Full Text of HB3640 100th General Assembly
HB3640 100TH GENERAL ASSEMBLY |
| | 100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018 HB3640 Introduced , by Rep. Ryan Spain SYNOPSIS AS INTRODUCED: |
| 35 ILCS 10/5-5 | | 35 ILCS 10/5-25 | | 35 ILCS 10/5-40 | | 35 ILCS 10/5-77 | |
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Amends the Economic Development for a Growing Economy Tax Credit Act. Provides that an employee of the Taxpayer who was previously employed in Illinois by the Taxpayer and whose employment was shifted to the project after the Taxpayer entered into the Agreement is not considered a new employee for purposes of the Act. Provides that the Department of Commerce and Economic Opportunity shall not enter into any new EDGE Agreements after December 31, 2021 (currently, April 30, 2017). Removes a requirement that the Department of Commerce and Economic Opportunity shall consider the magnitude of the cost differential between Illinois and the
competing state when awarding credits. Makes changes concerning eligibility for the credit. Effective immediately.
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| | A BILL FOR |
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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, 5-25, 5-40, | 6 | | and 5-77 as 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 by | 13 | | the municipality or county regarding the ability to
accommodate | 14 | | expansion within the municipality or county.
| 15 | | "Committee" means the Illinois Business Investment | 16 | | Committee created under
Section 5-25 of this Act within the | 17 | | Illinois Economic Development Board.
| 18 | | "Credit" means the amount agreed to between the Department | 19 | | and Applicant
under this Act, but not to exceed the Incremental | 20 | | Income Tax attributable to
the Applicant's project.
| 21 | | "Department" means the Department of Commerce and Economic | 22 | | Opportunity.
| 23 | | "Director" means the Director of Commerce and Economic | 24 | | Opportunity.
| 25 | | "Full-time Employee" means an individual who is employed | 26 | | for consideration
for at least 35 hours each week or who |
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| 1 | | renders any other standard of service
generally accepted by | 2 | | industry custom or practice as full-time employment. An | 3 | | individual for whom a W-2 is issued by a Professional Employer | 4 | | Organization (PEO) is a full-time employee if employed in the | 5 | | service of the Applicant for consideration for at least 35 | 6 | | hours each week or who renders any other standard of service | 7 | | generally accepted by industry custom or practice as full-time | 8 | | employment to Applicant.
| 9 | | "Incremental Income Tax" means the total amount withheld | 10 | | during the taxable
year from the compensation of New Employees | 11 | | under Article 7 of the Illinois
Income Tax Act arising from | 12 | | employment at a project that is the subject of an
Agreement.
| 13 | | "New Employee" means:
| 14 | | (a) A Full-time Employee first employed by a Taxpayer | 15 | | in the project
that is the subject of an Agreement and who | 16 | | is hired after the Taxpayer
enters into the tax credit | 17 | | Agreement.
| 18 | | (b) The term "New Employee" does not include:
| 19 | | (1) an employee of the Taxpayer who performs a job | 20 | | that was previously
performed by another employee, if | 21 | | that job existed for at least 6
months before hiring | 22 | | the employee;
| 23 | | (2) an employee of the Taxpayer who was previously | 24 | | employed in
Illinois by a Related Member of the | 25 | | Taxpayer and whose employment was
shifted to the | 26 | | Taxpayer after the Taxpayer entered into the tax credit
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| 1 | | Agreement; or
| 2 | | (3) a child, grandchild, parent, or spouse, other | 3 | | than a spouse who
is legally separated from the | 4 | | individual, of any individual who has a direct
or an | 5 | | indirect ownership interest of at least 5% in the | 6 | | profits, capital, or
value of the Taxpayer ; or .
| 7 | | (4) an employee of the Taxpayer who was previously | 8 | | employed in Illinois by the Taxpayer and whose | 9 | | employment was shifted to the project after the | 10 | | Taxpayer entered into the Agreement.
| 11 | | (c) Notwithstanding paragraph (1) of subsection (b), | 12 | | an employee may be
considered a New Employee under the | 13 | | Agreement if the employee performs a job
that was | 14 | | previously performed by an employee who was:
| 15 | | (1) treated under the Agreement as a New Employee; | 16 | | and
| 17 | | (2) promoted by the Taxpayer to another job.
