97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1401

 

Introduced , by Rep. Bill Mitchell

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/221 new
35 ILCS 5/704A

    Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to $210 for each employee hired by the taxpayer during the taxable year to fill a newly created position multiplied by the number of consecutive months during which the employee is employed by the taxpayer. Provides that the taxpayer may elect to use all or a portion of the credit against its withholding tax liability. Provides that, if the amount of the credit exceeds the taxpayer's liability for the taxable year, the credit may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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 adding
5Section 221 and by changing Section 704A as follows:
 
6    (35 ILCS 5/221 new)
7    Sec. 221. New employee credit.
8    (a) For taxable years beginning on or after January 1, 2011
9and ending on or before December 31, 2012, each taxpayer that
10operates a business within the State is entitled to a credit
11against the taxes imposed under subsections (a) and (b) of
12Section 201 of this Act in an amount equal to $210 for each
13employee hired by the taxpayer during the taxable year to fill
14a newly created position multiplied by the number of
15consecutive months during which the employee is employed by the
16taxpayer. For partners, shareholders of Subchapter S
17corporations, and owners of limited liability companies, if the
18limited liability company is treated as a partnership for
19purposes of federal and State income taxation, there shall be
20allowed a credit under this Section to be determined in
21accordance with the determination of income and distributive
22share of income under Sections 702 and 704 and Subchapter S of
23the Internal Revenue Code.

 

 

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1    (b) In addition, the taxpayer may elect to use all or a
2portion of the credit awarded under this Section as a credit
3against its withholding tax liability under Article 7 of this
4Act. The withholding tax credit shall be applied beginning with
5the first payment due date occurring on or after the last day
6of the taxable year. Such an election shall be made in the form
7and manner prescribed by the Department by rule and, once made,
8shall be irrevocable.
9    (c) In no event shall a credit under this Section reduce
10the taxpayer's liability to less than zero. If the amount of
11the credit exceeds the tax liability for the year, the excess
12may be carried forward and applied to the tax liability of the
135 taxable years following the excess credit year. The tax
14credit shall be applied to the earliest year for which there is
15a tax liability. If there are credits for more than one year
16that are available to offset a liability, the earlier credit
17shall be applied first.
 
18    (35 ILCS 5/704A)
19    Sec. 704A. Employer's return and payment of tax withheld.
20    (a) In general, every employer who deducts and withholds or
21is required to deduct and withhold tax under this Act on or
22after January 1, 2008 shall make those payments and returns as
23provided in this Section.
24    (b) Returns. Every employer shall, in the form and manner
25required by the Department, make returns with respect to taxes

 

 

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1withheld or required to be withheld under this Article 7 for
2each quarter beginning on or after January 1, 2008, on or
3before the last day of the first month following the close of
4that quarter.
5    (c) Payments. With respect to amounts withheld or required
6to be withheld on or after January 1, 2008:
7        (1) Semi-weekly payments. For each calendar year, each
8    employer who withheld or was required to withhold more than
9    $12,000 during the one-year period ending on June 30 of the
10    immediately preceding calendar year, payment must be made:
11            (A) on or before each Friday of the calendar year,
12        for taxes withheld or required to be withheld on the
13        immediately preceding Saturday, Sunday, Monday, or
14        Tuesday;
15            (B) on or before each Wednesday of the calendar
16        year, for taxes withheld or required to be withheld on
17        the immediately preceding Wednesday, Thursday, or
18        Friday.
19        Beginning with calendar year 2011, payments payment
20    made under this paragraph (1) of subsection (c) must be
21    made by electronic funds transfer.
22        (2) Semi-weekly payments. Any employer who withholds
23    or is required to withhold more than $12,000 in any quarter
24    of a calendar year is required to make payments on the
25    dates set forth under item (1) of this subsection (c) for
26    each remaining quarter of that calendar year and for the

 

 

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1    subsequent calendar year.
2        (3) Monthly payments. Each employer, other than an
3    employer described in items (1) or (2) of this subsection,
4    shall pay to the Department, on or before the 15th day of
5    each month the taxes withheld or required to be withheld
6    during the immediately preceding month.
7        (4) Payments with returns. Each employer shall pay to
8    the Department, on or before the due date for each return
9    required to be filed under this Section, any tax withheld
10    or required to be withheld during the period for which the
11    return is due and not previously paid to the Department.
12    (d) Regulatory authority. The Department may, by rule:
13        (1) Permit employers, in lieu of the requirements of
14    subsections (b) and (c), to file annual returns due on or
15    before January 31 of the year for taxes withheld or
16    required to be withheld during the previous calendar year
17    and, if the aggregate amounts required to be withheld by
18    the employer under this Article 7 (other than amounts
19    required to be withheld under Section 709.5) do not exceed
20    $1,000 for the previous calendar year, to pay the taxes
21    required to be shown on each such return no later than the
22    due date for such return.
23        (2) Provide that any payment required to be made under
24    subsection (c)(1) or (c)(2) is deemed to be timely to the
25    extent paid by electronic funds transfer on or before the
26    due date for deposit of federal income taxes withheld from,

