102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
SB2257

 

Introduced 2/26/2021, by Sen. Dale Fowler

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/704A

    Amends the Illinois Income Tax Act. Provides that the maximum withholding tax credit for full-time equivalent employees is determined by the Metropolitan and Nonmetropolitan area of the State that is the base of operations of the employee, as those areas are determined as of May 2017. Makes changes concerning the amount of the credit based on the Metropolitan and Nonmetropolitan area of the State. Makes technical corrections. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2257LRB102 17127 HLH 22558 b

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 704A as follows:
 
6    (35 ILCS 5/704A)
7    Sec. 704A. Employer's return and payment of tax withheld.
8    (a) In general, every employer who deducts and withholds
9or is required to deduct and withhold tax under this Act on or
10after January 1, 2008 shall make those payments and returns as
11provided in this Section.
12    (b) Returns. Every employer shall, in the form and manner
13required by the Department, make returns with respect to taxes
14withheld or required to be withheld under this Article 7 for
15each quarter beginning on or after January 1, 2008, on or
16before the last day of the first month following the close of
17that quarter.
18    (c) Payments. With respect to amounts withheld or required
19to be withheld on or after January 1, 2008:
20        (1) Semi-weekly payments. For each calendar year, each
21    employer who withheld or was required to withhold more
22    than $12,000 during the one-year period ending on June 30
23    of the immediately preceding calendar year, payment must

 

 

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1    be made:
2            (A) on or before each Friday of the calendar year,
3        for taxes withheld or required to be withheld on the
4        immediately preceding Saturday, Sunday, Monday, or
5        Tuesday;
6            (B) on or before each Wednesday of the calendar
7        year, for taxes withheld or required to be withheld on
8        the immediately preceding Wednesday, Thursday, or
9        Friday.
10        Beginning with calendar year 2011, payments made under
11    this paragraph (1) of subsection (c) must be made by
12    electronic funds transfer.
13        (2) Semi-weekly payments. Any employer who withholds
14    or is required to withhold more than $12,000 in any
15    quarter of a calendar year is required to make payments on
16    the dates set forth under item (1) of this subsection (c)
17    for each remaining quarter of that calendar year and for
18    the subsequent calendar year.
19        (3) Monthly payments. Each employer, other than an
20    employer described in items (1) or (2) of this subsection,
21    shall pay to the Department, on or before the 15th day of
22    each month the taxes withheld or required to be withheld
23    during the immediately preceding month.
24        (4) Payments with returns. Each employer shall pay to
25    the Department, on or before the due date for each return
26    required to be filed under this Section, any tax withheld

 

 

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1    or required to be withheld during the period for which the
2    return is due and not previously paid to the Department.
3    (d) Regulatory authority. The Department may, by rule:
4        (1) Permit employers, in lieu of the requirements of
5    subsections (b) and (c), to file annual returns due on or
6    before January 31 of the year for taxes withheld or
7    required to be withheld during the previous calendar year
8    and, if the aggregate amounts required to be withheld by
9    the employer under this Article 7 (other than amounts
10    required to be withheld under Section 709.5) do not exceed
11    $1,000 for the previous calendar year, to pay the taxes
12    required to be shown on each such return no later than the
13    due date for such return.
14        (2) Provide that any payment required to be made under
15    subsection (c)(1) or (c)(2) is deemed to be timely to the
16    extent paid by electronic funds transfer on or before the
17    due date for deposit of federal income taxes withheld
18    from, or federal employment taxes due with respect to, the
19    wages from which the Illinois taxes were withheld.
20        (3) Designate one or more depositories to which
21    payment of taxes required to be withheld under this
22    Article 7 must be paid by some or all employers.
23        (4) Increase the threshold dollar amounts at which
24    employers are required to make semi-weekly payments under
25    subsection (c)(1) or (c)(2).
26    (e) Annual return and payment. Every employer who deducts

 

 