| 18 | | (d) Notwithstanding subsection (a), the Department may | 19 | | award Credit to an
Applicant with respect to an employee | 20 | | hired prior to the date of the Agreement
if:
| 21 | | (1) the Applicant is in receipt of a letter from | 22 | | the Department stating
an
intent to enter into a credit | 23 | | Agreement;
| 24 | | (2) the letter described in paragraph (1) is issued | 25 | | by the
Department not later than 15 days after the | 26 | | effective date of this Act; and
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| 1 | | (3) the employee was hired after the date the | 2 | | letter described in
paragraph (1) was issued.
| 3 | | "Noncompliance Date" means, in the case of a Taxpayer that | 4 | | is not complying
with the requirements of the Agreement or the | 5 | | provisions of this Act, the day
following the last date upon | 6 | | which the Taxpayer was in compliance with the
requirements of | 7 | | the Agreement and the provisions of this Act, as determined
by | 8 | | the Director, pursuant to Section 5-65.
| 9 | | "Pass Through Entity" means an entity that is exempt from | 10 | | the tax under
subsection (b) or (c) of Section 205 of the | 11 | | Illinois Income Tax Act.
| 12 | | "Professional Employer Organization" (PEO) means an | 13 | | employee leasing company, as defined in Section 206.1(A)(2) of | 14 | | the Illinois Unemployment Insurance Act.
| 15 | | "Related Member" means a person that, with respect to the | 16 | | Taxpayer during
any portion of the taxable year, is any one of | 17 | | the following:
| 18 | | (1) An individual stockholder, if the stockholder and | 19 | | the members of the
stockholder's family (as defined in | 20 | | Section 318 of the Internal Revenue Code)
own directly, | 21 | | indirectly, beneficially, or constructively, in the | 22 | | aggregate,
at least 50% of the value of the Taxpayer's | 23 | | outstanding stock.
| 24 | | (2) A partnership, estate, or trust and any partner or | 25 | | beneficiary,
if the partnership, estate, or trust, and its | 26 | | partners or beneficiaries own
directly, indirectly, |
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| 1 | | beneficially, or constructively, in the aggregate, at
| 2 | | least 50% of the profits, capital, stock, or value of the
| 3 | | Taxpayer.
| 4 | | (3) A corporation, and any party related to the | 5 | | corporation in a manner
that would require an attribution | 6 | | of stock from the corporation to the
party or from the | 7 | | party to the corporation under the attribution rules
of | 8 | | Section 318 of the Internal Revenue Code, if the Taxpayer | 9 | | owns
directly, indirectly, beneficially, or constructively | 10 | | at least
50% of the value of the corporation's outstanding | 11 | | stock.
| 12 | | (4) A corporation and any party related to that | 13 | | corporation in a manner
that would require an attribution | 14 | | of stock from the corporation to the party or
from the | 15 | | party to the corporation under the attribution rules of | 16 | | Section 318 of
the Internal Revenue Code, if the | 17 | | corporation and all such related parties own
in the | 18 | | aggregate at least 50% of the profits, capital, stock, or | 19 | | value of the
Taxpayer.
| 20 | | (5) A person to or from whom there is attribution of | 21 | | stock ownership
in accordance with Section 1563(e) of the | 22 | | Internal Revenue Code, except,
for purposes of determining | 23 | | whether a person is a Related Member under
this paragraph, | 24 | | 20% shall be substituted for 5% wherever 5% appears in
| 25 | | Section 1563(e) of the Internal Revenue Code.
| 26 | | "Taxpayer" means an individual, corporation, partnership, |
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| 1 | | or other entity
that has any Illinois Income Tax liability.
| 2 | | (Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
| 3 | | (35 ILCS 10/5-25)
| 4 | | Sec. 5-25. Review of Application.
| 5 | | (a) In addition to those duties granted under the Illinois | 6 | | Economic
Development Board Act, the Illinois
Economic | 7 | | Development Board shall form a Business Investment Committee | 8 | | for the
purpose of making
recommendations for applications. At | 9 | | the request of the Board, the Director of
Commerce and
Economic | 10 | | Opportunity or his or her designee, the Director of the
| 11 | | Governor's Office of Management and Budget or
his or her | 12 | | designee, the
Director of Revenue or his or her designee, the | 13 | | Director of Employment
Security or his or her designee,
and an | 14 | | elected official of the affected locality, such as the chair of | 15 | | the
county board or the mayor, may
serve as members of the | 16 | | Committee to assist with its analysis and
deliberations.
