SB3738 103RD GENERAL ASSEMBLY

LRB103 36899 HLH 67012 b

103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
SB3738

Introduced 2/9/2024, by Sen. Robert Peters

SYNOPSIS AS INTRODUCED:

35 ILCS 5/216

Amends the Illinois Income Tax Act. Provides that the credit for ex-felons is renamed the credit for returning citizens. Provides that, for taxable years beginning on or after January 1, 2025, if the qualified returning citizen is employed by the taxpayer primarily at a job site in an underserved area, the amount of the credit for the returning citizen is equal to 25% (currently, 5%) of the qualified wages paid by the taxpayer. Provides that the total credit allowed with respect to each qualified returning citizen may not exceed $5,000 (currently, $1,500), except that, if the qualified returning citizen is employed by the taxpayer primarily at a job site in an underserved area, the credit may not exceed $10,000. Makes other changes. Effective immediately.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by changing Section 216 as follows:

(35 ILCS 5/216)

Sec. 216. Credit for wages paid to returning citizens ex-felons.

(a) For each taxable year beginning on or after January 1, 2007, each taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 of this Act in an amount equal to 5% of qualified wages paid by the taxpayer during the taxable year to one or more Illinois residents who are qualified returning citizens ex-offenders. However, for taxable years beginning on or after January 1, 2025, if the taxpayer employs the qualified returning citizen primarily at a job site in an underserved area, then the credit under this Section is in an amount equal to 25% of the qualified wages paid by the taxpayer during the taxable year to that qualified returning citizen. For taxable years beginning before January 1, 2025, the The total credit allowed to a taxpayer with respect to each qualified returning citizen ex-offender may not exceed $1,500 for all taxable years. For taxable years beginning on or after January 1, 2025, the total credit allowed to a taxpayer with respect to each qualified returning citizen may not exceed $5,000 for all taxable years, except that the total credit allowed with respect to a qualified returning citizen who is employed by the taxpayer primarily at a job site in an underserved area may not exceed $10,000 for all taxable years. For the purposes of this Section, a qualified returning citizen is employed primarily at a job site in an underserved area if at least 50% of the taxpayer's working hours during the taxable year occur at a job site in an underserved area. For taxable years ending before December 31, 2023, for partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. For taxable years ending on or after December 31, 2023, partners and shareholders of subchapter S corporations are entitled to a credit under this Section as provided in Section 251.

(b) For purposes of this Section, "qualified wages":

(1) includes only wages that are subject to federal unemployment tax under Section 3306 of the Internal Revenue Code, without regard to any dollar limitation contained in that Section;

(2) does not include any amounts paid or incurred by an employer for any period to any qualified returning citizen ex-offender for whom the employer receives federally funded payments for on-the-job training of that qualified returning citizen ex-offender for that period; and

(3) includes only wages attributable to service rendered during the one-year period beginning with the day the qualified returning citizen ex-offender begins work for the employer.

If the taxpayer has received any payment from a program established under Section 482(e)(1) of the federal Social Security Act with respect to a qualified returning citizen ex-offender, then, for purposes of calculating the credit under this Section, the amount of the qualified wages paid to that qualified returning citizen ex-offender must be reduced by the amount of the payment.

(c) As used in For purposes of this Section: ,

"Qualified returning citizen" "qualified ex-offender" means any person who:

(1) has been convicted of a crime in this State or of an offense in any other jurisdiction, not including any offense or attempted offense that would subject a person to registration under the Sex Offender Registration Act;

(2) was sentenced to a period of incarceration in an Illinois adult correctional center; and

(3) was hired by the taxpayer within 3 years after being released from an Illinois adult correctional center if the credit is claimed for a taxable year beginning before January 1, 2025 or was hired by the taxpayer within 10 years after being released from an Illinois adult correctional center if the credit is claimed for a taxable year beginning on or after January 1, 2025.

"Underserved area" means a census tract in the State that meets one or more of the following conditions:

(1) the census tract has a poverty rate of at least 20% according to the latest American Community Survey;

(2) 35% or more of the families with children in the census tract are living below 130% of the poverty line according to the latest American Community Survey;

(3) at least 20% of the households in the census tract receive assistance under the Supplemental Nutrition Assistance Program (SNAP); or

(4) the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the U.S. Department of Labor, for a period of at least 2 consecutive calendar years preceding the first day of the taxable year.

(d) In no event shall a credit under this Section reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The tax credit shall be applied to the earliest year for which there is a tax liability. If there are credits for more than one year that are available to offset a liability, the earlier credit shall be applied first.

(e) This Section is exempt from the provisions of Section 250.

(Source: P.A. 103-396, eff. 1-1-24.)

Section 99. Effective date. This Act takes effect upon becoming law.