||
12 | the tax imposed by subsections (a) and (b) of Section 201 of | ||||||
13 | this Act in an amount equal to 25% of qualified expenditures | ||||||
14 | incurred by a qualified taxpayer during the taxable year in the | ||||||
15 | restoration and preservation of a qualified historic structure | ||||||
16 | located in a River Edge Redevelopment Zone pursuant to a | ||||||
17 | qualified rehabilitation plan, provided that the total amount | ||||||
18 | of such expenditures (i) must equal $5,000 or more and (ii) | ||||||
19 | must exceed 50% of the purchase price of the property. | ||||||
20 | (a-1) For taxable years that begin on or after January 1, | ||||||
21 | 2018 and end prior to January 1, 2022, there shall be allowed a | ||||||
22 | tax credit against the tax imposed by subsections (a) and (b) | ||||||
23 | of Section 201 of this Act in an aggregate amount equal to 25% |
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1 | of qualified expenditures incurred by a qualified taxpayer in | ||||||
2 | the restoration and preservation of a qualified historic | ||||||
3 | structure located in a River Edge Redevelopment Zone pursuant | ||||||
4 | to a qualified rehabilitation plan, provided that the total | ||||||
5 | amount of such expenditures (i) must equal $5,000 or more and | ||||||
6 | (ii) must exceed the adjusted basis of the qualified historic | ||||||
7 | structure on the first day the qualified rehabilitation plan | ||||||
8 | begins. If the qualified rehabilitation plan spans multiple | ||||||
9 | years, the aggregate credit for the entire project shall be | ||||||
10 | allowed in the last taxable year. | ||||||
11 | (b) To obtain a tax credit pursuant to this Section, the | ||||||
12 | taxpayer must apply with the Department of Natural Resources | ||||||
13 | Commerce and Economic Opportunity . The Department of Natural | ||||||
14 | Resources Commerce and Economic Opportunity, in consultation | ||||||
15 | with the Historic Preservation Agency, shall determine the | ||||||
16 | amount of eligible rehabilitation costs and expenses within 30 | ||||||
17 | days of receipt of a complete application. For rehabilitation | ||||||
18 | projects with qualified rehabilitation costs and expenses in | ||||||
19 | excess of $250,000, the taxpayer must provide to the Department | ||||||
20 | of Natural Resources a third-party audit conducted by a | ||||||
21 | professionally qualified, independent auditor verifying (i) | ||||||
22 | the project expenses, (ii) whether they are qualified | ||||||
23 | expenditures, and (iii) that the qualified expenditures exceed | ||||||
24 | the adjusted basis of the qualified historic structure on the | ||||||
25 | first day the qualified rehabilitation plan commenced. The | ||||||
26 | Department of Natural Resources is authorized, but not |
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1 | required, to accept this audit to determine the amount of | ||||||
2 | qualified expenditures. For projects with less than $500,000 in | ||||||
3 | qualified rehabilitation costs, the taxpayer must submit a | ||||||
4 | certification of costs prepared by a certified public | ||||||
5 | accountant and certify that the qualified expenditures exceed | ||||||
6 | the adjusted basis of the qualified historic structure on the | ||||||
7 | first day the qualified rehabilitation plan commenced. The | ||||||
8 | Department of Natural Resources is authorized, but not | ||||||
9 | required, to accept this certification of costs to determine | ||||||
10 | the amount of qualified expenditures and the amount of the | ||||||
11 | credit . The Department of Natural Resources and the National | ||||||
12 | Park Service Historic Preservation Agency shall determine | ||||||
13 | whether the rehabilitation is consistent with the standards of | ||||||
14 | the Secretary of the United States Department of the Interior | ||||||
15 | for rehabilitation. | ||||||
16 | (b-1) Upon completion and review of the project, the | ||||||
17 | Department of Natural Resources Commerce and Economic | ||||||
18 | Opportunity shall issue a single certificate in the amount of | ||||||
19 | the eligible credits equal to 25% of qualified expenditures | ||||||
20 | incurred during the eligible taxable years, as defined in | ||||||
21 | subsections (a) and (a-1) . At the time the certificate is | ||||||
22 | issued, an issuance fee up to the maximum amount of 2% of the | ||||||
23 | amount of the credits issued by the certificate may be | ||||||
24 | collected from the applicant to administer the provisions of | ||||||
25 | this Section. If collected, this issuance fee shall be | ||||||
26 | deposited into the Historic Property Administrative Fund, a |
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1 | special fund created in the State treasury. Subject to | ||||||
2 | appropriation, moneys in the Historic Property Administrative | ||||||
3 | Fund shall be provided to the Department of Natural Resources | ||||||
4 | as reimbursement evenly divided between the Department of | ||||||
5 | Commerce and Economic Opportunity and the Historic | ||||||
6 | Preservation Agency to reimburse the Department of Commerce and | ||||||
7 | Economic Opportunity and the Historic Preservation Agency for | ||||||
