Full Text of SB1427 99th General Assembly
SB1427eng 99TH 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, 5-20, 5-25, | 6 | | and 5-50 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 | | "Project" means a for-profit economic development activity | 13 | | or activities at a single site, or of one or more taxpayers at | 14 | | multiple sites if the economic activities are vertically | 15 | | integrated. | 16 | | "Professional Employer Organization" (PEO) means an | 17 | | employee leasing company, as defined in Section 206.1(A)(2) of | 18 | | the Illinois Unemployment Insurance Act.
| 19 | | "Related Member" means a person that, with respect to the | 20 | | Taxpayer during
any portion of the taxable year, is any one of | 21 | | the following:
| 22 | | (1) An individual stockholder, if the stockholder and | 23 | | the members of the
stockholder's family (as defined in | 24 | | Section 318 of the Internal Revenue Code)
own directly, | 25 | | indirectly, beneficially, or constructively, in the | 26 | | aggregate,
at least 50% of the value of the Taxpayer's |
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| 1 | | outstanding stock.
| 2 | | (2) A partnership, estate, or trust and any partner or | 3 | | beneficiary,
if the partnership, estate, or trust, and its | 4 | | partners or beneficiaries own
directly, indirectly, | 5 | | beneficially, or constructively, in the aggregate, at
| 6 | | least 50% of the profits, capital, stock, or value of the
| 7 | | Taxpayer.
| 8 | | (3) A corporation, and any party related to the | 9 | | corporation in a manner
that would require an attribution | 10 | | of stock from the corporation to the
party or from the | 11 | | party to the corporation under the attribution rules
of | 12 | | Section 318 of the Internal Revenue Code, if the Taxpayer | 13 | | owns
directly, indirectly, beneficially, or constructively | 14 | | at least
50% of the value of the corporation's outstanding | 15 | | stock.
| 16 | | (4) A corporation and any party related to that | 17 | | corporation in a manner
that would require an attribution | 18 | | of stock from the corporation to the party or
from the | 19 | | party to the corporation under the attribution rules of | 20 | | Section 318 of
the Internal Revenue Code, if the | 21 | | corporation and all such related parties own
in the | 22 | | aggregate at least 50% of the profits, capital, stock, or | 23 | | value of the
Taxpayer.
| 24 | | (5) A person to or from whom there is attribution of | 25 | | stock ownership
in accordance with Section 1563(e) of the | 26 | | Internal Revenue Code, except,
for purposes of determining |
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| 1 | | whether a person is a Related Member under
this paragraph, | 2 | | 20% shall be substituted for 5% wherever 5% appears in
| 3 | | Section 1563(e) of the Internal Revenue Code.
| 4 | | "Retained Employee" means a full-time employee employed by | 5 | | a taxpayer during the term of the Agreement whose job duties | 6 | | are directly and substantially related to the project. The term | 7 | | "Retained Employee" does not include a child, grandchild, | 8 | | parent, or spouse, other than a spouse who is legally separated | 9 | | from the individual, of any individual who has direct or | 10 | | indirect ownership interest of at least 5% in the profits, | 11 | | capital, or value of the taxpayer. For purposes of this | 12 | | definition, "directly and substantially related to the | 13 | | project" means at least two-thirds of the employee's job duties | 14 | | must be directly related to the project and the employee must | 15 | | devote at least two-thirds of his or her time to the project. | 16 | | "Taxpayer" means an individual, corporation, partnership, | 17 | | or other entity
that has any Illinois Income Tax liability.
| 18 | | (Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
| 19 | | (35 ILCS 10/5-20)
| 20 | | Sec. 5-20. Application for a project to create and retain | 21 | | new jobs.
| 22 | | (a) Any Taxpayer proposing a project located or planned to | 23 | | be located in
Illinois may request consideration
for | 24 | | designation of its project, by formal written letter of request | 25 | | or by
formal application to the Department,
in which the |
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| 1 | | Applicant states its intent to make at least a specified level | 2 | | of
investment and
intends to hire or retain a
specified number | 3 | | of full-time employees at a designated location in Illinois.
