HB5111 EngrossedLRB097 16508 HLH 61676 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 Small Business Job Creation Tax Credit Act
5is amended by changing Sections 10 and 25 as follows:
 
6    (35 ILCS 25/10)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 10. Definitions. In this Act:
9    "Applicant" means a person that is operating a business
10located within the State of Illinois that is engaged in
11interstate or intrastate commerce and either:
12        (1) has no more than 50 full-time employees, without
13    regard to the location of employment of such employees at
14    the beginning of the incentive period; or
15        (2) hired within the incentive period an employee who
16    had participated as worker-trainee in the Put Illinois to
17    Work Program during 2010.
18    In the case of any person that is a member of a unitary
19business group within the meaning of subdivision (a)(27) of
20Section 1501 of the Illinois Income Tax Act, "applicant" refers
21to the unitary business group.
22    "Certificate" means the tax credit certificate issued by
23the Department under Section 35 of this Act.

 

 

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1    "Certificate of eligibility" means the certificate issued
2by the Department under Section 20 of this Act.
3    "Credit" means the amount awarded by the Department to an
4applicant by issuance of a certificate under Section 35 of this
5Act for each new full-time equivalent employee hired or job
6created.
7    "Department" means the Department of Commerce and Economic
8Opportunity.
9    "Director" means the Director of the Department.
10    "Full-time employee" means an individual who is employed
11for a basic wage for at least 35 hours each week or who renders
12any other standard of service generally accepted by industry
13custom or practice as full-time employment. An individual for
14whom a W-2 is issued by a Professional Employer Organization is
15a full-time employee if he or she is employed in the service of
16the applicant for a basic wage for at least 35 hours each week
17or renders any other standard of service generally accepted by
18industry custom or practice as full-time employment. For the
19purposes of this Act, such an individual shall be considered a
20full-time employee of the applicant.
21    "Professional Employer Organization" (PEO) shall have the
22same meaning as defined in Section 5-5 of the Economic
23Development for a Growing Economy Tax Credit Act. As used in
24this Section, "Professional Employer Organization" does not
25include a day and temporary labor service agency regulated
26under the Day and Temporary Labor Services Act.

 

 

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1    "Incentive period" means the period beginning July 1, 2010
2and ending on June 30, 2011.
3    "Basic wage" means compensation for employment that is no
4less than $10 per hour or the equivalent salary for a new
5employee.
6    "New employee" means a full-time employee:
7        (1) who first became employed by an applicant with less
8    than 50 full-time employees within the incentive period
9    whose hire results in a net increase in the applicant's
10    full-time Illinois employees and who is receiving a basic
11    wage as compensation; or
12        (2) who participated as a worker-trainee in the Put
13    Illinois to Work Program during 2010 and who is
14    subsequently hired during the incentive period by an
15    applicant and who is receiving a basic wage as
16    compensation.
17    The term "new employee" does not include:
18        (1) a person who was previously employed in Illinois by
19    the applicant or a related member prior to the onset of the
20    incentive period; or
21        (2) any individual who has a direct or indirect
22    ownership interest of at least 5% in the profits, capital,
23    or value of the applicant or a related member.
24    "Noncompliance date" means, in the case of an applicant
25that is not complying with the requirements of the provisions
26of this Act, the day following the last date upon which the

 

 

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1taxpayer was in compliance with the requirements of the
2provisions of this Act, as determined by the Director, pursuant
3to Section 45 of this Act.
4    "Put Illinois to Work Program" means a worker training and
5employment program that was established by the State of
6Illinois with funding from the United States Department of
7Health and Human Services of Emergency Temporary Assistance to
8Needy Families funds authorized by the American Recovery and
9Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
10funds were in turn used by the State of Illinois to fund the
11Put Illinois to Work Program.
12    "Related member" means a person that, with respect to the
13applicant during any portion of the incentive period, is any
14one of the following,
15        (1) An individual, if the individual and the members of
16    the individual's family (as defined in Section 318 of the
17    Internal Revenue Code) own directly, indirectly,
18    beneficially, or constructively, in the aggregate, at
19    least 50% of the value of the outstanding profits, capital,
20    stock, or other ownership interest in the applicant.
21        (2) A partnership, estate, or trust and any partner or
22    beneficiary, if the partnership, estate, or trust and its
23    partners or beneficiaries own directly, indirectly,
24    beneficially, or constructively, in the aggregate, at
25    least 50% of the profits, capital, stock, or other
26    ownership interest in the applicant.