8 | the costs associated with administering this Section. The | ||||||
9 | taxpayer must attach the certificate to the tax return on which | ||||||
10 | the credits are to be claimed. The Department of Commerce and | ||||||
11 | Economic Opportunity may adopt rules to implement this Section. | ||||||
12 | (c) The taxpayer must attach the certificate to the tax | ||||||
13 | return on which the credits are to be claimed. The tax credit | ||||||
14 | under this Section may not reduce the taxpayer's liability to | ||||||
15 | less than
zero. If the amount of the credit exceeds the tax | ||||||
16 | liability for the year, the excess credit may be carried | ||||||
17 | forward and applied to the tax liability of the 5 taxable years | ||||||
18 | following the excess credit year. | ||||||
19 | (c-1) If the taxpayer is a partnership, a Subchapter S | ||||||
20 | corporation, or a limited liability company that has elected | ||||||
21 | partnership tax treatment, the credit is allowed to the | ||||||
22 | partners, shareholders, or members in accordance with the | ||||||
23 | determination of income and distributive share of income under | ||||||
24 | the Internal Revenue Code. | ||||||
25 | (c-3) If a recapture event occurs during the recapture | ||||||
26 | period with respect to a qualified historic structure, then for |
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1 | any taxable year in which the credits allowed under subsection | ||||||
2 | (a) or (a-1) have been applied, the tax under the applicable | ||||||
3 | section of this Act shall be increased by applying the | ||||||
4 | recapture percentage set forth below to the tax decrease | ||||||
5 | resulting from the application of credits allowed under | ||||||
6 | subsection (a) or (a-1) to the taxable year in question. | ||||||
7 | For purposes of this subsection, the recapture percentage | ||||||
8 | shall be determined as follows: | ||||||
9 | (1) if the recapture event occurs within the first year | ||||||
10 | after commencement of the recapture period, then the | ||||||
11 | recapture percentage is 100%; | ||||||
12 | (2) if the recapture event occurs within the second | ||||||
13 | year after commencement of the recapture period, then the | ||||||
14 | recapture percentage is 80%; | ||||||
15 | (3) if the recapture event occurs within the third year | ||||||
16 | after commencement of the recapture period, then the | ||||||
17 | recapture percentage is 60%; | ||||||
18 | (4) if the recapture event occurs within the fourth | ||||||
19 | year after commencement of the recapture period, then the | ||||||
20 | recapture percentage is 40%; and | ||||||
21 | (5) if the recapture event occurs within the fifth year | ||||||
22 | after commencement of the recapture period, then the | ||||||
23 | recapture percentage is 20%. | ||||||
24 | In the case of any recapture event, the carryforwards under | ||||||
25 | subsection (c) above shall be adjusted by reason of such event. | ||||||
26 | (c-4) Subject to appropriation and prior to equal |
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1 | disbursement to the Department of Natural Resources, moneys in | ||||||
2 | the Historic Property Administrative Fund shall be used, on a | ||||||
3 | biennial basis beginning at the end of the second fiscal year | ||||||
4 | after the effective date of this amendatory Act of the 100th | ||||||
5 | General Assembly, to hire a qualified third party to prepare a | ||||||
6 | biennial report to assess the overall economic impact to the | ||||||
7 | State from the qualified rehabilitation projects under this Act | ||||||
8 | completed in that year and in previous years. The overall | ||||||
9 | economic impact shall include at least: (i) the direct and | ||||||
10 | indirect or induced economic impacts of completed projects; | ||||||
11 | (ii) temporary, permanent, and construction jobs created; | ||||||
12 | (iii) sales, income, and property tax generation before, during | ||||||
13 | construction, and after completion; and (iv) indirect | ||||||
14 | neighborhood impact after completion. | ||||||
15 | (c-5) The Department of Natural Resources may adopt rules | ||||||
16 | to implement this Section in addition to the rules expressly | ||||||
17 | authorized herein. | ||||||
18 | (d) As used in this Section, the following terms have the | ||||||
19 | following meanings. | ||||||
20 | "Placed in service" means the date the historic structure | ||||||
21 | or the rehabilitated portion thereof is first placed in a | ||||||
22 | condition or state of readiness or occupancy and is operational | ||||||
23 | for its specifically assigned function or use. If the property | ||||||
24 | remains in service during the rehabilitation, the placed in | ||||||
25 | service date will be commensurate with the date of completion | ||||||
26 | of the rehabilitation project as per the qualified |
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1 | rehabilitation plan. | ||||||
2 | "Qualified expenditure" means all the costs and expenses | ||||||
3 | defined as qualified rehabilitation expenditures under Section | ||||||
4 | 47 of the federal Internal Revenue Code that were incurred in | ||||||