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1and withholds or is required to deduct and withhold tax from a
2person engaged in domestic service employment, as that term is
3defined in Section 3510 of the Internal Revenue Code, may
4comply with the requirements of this Section with respect to
5such employees by filing an annual return and paying the taxes
6required to be deducted and withheld on or before the 15th day
7of the fourth month following the close of the employer's
8taxable year. The Department may allow the employer's return
9to be submitted with the employer's individual income tax
10return or to be submitted with a return due from the employer
11under Section 1400.2 of the Unemployment Insurance Act.
12    (f) Magnetic media and electronic filing. With respect to
13taxes withheld in calendar years prior to 2017, any W-2 Form
14that, under the Internal Revenue Code and regulations
15promulgated thereunder, is required to be submitted to the
16Internal Revenue Service on magnetic media or electronically
17must also be submitted to the Department on magnetic media or
18electronically for Illinois purposes, if required by the
19Department.
20    With respect to taxes withheld in 2017 and subsequent
21calendar years, the Department may, by rule, require that any
22return (including any amended return) under this Section and
23any W-2 Form that is required to be submitted to the Department
24must be submitted on magnetic media or electronically.
25    The due date for submitting W-2 Forms shall be as
26prescribed by the Department by rule.

 

 

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1    (g) For amounts deducted or withheld after December 31,
22009, a taxpayer who makes an election under subsection (f) of
3Section 5-15 of the Economic Development for a Growing Economy
4Tax Credit Act for a taxable year shall be allowed a credit
5against payments due under this Section for amounts withheld
6during the first calendar year beginning after the end of that
7taxable year equal to the amount of the credit for the
8incremental income tax attributable to full-time employees of
9the taxpayer awarded to the taxpayer by the Department of
10Commerce and Economic Opportunity under the Economic
11Development for a Growing Economy Tax Credit Act for the
12taxable year and credits not previously claimed and allowed to
13be carried forward under Section 211(4) of this Act as
14provided in subsection (f) of Section 5-15 of the Economic
15Development for a Growing Economy Tax Credit Act. The credit
16or credits may not reduce the taxpayer's obligation for any
17payment due under this Section to less than zero. If the amount
18of the credit or credits exceeds the total payments due under
19this Section with respect to amounts withheld during the
20calendar year, the excess may be carried forward and applied
21against the taxpayer's liability under this Section in the
22succeeding calendar years as allowed to be carried forward
23under paragraph (4) of Section 211 of this Act. The credit or
24credits shall be applied to the earliest year for which there
25is a tax liability. If there are credits from more than one
26taxable year that are available to offset a liability, the

 

 

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1earlier credit shall be applied first. Each employer who
2deducts and withholds or is required to deduct and withhold
3tax under this Act and who retains income tax withholdings
4under subsection (f) of Section 5-15 of the Economic
5Development for a Growing Economy Tax Credit Act must make a
6return with respect to such taxes and retained amounts in the
7form and manner that the Department, by rule, requires and pay
8to the Department or to a depositary designated by the
9Department those withheld taxes not retained by the taxpayer.
10For purposes of this subsection (g), the term taxpayer shall
11include taxpayer and members of the taxpayer's unitary
12business group as defined under paragraph (27) of subsection
13(a) of Section 1501 of this Act. This Section is exempt from
14the provisions of Section 250 of this Act. No credit awarded
15under the Economic Development for a Growing Economy Tax
16Credit Act for agreements entered into on or after January 1,
172015 may be credited against payments due under this Section.
18    (h) An employer may claim a credit against payments due
19under this Section for amounts withheld during the first
20calendar year ending after the date on which a tax credit
21certificate was issued under Section 35 of the Small Business
22Job Creation Tax Credit Act. The credit shall be equal to the
23amount shown on the certificate, but may not reduce the
24taxpayer's obligation for any payment due under this Section
25to less than zero. If the amount of the credit exceeds the
26total payments due under this Section with respect to amounts

 

 