 

 

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1        (3) A corporation, and any party related to the
2    corporation in a manner that would require an attribution
3    of stock from the corporation under the attribution rules
4    of Section 318 of the Internal Revenue Code, if the
5    applicant and any other related member own, in the
6    aggregate, directly, indirectly, beneficially, or
7    constructively, at least 50% of the value of the
8    corporation's outstanding stock.
9        (4) A corporation and any party related to that
10    corporation in a manner that would require an attribution
11    of stock from the corporation to the party or from the
12    party to the corporation under the attribution rules of
13    Section 318 of the Internal Revenue Code, if the
14    corporation and all such related parties own, in the
15    aggregate, at least 50% of the profits, capital, stock, or
16    other ownership interest in the applicant.
17        (5) A person to or from whom there is attribution of
18    stock ownership in accordance with Section 1563(e) of the
19    Internal Revenue Code, except that for purposes of
20    determining whether a person is a related member under this
21    paragraph, "20%" shall be substituted for "5%" whenever
22    "5%" appears in Section 1563(e) of the Internal Revenue
23    Code.
24(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
25    (Text of Section after amendment by P.A. 97-636)

 

 

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1    Sec. 10. Definitions. In this Act:
2    "Applicant" means a person that is operating a business
3located within the State of Illinois that is engaged in
4interstate or intrastate commerce and either:
5        (1) has no more than 50 full-time employees, without
6    regard to the location of employment of such employees at
7    the beginning of the incentive period; or
8        (2) hired within the incentive period an employee who
9    had participated as worker-trainee in the Put Illinois to
10    Work Program during 2010.
11    In the case of any person that is a member of a unitary
12business group within the meaning of subdivision (a)(27) of
13Section 1501 of the Illinois Income Tax Act, "applicant" refers
14to the unitary business group.
15    "Certificate" means the tax credit certificate issued by
16the Department under Section 35 of this Act.
17    "Certificate of eligibility" means the certificate issued
18by the Department under Section 20 of this Act.
19    "Credit" means the amount awarded by the Department to an
20applicant by issuance of a certificate under Section 35 of this
21Act for each new full-time equivalent employee hired or job
22created.
23    "Department" means the Department of Commerce and Economic
24Opportunity.
25    "Director" means the Director of the Department.
26    "Full-time employee" means an individual who is employed

 

 

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1for a basic wage for at least 35 hours each week or who renders
2any other standard of service generally accepted by industry
3custom or practice as full-time employment. An individual for
4whom a W-2 is issued by a Professional Employer Organization is
5a full-time employee if he or she is employed in the service of
6the applicant for a basic wage for at least 35 hours each week
7or renders any other standard of service generally accepted by
8industry custom or practice as full-time employment. For the
9purposes of this Act, such an individual shall be considered a
10full-time employee of the applicant.
11    "Professional Employer Organization" (PEO) shall have the
12same meaning as defined in Section 5-5 of the Economic
13Development for a Growing Economy Tax Credit Act. As used in
14this Section, "Professional Employer Organization" does not
15include a day and temporary labor service agency regulated
16under the Day and Temporary Labor Services Act.
17    "Incentive period" means the period beginning on July 1 and
18ending on June 30 of the following year. The first incentive
19period shall begin on July 1, 2010 and the last incentive
20period shall end on June 30, 2016.
21    "Basic wage" means compensation for employment that is no
22less than $10 per hour or the equivalent salary for a new
23employee.
24    "New employee" means a full-time employee:
25        (1) who first became employed by an applicant with less
26    than 50 full-time employees within the incentive period

 

 

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1    whose hire results in a net increase in the applicant's
2    full-time Illinois employees and who is receiving a basic
3    wage as compensation; or
4        (2) who participated as a worker-trainee in the Put
5    Illinois to Work Program during 2010 and who is
6    subsequently hired during the incentive period by an
7    applicant and who is receiving a basic wage as
8    compensation.
9    The term "new employee" does not include:
10        (1) a person who was previously employed in Illinois by
11    the applicant or a related member prior to the onset of the
12    incentive period; or
13        (2) any individual who has a direct or indirect
14    ownership interest of at least 5% in the profits, capital,
15    or value of the applicant or a related member.
16    "Noncompliance date" means, in the case of an applicant
17that is not complying with the requirements of the provisions
18of this Act, the day following the last date upon which the
19taxpayer was in compliance with the requirements of the
20provisions of this Act, as determined by the Director, pursuant
21to Section 45 of this Act.
22    "Put Illinois to Work Program" means a worker training and
23employment program that was established by the State of
24Illinois with funding from the United States Department of
25Health and Human Services of Emergency Temporary Assistance to
26Needy Families funds authorized by the American Recovery and

