Full Text of SB0805 103rd General Assembly
SB0805eng 103RD GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois, | 3 | | represented in the General Assembly:
| 4 | | Section 5. The Economic Development for a Growing Economy | 5 | | Tax Credit Act is amended by changing Sections 5-5 and 5-15 as | 6 | | follows:
| 7 | | (35 ILCS 10/5-5)
| 8 | | Sec. 5-5. Definitions. As used in this Act:
| 9 | | "Agreement" means the Agreement between a Taxpayer and the | 10 | | Department under
the provisions of Section 5-50 of this Act.
| 11 | | "Applicant" means a Taxpayer that is operating a business | 12 | | located or that
the Taxpayer plans to locate within the State | 13 | | of Illinois and that is engaged
in interstate or intrastate | 14 | | commerce for the purpose of manufacturing,
processing, | 15 | | assembling, warehousing, or distributing products, conducting
| 16 | | research and development, providing tourism services, or | 17 | | providing services
in interstate commerce, office industries, | 18 | | or agricultural processing, but
excluding retail, retail food, | 19 | | health, or professional services.
"Applicant" does not include | 20 | | a Taxpayer who closes or
substantially reduces an operation at | 21 | | one location in the State and relocates
substantially the same | 22 | | operation to another location in the State. This does
not | 23 | | prohibit a Taxpayer from expanding its operations at another |
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| 1 | | location in
the State, provided that existing operations of a | 2 | | similar nature located within
the State are not closed or | 3 | | substantially reduced. This also does not prohibit
a Taxpayer | 4 | | from moving its operations from one location in the State to | 5 | | another
location in the State for the purpose of expanding the | 6 | | operation provided that
the Department determines that | 7 | | expansion cannot reasonably be accommodated
within the | 8 | | municipality in which the business is located, or in the case | 9 | | of a
business located in an incorporated area of the county, | 10 | | within the county in
which the business is located, after | 11 | | conferring with the chief elected
official of the municipality | 12 | | or county and taking into consideration any
evidence offered | 13 | | by the municipality or county regarding the ability to
| 14 | | accommodate expansion within the municipality or county.
| 15 | | "Credit" means the amount agreed to between the Department | 16 | | and Applicant
under this Act, but not to exceed the lesser of: | 17 | | (1) the sum of (i) 50% of the Incremental Income Tax | 18 | | attributable to
New Employees at the Applicant's project and | 19 | | (ii) 10% of the training costs of New Employees; or (2) 100% of | 20 | | the Incremental Income Tax attributable to
New Employees at | 21 | | the Applicant's project. However, if the project is located in | 22 | | an underserved area, then the amount of the Credit may not | 23 | | exceed the lesser of: (1) the sum of (i) 75% of the Incremental | 24 | | Income Tax attributable to
New Employees at the Applicant's | 25 | | project and (ii) 10% of the training costs of New Employees; or | 26 | | (2) 100% of the Incremental Income Tax attributable to
New |
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| 1 | | Employees at the Applicant's project. If the project is not | 2 | | located in an underserved area and the Applicant agrees to | 3 | | hire the required number of New Employees, then the maximum | 4 | | amount of the Credit for that Applicant may be increased by an | 5 | | amount not to exceed 25% of the Incremental Income Tax | 6 | | attributable to retained employees at the Applicant's project. | 7 | | If the project is located in an underserved area and the | 8 | | Applicant agrees to hire the required number of New Employees, | 9 | | then the maximum amount of the credit for that Applicant may be | 10 | | increased by an amount not to exceed 50% of the Incremental | 11 | | Income Tax attributable to retained employees at the | 12 | | Applicant's project.
| 13 | | "Department" means the Department of Commerce and Economic | 14 | | Opportunity.
| 15 | | "Director" means the Director of Commerce and Economic | 16 | | Opportunity.
| 17 | | "Full-time Employee" means an individual who is employed | 18 | | for consideration
for at least 35 hours each week or who | 19 | | renders any other standard of service
generally accepted by | 20 | | industry custom or practice as full-time employment. An | 21 | | individual for whom a W-2 is issued by a Professional Employer | 22 | | Organization (PEO) is a full-time employee if employed in the | 23 | | service of the Applicant for consideration for at least 35 | 24 | | hours each week or who renders any other standard of service | 25 | | generally accepted by industry custom or practice as full-time | 26 | | employment to Applicant.