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1withheld during the calendar year, the excess may be carried
2forward and applied against the taxpayer's liability under
3this Section in the 5 succeeding calendar years. The credit
4shall be applied to the earliest year for which there is a tax
5liability. If there are credits from more than one calendar
6year that are available to offset a liability, the earlier
7credit shall be applied first. This Section is exempt from the
8provisions of Section 250 of this Act.
9    (i) Each employer with 50 or fewer full-time equivalent
10employees during the reporting period may claim a credit
11against the payments due under this Section for each qualified
12employee in an amount equal to the maximum credit allowable.
13The credit may be taken against payments due for reporting
14periods that begin on or after January 1, 2020, and end on or
15before December 31, 2027. An employer may not claim a credit
16for an employee who has been employed worked fewer than 90
17consecutive days immediately preceding the reporting period;
18however, such credits may accrue during that 90-day period and
19be claimed against payments under this Section for future
20reporting periods after the employee has been employed by
21worked for the employer at least 90 consecutive days. In no
22event may the credit exceed the employer's liability for the
23reporting period. Each employer who deducts and withholds or
24is required to deduct and withhold tax under this Act and who
25retains income tax withholdings under this subsection must
26make a return with respect to such taxes and retained amounts

 

 

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1in the form and manner that the Department, by rule, requires
2and pay to the Department or to a depositary designated by the
3Department those withheld taxes not retained by the employer.
4    For each reporting period, the employer may not claim a
5credit or credits for more employees than the number of
6employees making less than the minimum or reduced wage for the
7current calendar year during the last reporting period of the
8preceding calendar year. Notwithstanding any other provision
9of this subsection, an employer shall not be eligible for
10credits for a reporting period unless the average wage paid by
11the employer per employee for all employees making less than
12$55,000 during the reporting period is greater than the
13average wage paid by the employer per employee for all
14employees making less than $55,000 during the same reporting
15period of the prior calendar year.
16    For purposes of this subsection (i):
17    "Compensation paid in Illinois" has the meaning ascribed
18to that term under Section 304(a)(2)(B) of this Act.
19    "Employer" and "employee" have the meaning ascribed to
20those terms in the Minimum Wage Law, except that "employee"
21also includes employees who work for an employer with fewer
22than 4 employees. Employers that operate more than one
23establishment pursuant to a franchise agreement or that
24constitute members of a unitary business group shall aggregate
25their employees for purposes of determining eligibility for
26the credit.

 

 

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1    "Full-time equivalent employee" means an employee who
2works a full-time equivalent job, as defined in subsection (i)
3of Section 3 of the Illinois Enterprise Zone Act employees"
4means the ratio of the number of paid hours during the
5reporting period and the number of working hours in that
6period.
7    "Maximum credit" means the percentage listed below of the
8difference between the amount of compensation paid in Illinois
9to employees who are paid not more than the required minimum
10wage reduced by the amount of compensation paid in Illinois to
11employees who were paid less than the current required minimum
12wage during the reporting period prior to each increase in the
13required minimum wage on January 1. If an employer pays an
14employee more than the required minimum wage and that employee
15previously earned less than the required minimum wage, the
16employer may include the portion that does not exceed the
17required minimum wage as compensation paid in Illinois to
18employees who are paid not more than the required minimum
19wage.
20    The maximum credit is determined by the Metropolitan and
21Nonmetropolitan area of the State that is the base of
22operations of the employee. The Metropolitan and
23Nonmetropolitan areas of this State are those areas as defined
24by the United States Bureau of Labor Statistics as of May 2017.
25    For reporting periods beginning on or after January 1,
262021 and ending on or before December 31, 2021, the maximum

 

 

