97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5799

 

Introduced 2/16/2012, by Rep. Dwight Kay

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/223 new

    Creates the Manufacturing Job Destination Tax Credit Act and amends the Illinois Income Tax Act. Provides for a credit of 25% of the Illinois labor expenditures made by a manufacturing company in order to foster job creation and retention in Illinois. Authorizes the Department of Revenue to award a tax credit to taxpayer-employers who apply for the credit and meet certain Illinois labor expenditure requirements. Sets minimum requirements and procedures for certifying a taxpayer as an "accredited manufacturer" and for awarding the credit. 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. Short title. This Act may be cited as the
5Manufacturing Job Destination Tax Credit Act.
 
6    Section 10. Purpose. The General Assembly finds that the
7manufacturing sector is a crucial underpinning of the economy
8of the State of Illinois. Therefore, it is in the best interest
9of the State of Illinois to make Illinois the preferred
10destination for manufacturing and to strengthen the existing
11industrial base in Illinois, thereby promoting job growth, an
12expedited economic recovery, and long-term revenue growth for
13the State.
 
14    Section 15. Definitions. As used in this Act:
15    "Accredited manufacturer" means a manufacturer that has
16been certified by the Department.
17    "Credit" means an amount equal to 25% of qualifying
18Illinois labor expenditures approved by the Department. The
19accredited manufacturer is deemed to have paid, on its balance
20due day for the year, an amount equal to 25% of its qualified
21Illinois labor expenditure for the tax year.
22    "Department" means the Department of Revenue.

 

 

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1    "Director" means the Director of Revenue.
2    "Illinois labor expenditure" means salary or wages paid to
3employees of an accredited manufacturer for services rendered
4in Illinois.
5    To qualify as an Illinois labor expenditure, the
6expenditure must be:
7        (1) reasonable under the circumstances;
8        (2) included in the federal income tax basis of the
9    property;
10        (3) incurred by the accredited manufacturer for
11    services on or after January 1, 2012;
12        (4) incurred for the production stages of the
13    manufacturing process;
14        (5) limited to the first $25,000 of wages paid to or
15    incurred for each employee of the manufacturing company;
16        (6) exclusive of the salary or wages paid to or
17    incurred for the 2 highest paid employees of the
18    manufacturing company;
19        (7) directly attributable to the accredited
20    manufacturer;
21        (8) paid in the tax year for which the applicant is
22    claiming the credit or no later than 60 days after the end
23    of the tax year; and
24        (9) paid for services rendered in Illinois.
 
25    Section 20. Tax credit awards. Subject to the conditions

 

 

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1set forth in this Act, an accredited manufacturer is entitled
2to a credit of 25% of all qualifying Illinois labor
3expenditures approved by the Department.
 
4    Section 25. Accredited manufacturing company
5certification. Any taxpayer may request certification as an
6accredited manufacturing company by formal application to the
7Department. In determining whether to issue an accredited
8manufacturing company certificate, the Department must
9determine that all of the following conditions exist:
10        (1) The taxpayer is engaged primarily in the business
11    of manufacturing goods.
12        (2) The taxpayer intends to employ workers in the State
13    of Illinois.
14        (3) The taxpayer provides health insurance to its
15    employees.
16        (4) The taxpayer provides to its employees either a
17    pension plan or a 401k plan.
18        (5) The taxpayer offers to its employees elder care
19    benefits and a dependent care flexible spending account.
20        (6) The taxpayer intends to expend a portion of its
21    research and development budgets in the State of Illinois.
 
22    Section 30. Issuance of manufacturing job destination tax
23credit certification.
24    (a) In order to qualify for a tax credit under this Act, an

 

 

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1accredited manufacturer must file, on forms prescribed by the
2Department, all information necessary to calculate the tax
3credit.
4    (b) Upon satisfactory review of the application, the
5Department shall issue a manufacturing job destination tax
6credit certificate stating the amount of the tax credit.
 
7    Section 35. Amount and duration of the credit. The amount
8of the credit awarded under this Act is based on the amount of
9qualifying Illinois labor expenditures approved by the
10Department in any tax year beginning on or after January 1,
112012 for the applicant.
 
12    Section 40. Evaluation of tax credit program. The
13Department shall evaluate the tax credit program. The
14evaluation must include an assessment of the effectiveness of
15the program in creating and retaining jobs in Illinois and of
16the revenue impact of the program and may include a review of
17the practices and experiences of other states or nations with
18similar programs. Upon completion of this evaluation, the
19Department shall determine the overall success of the program
20and may make a recommendation to extend, modify, or not extend
21the program based on this evaluation.
 
22    Section 45. Program terms and conditions. Any documentary
23materials or data made available to or received by any agent or

 

 

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1employee of the Department are confidential and are not public
2records to the extent that the materials or data consist of
3commercial or financial information regarding the
4manufacturing operation of the applicant for or recipient of
5any tax credit under this Act.
 
6    Section 50. Appeals. If the Department denies a taxpayer
7certification under Section 25 of this Act, the denial must be
8in writing and must state the reasons for the denial. The
9taxpayer shall have 60 days after the first denial to correct
10any deficiency that was the reason for the initial denial of
11certification.
12     If the Department again denies the certification, the
13taxpayer may appeal the second denial within 60 days after that
14denial and request a hearing. At the hearing, if the taxpayer
15shows, by preponderance of evidence, that he or she has
16complied with the requirements of this Section, then the
17taxpayer shall be certified as an accredited manufacturer.
18     If the taxpayer disagrees with the Department about the
19amount of the tax credit available for any tax year, the
20taxpayer may appeal the certification and request a hearing. If
21the taxpayer shows, by a preponderance of evidence, that he or
22she is entitled to a larger amount, the Department shall
23approve the larger amount. However, in no instance may the
24Department determine a lesser amount.
25     The provisions of the Administrative Review Law, and the

 

 

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1rules adopted pursuant thereto, apply to and govern all
2proceedings for the judicial review of this Act.
 
3    Section 90. The Illinois Income Tax Act is amended by
4adding Section 223 as follows:
 
5    (35 ILCS 5/223 new)
6    Sec. 223. Manufacturing job destination tax credit. For tax
7years beginning on or after January 1, 2012, a taxpayer who has
8been awarded a tax credit under the Manufacturing Job
9Destination Tax Credit Act is entitled to a credit against the
10taxes imposed under subsections (a) and (b) of Section 201 of
11this Act in an amount determined by the Department under the
12Manufacturing Job Destination Tax Credit Act. If the taxpayer
13is a partnership or Subchapter S corporation, the credit is
14allowed to the partners or shareholders in accordance with the
15determination of income and distributive share of income under
16Sections 702 and 704 and Subchapter S of the Internal Revenue
17Code. The Department must prescribe rules to enforce and
18administer the provisions of this Section. This Section is
19exempt from the provisions of Section 250 of this Act.
20    The credit may not be carried forward or back. In no event
21shall a credit under this Section reduce the taxpayer's
22liability to less than zero.
 
23    Section 99. Effective date. This Act takes effect upon
24becoming law.