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| 1 | | "Incremental Income Tax" means the total amount withheld | 2 | | during the taxable
year from the compensation of New Employees | 3 | | and, if applicable, retained employees under Article 7 of the | 4 | | Illinois
Income Tax Act arising from employment at a project | 5 | | that is the subject of an
Agreement.
| 6 | | "New Construction EDGE Agreement" means the Agreement | 7 | | between a Taxpayer and the Department under the provisions of | 8 | | Section 5-51 of this Act. | 9 | | "New Construction EDGE Credit" means an amount agreed to | 10 | | between the Department and the Applicant under this Act as | 11 | | part of a New Construction EDGE Agreement that does not exceed | 12 | | 50% of the Incremental Income Tax attributable to New | 13 | | Construction EDGE Employees at the Applicant's project; | 14 | | however, if the New Construction EDGE Project is located in an | 15 | | underserved area, then the amount of the New Construction EDGE | 16 | | Credit may not exceed 75% of the Incremental Income Tax | 17 | | attributable to New Construction EDGE Employees at the | 18 | | Applicant's New Construction EDGE Project. | 19 | | "New Construction EDGE Employee" means a laborer or worker | 20 | | who is employed by an Illinois contractor or subcontractor in | 21 | | the actual construction work on the site of a New Construction | 22 | | EDGE Project, pursuant to a New Construction EDGE Agreement. | 23 | | "New Construction EDGE Incremental Income Tax" means the | 24 | | total amount withheld during the taxable year from the | 25 | | compensation of New Construction EDGE Employees. | 26 | | "New Construction EDGE Project" means the building of a |
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| 1 | | Taxpayer's structure or building, or making improvements of | 2 | | any kind to real property. "New Construction EDGE Project" | 3 | | does not include the routine operation, routine repair, or | 4 | | routine maintenance of existing structures, buildings, or real | 5 | | property. | 6 | | "New Employee" means:
| 7 | | (a) A Full-time Employee first employed by a Taxpayer | 8 | | in the project
that is the subject of an Agreement and who | 9 | | is hired after the Taxpayer
enters into the tax credit | 10 | | Agreement.
| 11 | | (b) The term "New Employee" does not include:
| 12 | | (1) an employee of the Taxpayer who performs a job | 13 | | that was previously
performed by another employee, if | 14 | | that job existed for at least 6
months before hiring | 15 | | the employee;
| 16 | | (2) an employee of the Taxpayer who was previously | 17 | | employed in
Illinois by a Related Member of the | 18 | | Taxpayer and whose employment was
shifted to the | 19 | | Taxpayer after the Taxpayer entered into the tax | 20 | | credit
Agreement; or
| 21 | | (3) a child, grandchild, parent, or spouse, other | 22 | | than a spouse who
is legally separated from the | 23 | | individual, of any individual who has a direct
or an | 24 | | indirect ownership interest of at least 5% in the | 25 | | profits, capital, or
value of the Taxpayer.
| 26 | | (c) Notwithstanding paragraph (1) of subsection (b), |
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| 1 | | an employee may be
considered a New Employee under the | 2 | | Agreement if the employee performs a job
that was | 3 | | previously performed by an employee who was:
| 4 | | (1) treated under the Agreement as a New Employee; | 5 | | and
| 6 | | (2) promoted by the Taxpayer to another job.
| 7 | | (d) Notwithstanding subsection (a), the Department may | 8 | | award Credit to an
Applicant with respect to an employee | 9 | | hired prior to the date of the Agreement
if:
| 10 | | (1) the Applicant is in receipt of a letter from | 11 | | the Department stating
an
intent to enter into a | 12 | | credit Agreement;
| 13 | | (2) the letter described in paragraph (1) is | 14 | | issued by the
Department not later than 15 days after | 15 | | the effective date of this Act; and
| 16 | | (3) the employee was hired after the date the | 17 | | letter described in
paragraph (1) was issued.
