Illinois General Assembly - Full Text of HB0186
Illinois General Assembly

  Bills & Resolutions  
  Compiled Statutes  
  Public Acts  
  Legislative Reports  
  IL Constitution  
  Legislative Guide  
  Legislative Glossary  

 Search By Number
 (example: HB0001)
Search Tips

Search By Keyword

Full Text of HB0186  102nd General Assembly

HB0186 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB0186

 

Introduced 1/22/2021, by Rep. Maurice A. West, II

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/704A

    Amends the Illinois Income Tax Act. Creates a credit against withholding tax payments for employers with 250 or fewer full-time equivalent employees in an amount equal to a percentage of the compensation paid to qualified employees who received a raise from the employer.


LRB102 04787 HLH 14806 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB0186LRB102 04787 HLH 14806 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

 

 

HB0186- 2 -LRB102 04787 HLH 14806 b

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

 

 

HB0186- 3 -LRB102 04787 HLH 14806 b

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

 

 

HB0186- 4 -LRB102 04787 HLH 14806 b

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.

 

 

HB0186- 5 -LRB102 04787 HLH 14806 b

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

 

 

HB0186- 6 -LRB102 04787 HLH 14806 b

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

 

 

HB0186- 7 -LRB102 04787 HLH 14806 b

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 worked fewer than 90 consecutive days
17immediately preceding the reporting period; however, such
18credits may accrue during that 90-day period and be claimed
19against payments under this Section for future reporting
20periods after the employee has worked for the employer at
21least 90 consecutive days. In no event may the credit exceed
22the employer's liability for the reporting period. Each
23employer who deducts and withholds or is required to deduct
24and withhold tax under this Act and who retains income tax
25withholdings under this subsection must make a return with
26respect to such taxes and retained amounts in the form and

 

 

HB0186- 8 -LRB102 04787 HLH 14806 b

1manner that the Department, by rule, requires and pay to the
2Department or to a depositary designated by the Department
3those 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.

 

 

HB0186- 9 -LRB102 04787 HLH 14806 b

1    "Full-time equivalent employees" means the ratio of the
2number of paid hours during the reporting period and the
3number of working hours in that period.
4    "Maximum credit" means the percentage listed below of the
5difference between the amount of compensation paid in Illinois
6to employees who are paid not more than the required minimum
7wage reduced by the amount of compensation paid in Illinois to
8employees who were paid less than the current required minimum
9wage during the reporting period prior to each increase in the
10required minimum wage on January 1. If an employer pays an
11employee more than the required minimum wage and that employee
12previously earned less than the required minimum wage, the
13employer may include the portion that does not exceed the
14required minimum wage as compensation paid in Illinois to
15employees who are paid not more than the required minimum
16wage.
17        (1) 25% for reporting periods beginning on or after
18    January 1, 2020 and ending on or before December 31, 2020;
19        (2) 21% for reporting periods beginning on or after
20    January 1, 2021 and ending on or before December 31, 2021;
21        (3) 17% for reporting periods beginning on or after
22    January 1, 2022 and ending on or before December 31, 2022;
23        (4) 13% for reporting periods beginning on or after
24    January 1, 2023 and ending on or before December 31, 2023;
25        (5) 9% for reporting periods beginning on or after
26    January 1, 2024 and ending on or before December 31, 2024;

 

 

HB0186- 10 -LRB102 04787 HLH 14806 b

1        (6) 5% for reporting periods beginning on or after
2    January 1, 2025 and ending on or before December 31, 2025.
3    The amount computed under this subsection may continue to
4be claimed for reporting periods beginning on or after January
51, 2026 and:
6        (A) ending on or before December 31, 2026 for
7    employers with more than 5 employees; or
8        (B) ending on or before December 31, 2027 for
9    employers with no more than 5 employees.
10    "Qualified employee" means an employee who is paid not
11more than the required minimum wage and has an average wage
12paid per hour by the employer during the reporting period
13equal to or greater than his or her average wage paid per hour
14by the employer during each reporting period for the
15immediately preceding 12 months. A new qualified employee is
16deemed to have earned the required minimum wage in the
17preceding reporting period.
18    "Reporting period" means the quarter for which a return is
19required to be filed under subsection (b) of this Section.
20    (j) Each employer with 250 or fewer full-time equivalent
21employees during the reporting period may claim a credit
22against the payments due under this Section for each qualified
23employee in an amount equal to the credit amount. The credit
24may be taken against payments due for reporting periods that
25begin on or after January 1, 2022 and end on or before December
2631, 2030. Credits for a particular qualified employee may not