 

 

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1Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
2funds were in turn used by the State of Illinois to fund the
3Put Illinois to Work Program.
4    "Related member" means a person that, with respect to the
5applicant during any portion of the incentive period, is any
6one of the following,
7        (1) An individual, if the individual and the members of
8    the individual's family (as defined in Section 318 of the
9    Internal Revenue Code) own directly, indirectly,
10    beneficially, or constructively, in the aggregate, at
11    least 50% of the value of the outstanding profits, capital,
12    stock, or other ownership interest in the applicant.
13        (2) A partnership, estate, or trust and any partner or
14    beneficiary, if the partnership, estate, or trust and its
15    partners or beneficiaries own directly, indirectly,
16    beneficially, or constructively, in the aggregate, at
17    least 50% of the profits, capital, stock, or other
18    ownership interest in the applicant.
19        (3) A corporation, and any party related to the
20    corporation in a manner that would require an attribution
21    of stock from the corporation under the attribution rules
22    of Section 318 of the Internal Revenue Code, if the
23    applicant and any other related member own, in the
24    aggregate, directly, indirectly, beneficially, or
25    constructively, at least 50% of the value of the
26    corporation's outstanding stock.

 

 

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1        (4) A corporation and any party related to that
2    corporation in a manner that would require an attribution
3    of stock from the corporation to the party or from the
4    party to the corporation under the attribution rules of
5    Section 318 of the Internal Revenue Code, if the
6    corporation and all such related parties own, in the
7    aggregate, at least 50% of the profits, capital, stock, or
8    other ownership interest in the applicant.
9        (5) A person to or from whom there is attribution of
10    stock ownership in accordance with Section 1563(e) of the
11    Internal Revenue Code, except that for purposes of
12    determining whether a person is a related member under this
13    paragraph, "20%" shall be substituted for "5%" whenever
14    "5%" appears in Section 1563(e) of the Internal Revenue
15    Code.
16(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
1797-636, eff. 6-1-12.)
 
18    (35 ILCS 25/25)
19    (Text of Section before amendment by P.A. 97-636)
20    Sec. 25. Tax credit.
21    (a) Subject to the conditions set forth in this Act, an
22applicant is entitled to a credit against payment of taxes
23withheld under Section 704A of the Illinois Income Tax Act:
24        (1) for new employees who participated as
25    worker-trainees in the Put Illinois to Work Program during

 

 

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1    2010:
2            (A) in the first calendar year ending on or after
3        the date that is 6 months after December 31, 2010, or
4        the date of hire, whichever is later. Under this
5        subparagraph, the applicant is entitled to one-half of
6        the credit allowable for each new employee who is
7        employed for at least 6 months after the date of hire;
8        and
9            (B) in the first calendar year ending on or after
10        the date that is 12 months after December 31, 2010, or
11        the date of hire, whichever is later. Under this
12        subparagraph, the applicant is entitled to one-half of
13        the credit allowable for each new employee who is
14        employed for at least 12 months after the date of hire;
15         (2) for all other new employees, in the first calendar
16    year ending on or after the date that is 12 months after
17    the date of hire of a new employee. The credit shall be
18    allowed as a credit to an applicant for each full-time
19    employee hired during the incentive period that results in
20    a net increase in full-time Illinois employees, where the
21    net increase in the employer's full-time Illinois
22    employees is maintained for at least 12 months.
23    (b) The Department shall make credit awards under this Act
24to further job creation.
25    (c) The credit shall be claimed for the first calendar year
26ending on or after the date on which the certificate is issued

 

 