| 18 | | "Noncompliance Date" means, in the case of a Taxpayer that | 19 | | is not complying
with the requirements of the Agreement or the | 20 | | provisions of this Act, the day
following the last date upon | 21 | | which the Taxpayer was in compliance with the
requirements of | 22 | | the Agreement and the provisions of this Act, as determined
by | 23 | | the Director, pursuant to Section 5-65.
| 24 | | "Pass Through Entity" means an entity that is exempt from | 25 | | the tax under
subsection (b) or (c) of Section 205 of the | 26 | | Illinois Income Tax Act.
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| 1 | | "Professional Employer Organization" (PEO) means an | 2 | | employee leasing company, as defined in Section 206.1(A)(2) of | 3 | | the Illinois Unemployment Insurance Act.
| 4 | | "Related Member" means a person that, with respect to the | 5 | | Taxpayer during
any portion of the taxable year, is any one of | 6 | | the following:
| 7 | | (1) An individual stockholder, if the stockholder and | 8 | | the members of the
stockholder's family (as defined in | 9 | | Section 318 of the Internal Revenue Code)
own directly, | 10 | | indirectly, beneficially, or constructively, in the | 11 | | aggregate,
at least 50% of the value of the Taxpayer's | 12 | | outstanding stock.
| 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 value of the
| 18 | | Taxpayer.
| 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 to the
party or from the | 22 | | party to the corporation under the attribution rules
of | 23 | | Section 318 of the Internal Revenue Code, if the Taxpayer | 24 | | owns
directly, indirectly, beneficially, or constructively | 25 | | at least
50% of the value of the corporation's outstanding | 26 | | 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 | | value of the
Taxpayer.
| 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,
for purposes of determining | 12 | | whether a person is a Related Member under
this paragraph, | 13 | | 20% shall be substituted for 5% wherever 5% appears in
| 14 | | Section 1563(e) of the Internal Revenue Code.
| 15 | | "Startup taxpayer" means , for Agreements that are executed | 16 | | before the effective date of this amendatory Act of the 103rd | 17 | | General Assembly, a corporation, partnership, or other entity | 18 | | incorporated or organized no more than 5 years before the | 19 | | filing of an application for an Agreement that has never had | 20 | | any Illinois income tax liability, excluding any Illinois | 21 | | income tax liability of a Related Member which shall not be | 22 | | attributed to the startup taxpayer. "Startup taxpayer" means, | 23 | | for Agreements that are executed on or after the effective | 24 | | date of this amendatory Act of the 103rd General Assembly, a | 25 | | corporation, partnership, or other entity incorporated or | 26 | | organized no more than 10 years before the filing of an |
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| 1 | | application for an Agreement that has never had any Illinois | 2 | | income tax liability, excluding any Illinois income tax | 3 | | liability of a Related Member which shall not be attributed to | 4 | | the startup taxpayer. | 5 | | "Taxpayer" means an individual, corporation, partnership, | 6 | | or other entity
that has any Illinois Income Tax liability.