 

 

HB0186- 11 -LRB102 04787 HLH 14806 b

1be taken for reporting periods that begin more than 2 years
2after the effective date of the raise. An employer may not
3claim a credit for an employee who has worked fewer than 180
4consecutive days immediately preceding the first day of the
5first pay period during which the raise is in effect. In no
6event may the credit exceed the employer's liability for the
7reporting period. Each employer who deducts and withholds or
8is required to deduct and withhold tax under this Act and who
9retains income tax withholdings under this subsection must
10make a return with respect to such taxes and retained amounts
11in the form and manner that the Department, by rule, requires
12and pay to the Department or to a depositary designated by the
13Department those withheld taxes not retained by the employer.
14    Notwithstanding any other provision of this subsection, an
15employer is not eligible for credits under this subsection for
16a reporting period unless the average wage paid by the
17employer per employee for all employees making less than
18$52,000 during the reporting period is greater than the
19average wage paid by the employer per employee for all
20employees making less than $52,000 during the same reporting
21period of the prior calendar year.
22    For purposes of this subsection (j):
23    "Base period" means the employer's reporting period that
24immediately precedes the reporting period in which the
25qualified employee's raise takes effect.
26    "Compensation paid in Illinois" has the meaning ascribed

 

 

HB0186- 12 -LRB102 04787 HLH 14806 b

1to that term under paragraph (B) of item (2) of subsection (a)
2of Section 304 of this Act.
3    "Credit amount" means the amount listed below:
4        (1) 25% of the difference between the amount of
5    compensation paid in Illinois by the employer to the
6    qualified employee in the base period and the portion of
7    the compensation paid in Illinois by the employer to the
8    qualified employee in the reporting period for which the
9    credit is taken that does not exceed $37,400 when
10    annualized; plus
11        (2) 20% of the compensation paid in Illinois by the
12    employer to the qualified employee in the reporting period
13    for which the credit is taken that exceeds the greater of
14    (i) the amount of compensation paid in Illinois by the
15    employer to the qualified employee in the base period or
16    (ii) $37,400 when annualized but does not exceed $41,600
17    when annualized; plus
18        (3) 15% of the compensation paid in Illinois by the
19    employer to the qualified employee in the reporting period
20    for which the credit is taken that exceeds the greater of
21    (i) the amount of compensation paid in Illinois by the
22    employer to the qualified employee in the base period or
23    (ii) $41,600 when annualized but does not exceed $52,000
24    when annualized.
25    "Employer" and "employee" have the meanings ascribed to
26those terms in the Minimum Wage Law, except that "employee"

 

 

HB0186- 13 -LRB102 04787 HLH 14806 b

1also includes employees who work for an employer with fewer
2than 4 employees. Employers that operate more than one
3establishment pursuant to a franchise agreement or that
4constitute members of a unitary business group shall aggregate
5their employees for purposes of determining eligibility for
6the credit.
7    "Full-time equivalent employee" means an individual who is
8employed for a basic wage for at least 35 hours each week or
9who renders any other standard of service generally accepted
10by industry custom or practice as full-time employment.
11    "Qualified employee" means an employee who receives a
12raise from an employer, whose post-raise annual salary
13attributable to that employer is not less than $31,200, and
14who continues to be employed by the employer during the
15reporting period for which the credit is taken.
16    "Raise" means a permanent increase in an employee's hourly
17pay or salary that does not result in reduced hours or reduced
18benefits and is not a temporary bonus.
19    "Reporting period" means the quarter for which a return is
20required to be filed under subsection (b) of this Section.
21(Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17;
22100-863, eff. 8-14-18; 101-1, eff. 2-19-19.)