| 17 | | (b) At the Department's request, the Committee
shall
| 18 | | convene, make inquiries,
and conduct studies in the manner and | 19 | | by the methods as it deems desirable,
review information with
| 20 | | respect to Applicants, and make recommendations for
projects to | 21 | | benefit the State. In making its recommendation that
an | 22 | | Applicant's application for Credit should or should not be | 23 | | accepted, which
shall occur
within a reasonable time frame
as | 24 | | determined by the nature of the application, the Committee | 25 | | shall determine
that
all the following conditions
exist:
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| 1 | | (1) The Applicant's project intends, as required by | 2 | | subsection (b) of
Section 5-20 to make
the required | 3 | | investment in the State and intends to hire the required
| 4 | | number of
New Employees in Illinois as a result of that | 5 | | project.
| 6 | | (2) The Applicant's project is economically sound and | 7 | | will benefit the
people of the State of
Illinois by | 8 | | increasing opportunities for employment and strengthen the | 9 | | economy
of Illinois.
| 10 | | (3) (Blank). That, if not for the Credit, the project | 11 | | would not occur in Illinois,
which may be demonstrated
by | 12 | | any means including, but not limited to, evidence the | 13 | | Applicant has
multi-state
location options and
could | 14 | | reasonably and efficiently locate outside of the State, or | 15 | | demonstration
that at least one other
state is being | 16 | | considered for the project, or evidence the receipt of the
| 17 | | Credit is a major factor in
the Applicant's decision and | 18 | | that without the Credit,
the Applicant likely would not
| 19 | | create new jobs in Illinois, or demonstration that | 20 | | receiving the Credit is
essential to the Applicant's
| 21 | | decision to create or retain new jobs in the State.
| 22 | | (4) (Blank). A cost differential is identified, using | 23 | | best available
data, in the projected costs for the | 24 | | Applicant's project compared to
the costs in the competing | 25 | | state, including the impact of the competing
state's | 26 | | incentive programs. The competing state's incentive
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| 1 | | programs shall include state, local, private, and federal | 2 | | funds
available.
| 3 | | (5) The political subdivisions affected by the project | 4 | | have
committed local incentives with respect to the | 5 | | project, considering local
ability to assist.
| 6 | | (6) Awarding the Credit will result in an overall | 7 | | positive fiscal
impact to the State, as certified by the | 8 | | Committee using
the best
available data.
| 9 | | (7) The Credit is not prohibited by Section 5-35 of | 10 | | this Act.
| 11 | | (Source: P.A. 94-793, eff. 5-19-06.)
| 12 | | (35 ILCS 10/5-40)
| 13 | | Sec. 5-40. Determination of Amount of the Credit. In | 14 | | determining the
amount of the Credit that should be awarded, | 15 | | the Committee shall provide
guidance on, and the
Department | 16 | | shall take into consideration, the
following factors:
| 17 | | (1) The number and location of jobs created and | 18 | | retained in relation to
the economy of the county where the | 19 | | projected investment is to
occur.
| 20 | | (2) The potential impact on the economy of Illinois.
| 21 | | (3) (Blank). The magnitude of the cost differential | 22 | | between Illinois and the
competing state.
| 23 | | (4) The incremental payroll attributable to the | 24 | | project.
| 25 | | (5) The capital investment attributable to the |
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| 1 | | project.
| 2 | | (6) The amount of the average wage and benefits paid by | 3 | | the Applicant in
relation to the wage and benefits of the | 4 | | area of the project.
| 5 | | (7) The costs to Illinois and the affected political | 6 | | subdivisions
with respect to the project.
| 7 | | (8) The financial assistance that is otherwise | 8 | | provided by Illinois
and the affected political | 9 | | subdivisions.
| 10 | | (Source: P.A. 91-476, eff. 8-11-99.)
| 11 | | (35 ILCS 10/5-77) | 12 | | Sec. 5-77. Sunset of new Agreements. The Department shall | 13 | | not enter into any new Agreements under the provisions of | 14 | | Section 5-50 of this Act after December 31, 2021 April 30, | 15 | | 2017 .
| 16 | | (Source: P.A. 99-925, eff. 1-20-17.)
| 17 | | Section 99. Effective date. This Act takes effect upon | 18 | | becoming law.
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