| 7 | | Until July 1, 2022, "underserved area" means a geographic | 8 | | area that meets one or more of the following conditions: | 9 | | (1) the area has a poverty rate of at least 20% | 10 | | according to the latest federal decennial census; | 11 | | (2) 75% or more of the children in the area | 12 | | participate in the federal free lunch program according to | 13 | | reported statistics from the State Board of Education; | 14 | | (3) at least 20% of the households in the area receive | 15 | | assistance under the Supplemental Nutrition Assistance | 16 | | Program (SNAP); or | 17 | | (4) the area has
an average unemployment rate, as | 18 | | determined by the Illinois Department of
Employment | 19 | | Security, that is more than 120% of the national | 20 | | unemployment average, as
determined by the U.S. Department | 21 | | of Labor, for a period of at least 2 consecutive calendar | 22 | | years preceding the date of the application. | 23 | | On and after July 1, 2022, "underserved area" means a | 24 | | geographic area that meets one or more of the following | 25 | | conditions: | 26 | | (1) the area has a poverty rate of at least 20% |
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| 1 | | according to the latest American Community Survey; | 2 | | (2) 35% or more of the families with children in the | 3 | | area are living below 130% of the poverty line, according | 4 | | to the latest American Community Survey; | 5 | | (3) at least 20% of the households in the area receive | 6 | | assistance under the Supplemental Nutrition Assistance | 7 | | Program (SNAP); or | 8 | | (4) the area has an average unemployment rate, as | 9 | | determined by the Illinois Department of Employment | 10 | | Security, that is more than 120% of the national | 11 | | unemployment average, as determined by the U.S. Department | 12 | | of Labor, for a period of at least 2 consecutive calendar | 13 | | years preceding the date of the application. | 14 | | (Source: P.A. 101-9, eff. 6-5-19; 102-330, eff. 1-1-22; | 15 | | 102-700, eff. 4-19-22; 102-1125, eff. 2-3-23.)
| 16 | | (35 ILCS 10/5-15) | 17 | | Sec. 5-15. Tax Credit Awards. Subject to the conditions | 18 | | set forth in this
Act, a Taxpayer is
entitled to a Credit | 19 | | against or, as described in subsection (g) of this Section, a | 20 | | payment towards taxes imposed pursuant to subsections (a) and | 21 | | (b)
of Section 201 of the Illinois
Income Tax Act that may be | 22 | | imposed on the Taxpayer for a taxable year beginning
on or
| 23 | | after January 1, 1999,
if the Taxpayer is awarded a Credit by | 24 | | the Department under this Act for that
taxable year. | 25 | | (a) The Department shall make Credit awards under this Act |
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| 1 | | to foster job
creation and retention in Illinois. | 2 | | (b) A person that proposes a project to create new jobs in | 3 | | Illinois must
enter into an Agreement with the
Department for | 4 | | the Credit under this Act. | 5 | | (c) The Credit shall be claimed for the taxable years | 6 | | specified in the
Agreement. | 7 | | (d) The Credit shall not exceed the Incremental Income Tax | 8 | | attributable to
the project that is the subject of the | 9 | | Agreement. | 10 | | (e) Nothing herein shall prohibit a Tax Credit Award to an | 11 | | Applicant that uses a PEO if all other award criteria are | 12 | | satisfied.
| 13 | | (f) In lieu of the Credit allowed under this Act against | 14 | | the taxes imposed pursuant to subsections (a) and (b) of | 15 | | Section 201 of the Illinois Income Tax Act for any taxable year | 16 | | ending on or after December 31, 2009, for Taxpayers that | 17 | | entered into Agreements prior to January 1, 2015 and otherwise | 18 | | meet the criteria set forth in this subsection (f), the | 19 | | Taxpayer may elect to claim the Credit against its obligation | 20 | | to pay over withholding under Section 704A of the Illinois | 21 | | Income Tax Act. | 22 | | (1) The election under this subsection (f) may be made | 23 | | only by a Taxpayer that (i) is primarily engaged in one of | 24 | | the following business activities: water purification and | 25 | | treatment, motor vehicle metal stamping, automobile | 26 | | manufacturing, automobile and light duty motor vehicle |