 

 

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1    or federal employment taxes due with respect to, the wages
2    from which the Illinois taxes were withheld.
3        (3) Designate one or more depositories to which payment
4    of taxes required to be withheld under this Article 7 must
5    be paid by some or all employers.
6        (4) Increase the threshold dollar amounts at which
7    employers are required to make semi-weekly payments under
8    subsection (c)(1) or (c)(2).
9    (e) Annual return and payment. Every employer who deducts
10and withholds or is required to deduct and withhold tax from a
11person engaged in domestic service employment, as that term is
12defined in Section 3510 of the Internal Revenue Code, may
13comply with the requirements of this Section with respect to
14such employees by filing an annual return and paying the taxes
15required to be deducted and withheld on or before the 15th day
16of the fourth month following the close of the employer's
17taxable year. The Department may allow the employer's return to
18be submitted with the employer's individual income tax return
19or to be submitted with a return due from the employer under
20Section 1400.2 of the Unemployment Insurance Act.
21    (f) Magnetic media and electronic filing. Any W-2 Form
22that, under the Internal Revenue Code and regulations
23promulgated thereunder, is required to be submitted to the
24Internal Revenue Service on magnetic media or electronically
25must also be submitted to the Department on magnetic media or
26electronically for Illinois purposes, if required by the

 

 

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1Department.
2    (g) For amounts deducted or withheld after December 31,
32009, a taxpayer who makes an election under subsection (f) of
4Section 5-15 of the Economic Development for a Growing Economy
5Tax Credit Act for a taxable year shall be allowed a credit
6against payments due under this Section for amounts withheld
7during the first calendar year beginning after the end of that
8taxable year equal to the amount of the credit for the
9incremental income tax attributable to full-time employees of
10the taxpayer awarded to the taxpayer by the Department of
11Commerce and Economic Opportunity under the Economic
12Development for a Growing Economy Tax Credit Act for the
13taxable year and credits not previously claimed and allowed to
14be carried forward under Section 211(4) of this Act as provided
15in subsection (f) of Section 5-15 of the Economic Development
16for a Growing Economy Tax Credit Act. The credit or credits may
17not reduce the taxpayer's obligation for any payment due under
18this Section to less than zero. If the amount of the credit or
19credits exceeds the total payments due under this Section with
20respect to amounts withheld during the calendar year, the
21excess may be carried forward and applied against the
22taxpayer's liability under this Section in the succeeding
23calendar years as allowed to be carried forward under paragraph
24(4) of Section 211 of this Act. The credit or credits shall be
25applied to the earliest year for which there is a tax
26liability. If there are credits from more than one taxable year

 

 

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1that are available to offset a liability, the earlier credit
2shall be applied first. Each employer who deducts and withholds
3or is required to deduct and withhold tax under this Act and
4who retains income tax withholdings under subsection (f) of
5Section 5-15 of the Economic Development for a Growing Economy
6Tax Credit Act must make a return with respect to such taxes
7and retained amounts in the form and manner that the
8Department, by rule, requires and pay to the Department or to a
9depositary designated by the Department those withheld taxes
10not retained by the taxpayer. For purposes of this subsection
11(g), the term taxpayer shall include taxpayer and members of
12the taxpayer's unitary business group as defined under
13paragraph (27) of subsection (a) of Section 1501 of this Act.
14This Section is exempt from the provisions of Section 250 of
15this Act.
16    (h) An employer may claim a credit against payments due
17under this Section for amounts withheld during the first
18calendar year ending after date on which a tax credit
19certificate was issued under Section 35 of the Small Business
20Job Creation Tax Credit Act. The credit shall be equal to the
21amount shown on the certificate, but may not reduce the
22taxpayer's obligation for any payment due under this Section to
23less than zero. If the amount of the credit exceeds the total
24payments due under this Section with respect to amounts
25withheld during the calendar year, the excess may be carried
26forward and applied against the taxpayer's liability under this

 

 

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1Section in the 5 succeeding calendar years. The credit shall be
2applied to the earliest year for which there is a tax
3liability. If there are credits from more than one calendar
4year that are available to offset a liability, the earlier
5credit shall be applied first. This Section is exempt from the
6provisions of Section 250 of this Act.
7    (i) A taxpayer may elect to claim all or a part of the
8credit awarded under Section 221 of this Act as a credit
9against payments due under this Section. Such an election shall
10be made in the form and manner prescribed by the Department by
11rule. If, in any payment period, the amount of the credit that
12is eligible to be applied toward the taxpayer's withholding tax
13liability exceeds the amount required to be withheld by the
14taxpayer for that payment period, then the excess may carried
15forward to the next payment period until the entire amount has
16been applied. If there are credits from more than one payment
17period that are available to offset a liability, the earlier
18credit shall be applied first.
19(Source: P.A. 95-8, eff. 6-29-07; 95-707, eff. 1-11-08; 96-834,
20eff. 12-14-09; 96-888, eff. 4-13-10; 96-905, eff. 6-4-10;
2196-1027, eff. 7-12-10; revised 9-16-10.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.