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1credit for all regions is 25%.
2    For reporting periods beginning on or after January 1,
32022, the maximum credit for the City of Chicago and the Cook
4County portion of the City of Chicago-Naperville-Elgin region
5is:
6        (1) (Blank); 25% for reporting periods beginning on or
7    after January 1, 2020 and ending on or before December 31,
8    2020;
9        (2) 30% 21% for reporting periods beginning on or
10    after January 1, 2021 and ending on or before December 31,
11    2021;
12        (3) 35% 17% for reporting periods beginning on or
13    after January 1, 2022 and ending on or before December 31,
14    2022;
15        (4) 35% 13% for reporting periods beginning on or
16    after January 1, 2023 and ending on or before December 31,
17    2023;
18        (5) 40% 9% for reporting periods beginning on or after
19    January 1, 2024 and ending on or before December 31, 2024;
20        (6) 40% 5% for reporting periods beginning on or after
21    January 1, 2025 and thereafter ending on or before
22    December 31, 2025.
23    For reporting periods beginning on or after January 1,
242022, the maximum credit for the City of
25Chicago-Naperville-Elgin region excluding Chicago and Cook
26County is:

 

 

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1        (1) 35% for reporting periods beginning on or after
2    January 1, 2022 and ending on or before December 31, 2022;
3        (2) 35% for reporting periods beginning on or after
4    January 1, 2023 and ending on or before December 31, 2023;
5    and
6        (3) 40% for reporting periods beginning on or after
7    January 1, 2024.
8    For reporting periods beginning on or after January 1,
92022, the maximum credit for the Bloomington,
10Champaign-Urbana, and Springfield regions is:
11        (1) 35% for reporting periods beginning on or after
12    January 1, 2022 and ending on or before December 31, 2022;
13        (2) 40% for reporting periods beginning on or after
14    January 1, 2023 and ending on or before December 31, 2023;
15    and
16        (3) 45% for reporting periods beginning on or after
17    January 1, 2024.
18    For reporting periods beginning on or after January 1,
192022, the maximum credit for the Cape Girardeau,
20Carbondale-Marion, Davenport-Moline-Rock Island, Peoria, and
21St. Louis MO-IL regions is:
22        (1) 40% for reporting periods beginning on or after
23    January 1, 2022 and ending on or before December 31, 2022;
24        (2) 45% for reporting periods beginning on or after
25    January 1, 2023 and ending on or before December 31, 2023;
26    and

 

 

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1        (3) 50% for reporting periods beginning on or after
2    January 1, 2024.
3    For reporting periods beginning on or after January 1,
42022, the maximum credit for the Danville, Decatur, Kankakee,
5and Rockford regions is:
6        (1) 40% for reporting periods beginning on or after
7    January 1, 2022 and ending on or before December 31, 2022;
8        (2) 45% for reporting periods beginning on or after
9    January 1, 2023 and ending on or before December 31, 2023;
10    and
11        (3) 50% for reporting periods beginning on or after
12    January 1, 2024.
13    For reporting periods beginning on or after January 1,
142022, the maximum credit for the Northwest Illinois, West
15Central Illinois, East Central Illinois, and South Illinois
16nonmetropolitan areas is;
17        (1) 45% for reporting periods beginning on or after
18    January 1, 2022 and ending on or before December 31, 2022;
19        (2) 55% for reporting periods beginning on or after
20    January 1, 2023 and ending on or before December 31, 2023;
21    and
22        (3) 60% for reporting periods beginning on or after
23    January 1, 2024.
24    The amount computed under this subsection may continue to
25be claimed for reporting periods beginning on or after January
261, 2026 and:

 

 

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1        (A) ending on or before December 31, 2026 for
2    employers with more than 5 employees; or
3        (B) ending on or before December 31, 2027 for
4    employers with no more than 5 employees.
5    "Qualified employee" means an employee who is paid not
6more than the required minimum wage and has an average wage
7paid per hour by the employer during the reporting period
8equal to or greater than his or her average wage paid per hour
9by the employer during each reporting period for the
10immediately preceding 12 months. A new qualified employee is
11deemed to have earned the required minimum wage in the
12preceding reporting period.
13    "Reporting period" means the quarter for which a return is
14required to be filed under subsection (b) of this Section.
15(Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17;
16100-863, eff. 8-14-18; 101-1, eff. 2-19-19.)
 
17    Section 99. Effective date. This Act takes effect upon
18becoming law.