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| 1 | | manufacturing, motor vehicle manufacturing, light truck | 2 | | and utility vehicle manufacturing, heavy duty truck | 3 | | manufacturing, motor vehicle body manufacturing, cable | 4 | | television infrastructure design or manufacturing, or | 5 | | wireless telecommunication or computing terminal device | 6 | | design or manufacturing for use on public networks and | 7 | | (ii) meets the following criteria: | 8 | | (A) the Taxpayer (i) had an Illinois net loss or an | 9 | | Illinois net loss deduction under Section 207 of the | 10 | | Illinois Income Tax Act for the taxable year in which | 11 | | the Credit is awarded, (ii) employed a minimum of | 12 | | 1,000 full-time employees in this State during the | 13 | | taxable year in which the Credit is awarded, (iii) has | 14 | | an Agreement under this Act on December 14, 2009 (the | 15 | | effective date of Public Act 96-834), and (iv) is in | 16 | | compliance with all provisions of that Agreement; | 17 | | (B) the Taxpayer (i) had an Illinois net loss or an | 18 | | Illinois net loss deduction under Section 207 of the | 19 | | Illinois Income Tax Act for the taxable year in which | 20 | | the Credit is awarded, (ii) employed a minimum of | 21 | | 1,000 full-time employees in this State during the | 22 | | taxable year in which the Credit is awarded, and (iii) | 23 | | has applied for an Agreement within 365 days after | 24 | | December 14, 2009 (the effective date of Public Act | 25 | | 96-834); | 26 | | (C) the Taxpayer (i) had an Illinois net operating |
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| 1 | | loss carryforward under Section 207 of the Illinois | 2 | | Income Tax Act in a taxable year ending during | 3 | | calendar year 2008, (ii) has applied for an Agreement | 4 | | within 150 days after the effective date of this | 5 | | amendatory Act of the 96th General Assembly, (iii) | 6 | | creates at least 400 new jobs in Illinois, (iv) | 7 | | retains at least 2,000 jobs in Illinois that would | 8 | | have been at risk of relocation out of Illinois over a | 9 | | 10-year period, and (v) makes a capital investment of | 10 | | at least $75,000,000; | 11 | | (D) the Taxpayer (i) had an Illinois net operating | 12 | | loss carryforward under Section 207 of the Illinois | 13 | | Income Tax Act in a taxable year ending during | 14 | | calendar year 2009, (ii) has applied for an Agreement | 15 | | within 150 days after the effective date of this | 16 | | amendatory Act of the 96th General Assembly, (iii) | 17 | | creates at least 150 new jobs, (iv) retains at least | 18 | | 1,000 jobs in Illinois that would have been at risk of | 19 | | relocation out of Illinois over a 10-year period, and | 20 | | (v) makes a capital investment of at least | 21 | | $57,000,000; or | 22 | | (E) the Taxpayer (i) employed at least 2,500 | 23 | | full-time employees in the State during the year in | 24 | | which the Credit is awarded, (ii) commits to make at | 25 | | least $500,000,000 in combined capital improvements | 26 | | and project costs under the Agreement, (iii) applies |
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| 1 | | for an Agreement between January 1, 2011 and June 30, | 2 | | 2011, (iv) executes an Agreement for the Credit during | 3 | | calendar year 2011, and (v) was incorporated no more | 4 | | than 5 years before the filing of an application for an | 5 | | Agreement. | 6 | | (1.5) The election under this subsection (f) may also | 7 | | be made by a Taxpayer for any Credit awarded pursuant to an | 8 | | agreement that was executed between January 1, 2011 and | 9 | | June 30, 2011, if the Taxpayer (i) is primarily engaged in | 10 | | the manufacture of inner tubes or tires, or both, from | 11 | | natural and synthetic rubber, (ii) employs a minimum of | 12 | | 2,400 full-time employees in Illinois at the time of | 13 | | application, (iii) creates at least 350 full-time jobs and | 14 | | retains at least 250 full-time jobs in Illinois that would | 15 | | have been at risk of being created or retained outside of | 16 | | Illinois, and (iv) makes a capital investment of at least | 17 | | $200,000,000 at the project location. | 18 | | (1.6) The election under this subsection (f) may also | 19 | | be made by a Taxpayer for any Credit awarded pursuant to an | 20 | | agreement that was executed within 150 days after the | 21 | | effective date of this amendatory Act of the 97th General | 22 | | Assembly, if the Taxpayer (i) is primarily engaged in the | 23 | | operation of a discount department store, (ii) maintains | 24 | | its corporate headquarters in Illinois, (iii) employs a | 25 | | minimum of 4,250 full-time employees at its corporate | 26 | | headquarters in Illinois at the time of application, (iv) |