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1by the Department.
2    (d) The credit shall not exceed $2,500 per new employee
3hired.
4    (e) The net increase in full-time Illinois employees,
5measured on an annual full-time equivalent basis, shall be the
6total number of full-time Illinois employees of the applicant
7on June 30, 2011, minus the number of full-time Illinois
8employees employed by the employer on July 1, 2010. For
9purposes of the calculation, an employer that begins doing
10business in this State during the incentive period, as
11determined by the Director, shall be treated as having zero
12Illinois employees on July 1, 2010.
13    (f) The net increase in the number of full-time Illinois
14employees of the applicant under subsection (e) must be
15sustained continuously for at least 12 months, starting with
16the date of hire of a new employee during the incentive period.
17Eligibility for the credit does not depend on the continuous
18employment of any particular individual. For purposes of this
19subsection (f), if a new employee ceases to be employed before
20the completion of the 12-month period for any reason, the net
21increase in the number of full-time Illinois employees shall be
22treated as continuous if a different new employee is hired as a
23replacement within a reasonable time for the same position.
24    (g) The Department shall promulgate rules to enable an
25applicant for which a PEO has been contracted to issue W-2s and
26make payment of taxes withheld under Section 704A of the

 

 

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1Illinois Income Tax Act for new employees to retain the benefit
2of tax credits to which the applicant is otherwise entitled
3under this Act.
4(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
5    (Text of Section after amendment by P.A. 97-636)
6    Sec. 25. Tax credit.
7    (a) Subject to the conditions set forth in this Act, an
8applicant is entitled to a credit against payment of taxes
9withheld under Section 704A of the Illinois Income Tax Act:
10        (1) for new employees who participated as
11    worker-trainees in the Put Illinois to Work Program during
12    2010:
13            (A) in the first calendar year ending on or after
14        the date that is 6 months after December 31, 2010, or
15        the date of hire, whichever is later. Under this
16        subparagraph, the applicant is entitled to one-half of
17        the credit allowable for each new employee who is
18        employed for at least 6 months after the date of hire;
19        and
20            (B) in the first calendar year ending on or after
21        the date that is 12 months after December 31, 2010, or
22        the date of hire, whichever is later. Under this
23        subparagraph, the applicant is entitled to one-half of
24        the credit allowable for each new employee who is
25        employed for at least 12 months after the date of hire;

 

 

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1         (2) for all other new employees, in the first calendar
2    year ending on or after the date that is 12 months after
3    the date of hire of a new employee. The credit shall be
4    allowed as a credit to an applicant for each full-time
5    employee hired during the incentive period that results in
6    a net increase in full-time Illinois employees, where the
7    net increase in the employer's full-time Illinois
8    employees is maintained for at least 12 months.
9    (b) The Department shall make credit awards under this Act
10to further job creation.
11    (c) The credit shall be claimed for the first calendar year
12ending on or after the date on which the certificate is issued
13by the Department.
14    (d) The credit shall not exceed $2,500 per new employee
15hired.
16    (e) The net increase in full-time Illinois employees,
17measured on an annual full-time equivalent basis, shall be the
18total number of full-time Illinois employees of the applicant
19on the final day of the incentive period, minus the number of
20full-time Illinois employees employed by the employer on the
21first day of that same incentive period. For purposes of the
22calculation, an employer that begins doing business in this
23State during the incentive period, as determined by the
24Director, shall be treated as having zero Illinois employees on
25the first day of the incentive period.
26    (f) The net increase in the number of full-time Illinois

 

 

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1employees of the applicant under subsection (e) must be
2sustained continuously for at least 12 months, starting with
3the date of hire of a new employee during the incentive period.
4Eligibility for the credit does not depend on the continuous
5employment of any particular individual. For purposes of this
6subsection (f), if a new employee ceases to be employed before
7the completion of the 12-month period for any reason, the net
8increase in the number of full-time Illinois employees shall be
9treated as continuous if a different new employee is hired as a
10replacement within a reasonable time for the same position.
11    (g) The Department shall promulgate rules to enable an
12applicant for which a PEO has been contracted to issue W-2s and
13make payment of taxes withheld under Section 704A of the
14Illinois Income Tax Act for new employees to retain the benefit
15of tax credits to which the applicant is otherwise entitled
16under this Act.
17(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
1897-636, eff. 6-1-12.)
 
19    Section 95. No acceleration or delay. Where this Act makes
20changes in a statute that is represented in this Act by text
21that is not yet or no longer in effect (for example, a Section
22represented by multiple versions), the use of that text does
23not accelerate or delay the taking effect of (i) the changes
24made by this Act or (ii) provisions derived from any other
25Public Act.