5 | connection with a qualified historic structure. | ||||||
6 | "Qualified historic structure" means a certified historic | ||||||
7 | structure as defined under Section 47(c)(3) of the federal | ||||||
8 | Internal Revenue Code. | ||||||
9 | "Qualified rehabilitation plan" means a project that is | ||||||
10 | approved by the Department of Natural Resources and the | ||||||
11 | National Park Service Historic Preservation Agency as being | ||||||
12 | consistent with the standards in effect on the effective date | ||||||
13 | of this amendatory Act of the 97th General Assembly for | ||||||
14 | rehabilitation as adopted by the federal Secretary of the | ||||||
15 | Interior. | ||||||
16 | "Qualified taxpayer" means the owner of the qualified | ||||||
17 | historic structure or any other person who qualifies for the | ||||||
18 | federal rehabilitation credit allowed by Section 47 of the | ||||||
19 | federal Internal Revenue Code with respect to that qualified | ||||||
20 | historic structure. Partners, shareholders of subchapter S | ||||||
21 | corporations, and owners of limited liability companies (if the | ||||||
22 | limited liability company is treated as a partnership for | ||||||
23 | purposes of federal and State income taxation) are entitled to | ||||||
24 | a credit under this Section to be determined in accordance with | ||||||
25 | the determination of income and distributive share of income | ||||||
26 | under Sections 702 and 703 and subchapter S of the Internal |
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1 | Revenue Code, provided that credits granted to a partnership, a | ||||||
2 | limited liability company taxed as a partnership, or other | ||||||
3 | multiple owners of property shall be passed through to the | ||||||
4 | partners, members, or owners respectively on a pro rata basis | ||||||
5 | or pursuant to an executed agreement among the partners, | ||||||
6 | members, or owners documenting any alternate distribution | ||||||
7 | method.
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8 | "Recapture event" means any of the following events | ||||||
9 | occurring during the recapture period: | ||||||
10 | (1) failure to place in service the rehabilitated | ||||||
11 | portions of the qualified historic structure, or failure to | ||||||
12 | maintain the rehabilitated portions of the qualified | ||||||
13 | historic structure in service after they are placed in | ||||||
14 | service; provided that a recapture event under this | ||||||
15 | paragraph (1) shall not include a removal from service for | ||||||
16 | a reasonable period of time to conduct maintenance and | ||||||
17 | repairs that are reasonably necessary to protect the health | ||||||
18 | and safety of the public or to protect the structural | ||||||
19 | integrity of the qualified historic structure or a | ||||||
20 | neighboring structure; | ||||||
21 | (2) demolition or other alteration of the qualified | ||||||
22 | historic structure in a manner that is inconsistent with | ||||||
23 | the qualified rehabilitation plan or the Secretary of the | ||||||
24 | Interior's Standards for Rehabilitation; | ||||||
25 | (3) disposition of the rehabilitated qualified | ||||||
26 | historic structure in whole or a proportional disposition |
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1 | of a partnership interest therein, except as otherwise | ||||||
2 | permitted by this Section; or | ||||||
3 | (4) use of the qualified historic structure in a manner | ||||||
4 | that is inconsistent with the qualified rehabilitation | ||||||
5 | plan or that is otherwise inconsistent with the provisions | ||||||
6 | and intent of this Section. | ||||||
7 | A recapture event occurring in one taxable year shall be | ||||||
8 | deemed continuing to subsequent taxable years unless and until | ||||||
9 | corrected. | ||||||
10 | The following dispositions of a qualified historic | ||||||
11 | structure shall not be deemed to be a recapture event for | ||||||
12 | purposes of this Section: | ||||||
13 | (1) a transfer by reason of death; | ||||||
14 | (2) a transfer between spouses incident to divorce; | ||||||
15 | (3) a sale by and leaseback to an entity that, when the | ||||||
16 | rehabilitated portions of the qualified historic structure | ||||||
17 | are placed in service, will be a lessee of the qualified | ||||||
18 | historic structure, but only for so long as the entity | ||||||
19 | continues to be a lessee; and | ||||||
20 | (4) a mere change in the form of conducting the trade | ||||||
21 | or business by the owner (or, if applicable, the lessee) of | ||||||
22 | the qualified historic structure, so long as the property | ||||||
23 | interest in such qualified historic structure is retained | ||||||
24 | in such trade or business and the owner or lessee retains a | ||||||
25 | substantial interest in such trade or business. | ||||||
26 | "Recapture period" means the 5-year period beginning on the |
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1 | date that the qualified historic structure or rehabilitated | ||||||
2 | portions thereof are placed in service. | ||||||
3 | (Source: P.A. 99-914, eff. 12-20-16; 100-236, eff. 8-18-17.)
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