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| 1 | | retains at least 4,250 full-time jobs in Illinois that | 2 | | would have been at risk of being relocated outside of | 3 | | Illinois, (v) had a minimum of $40,000,000,000 in total | 4 | | revenue in 2010, and (vi) makes a capital investment of at | 5 | | least $300,000,000 at the project location. | 6 | | (1.7) Notwithstanding any other provision of law, the | 7 | | election under this subsection (f) may also be made by a | 8 | | Taxpayer for any Credit awarded pursuant to an agreement | 9 | | that was executed or applied for on or after July 1, 2011 | 10 | | and on or before March 31, 2012, if the Taxpayer is | 11 | | primarily engaged in the manufacture of original and | 12 | | aftermarket filtration parts and products for automobiles, | 13 | | motor vehicles, light duty motor vehicles, light trucks | 14 | | and utility vehicles, and heavy duty trucks, (ii) employs | 15 | | a minimum of 1,000 full-time employees in Illinois at the | 16 | | time of application, (iii) creates at least 250 full-time | 17 | | jobs in Illinois, (iv) relocates its corporate | 18 | | headquarters to Illinois from another state, and (v) makes | 19 | | a capital investment of at least $4,000,000 at the project | 20 | | location. | 21 | | (1.8) Notwithstanding any other provision of law, the | 22 | | election under this subsection (f) may also be made by a | 23 | | startup taxpayer for any Credit awarded pursuant to an | 24 | | Agreement that was executed or applied for on or after the | 25 | | effective date of this amendatory Act of the 102nd General | 26 | | Assembly , if the startup taxpayer, without considering any |
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| 1 | | Related Member or other investor, (i) has never had any | 2 | | Illinois income tax liability and (ii) was incorporated no | 3 | | more than 5 years before the filing of an application for | 4 | | an Agreement . Any such election under this paragraph (1.8) | 5 | | shall be effective unless and until such startup taxpayer | 6 | | has any Illinois income tax liability. This election under | 7 | | this paragraph (1.8) shall automatically terminate when | 8 | | the startup taxpayer has any Illinois income tax liability | 9 | | at the end of any taxable year during the term of the | 10 | | Agreement. Thereafter, the startup taxpayer may receive a | 11 | | Credit, taking into account any benefits previously | 12 | | enjoyed or received by way of the election under this | 13 | | paragraph (1.8), so long as the startup taxpayer remains | 14 | | in compliance with the terms and conditions of the | 15 | | Agreement. | 16 | | (2) An election under this subsection shall allow the | 17 | | credit to be taken against payments otherwise due under | 18 | | Section 704A of the Illinois Income Tax Act during the | 19 | | first calendar quarter year beginning after the end of the | 20 | | taxable quarter year in which the credit is awarded under | 21 | | this Act. | 22 | | (3) The election shall be made in the form and manner | 23 | | required by the Illinois Department of Revenue and, once | 24 | | made, shall be irrevocable. | 25 | | (4) If a Taxpayer who meets the requirements of | 26 | | subparagraph (A) of paragraph (1) of this subsection (f) |
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| 1 | | elects to claim the Credit against its withholdings as | 2 | | provided in this subsection (f), then, on and after the | 3 | | date of the election, the terms of the Agreement between | 4 | | the Taxpayer and the Department may not be further amended | 5 | | during the term of the Agreement. | 6 | | (g) A pass-through entity that has been awarded a credit | 7 | | under this Act, its shareholders, or its partners may treat | 8 | | some or all of the credit awarded pursuant to this Act as a tax | 9 | | payment for purposes of the Illinois Income Tax Act. The term | 10 | | "tax payment" means a payment as described in Article 6 or | 11 | | Article 8 of the Illinois Income Tax Act or a composite payment | 12 | | made by a pass-through entity on behalf of any of its | 13 | | shareholders or partners to satisfy such shareholders' or | 14 | | partners' taxes imposed pursuant to subsections (a) and (b) of | 15 | | Section 201 of the Illinois Income Tax Act. In no event shall | 16 | | the amount of the award credited pursuant to this Act exceed | 17 | | the Illinois income tax liability of the pass-through entity | 18 | | or its shareholders or partners for the taxable year. | 19 | | (Source: P.A. 102-700, eff. 4-19-22.)
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