As
| 4 | | circumstances require, the
Department may require a formal | 5 | | application from an Applicant and a formal
letter of request | 6 | | for
assistance.
| 7 | | (b) In order to qualify for Credits under this Act, an | 8 | | Applicant's project
must:
| 9 | | (1) involve an investment of at least $5,000,000 in | 10 | | capital improvements
to be placed in service and to employ | 11 | | at least 25 New Employees within the
State as a direct | 12 | | result of the project;
| 13 | | (2) involve an investment in capital improvements to be | 14 | | placed in
service in the State at a level of at least an | 15 | | amount (to be expressly specified
by the Department and the | 16 | | Committee) in capital improvements to be placed in
service | 17 | | and will employ at least an amount (to be expressly | 18 | | specified by the
Department and the Committee) of New | 19 | | Employees
or Retained Employees within the State as | 20 | | specified by the Department , provided that the Department | 21 | | has and the Committee have
determined that the project will | 22 | | provide a substantial economic benefit to the
State; or | 23 | | (3) if the applicant has 100 or fewer employees, | 24 | | involve an investment of at least $1,000,000 in capital | 25 | | improvements to be placed in service and to employ at least | 26 | | 5 New Employees within the State as a direct result of the |
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| 1 | | project.
| 2 | | The Director may approve projects that do not meet the | 3 | | specified minimum job creation and investment thresholds set | 4 | | forth in this subsection (b) for an applicant meeting all other | 5 | | requirements of this Act provided that one or more of the | 6 | | following conditions are met: | 7 | | (A) approval would support a business with potential to | 8 | | generate additional growth by attracting companion | 9 | | businesses; or | 10 | | (B) approval would avert loss of one of the area's | 11 | | major sources of employment. | 12 | | (c) After receipt of an application, the Department may | 13 | | enter into an
Agreement with the Applicant if the
application | 14 | | is accepted in accordance with Section 5-25.
| 15 | | (Source: P.A. 93-882, eff. 1-1-05.)
| 16 | | (35 ILCS 10/5-25)
| 17 | | Sec. 5-25. Review of Application.
| 18 | | (a) In addition to those duties granted under the Illinois | 19 | | Economic
Development Board Act, the Illinois
Economic | 20 | | Development Board shall form a Business Investment Committee | 21 | | for the
purpose of making
recommendations for applications. At | 22 | | the request of the Board, the Director of
Commerce and
Economic | 23 | | Opportunity or his or her designee, the Director of the
| 24 | | Governor's Office of Management and Budget or
his or her | 25 | | designee, the
Director of Revenue or his or her designee, the |
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| 1 | | Director of Employment
Security or his or her designee,
and an | 2 | | elected official of the affected locality, such as the chair of | 3 | | the
county board or the mayor, may
serve as members of the | 4 | | Committee to assist with its analysis and
deliberations.
| 5 | | (b) At the Department's request, the Committee
shall
| 6 | | convene, make inquiries,
and conduct studies in the manner and | 7 | | by the methods as it deems desirable,
review information with
| 8 | | respect to Applicants, and make recommendations for
projects to | 9 | | benefit the State. In making its recommendation that
an | 10 | | Applicant's application for Credit should or should not be | 11 | | accepted, which
shall occur
within a reasonable time frame
as | 12 | | determined by the nature of the application, the Committee | 13 | | shall determine
that
all the following conditions
exist:
| 14 | | (1) The Applicant's project intends, as required by | 15 | | subsection (b) of
Section 5-20 to make
the required | 16 | | investment in the State and intends to hire or retain the | 17 | | required
number of
New Employees or Retained Employees in | 18 | | Illinois as a result of that project.
| 19 | | (2) The Applicant's project is economically sound and | 20 | | will benefit the
people of the State of
Illinois by | 21 | | increasing opportunities for employment and strengthen the | 22 | | economy
of Illinois.
| 23 | | (3) That, if not for the Credit, the project would not | 24 | | occur in Illinois,
which may be demonstrated
by any means | 25 | | including, but not limited to, evidence the Applicant has
| 26 | | multi-state
location options and
could reasonably and |
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| 1 | | efficiently locate outside of the State, or demonstration
| 2 | | that at least one other
state is being considered for the | 3 | | project, or evidence the receipt of the
Credit is a major | 4 | | factor in
the Applicant's decision and that without the | 5 | | Credit,
the Applicant likely would not
create new jobs in | 6 | | Illinois, or demonstration that receiving the Credit is
| 7 | | essential to the Applicant's
decision to create or retain | 8 | | new jobs in the State.
| 9 | | (4) A cost differential is identified, using best | 10 | | available
data, in the projected costs for the Applicant's | 11 | | project compared to
the costs in the competing state, | 12 | | including the impact of the competing
state's incentive | 13 | | programs. The competing state's incentive
programs shall | 14 | | include state, local, private, and federal funds
| 15 | | available.
| 16 | | (5) The political subdivisions affected by the project | 17 | | have
committed local incentives with respect to the | 18 | | project, considering local
ability to assist.
| 19 | | (6) Awarding the Credit will result in an overall | 20 | | positive fiscal
impact to the State, as certified by the | 21 | | Committee using
the best
available data.
| 22 | | (7) The Credit is not prohibited by Section 5-35 of | 23 | | this Act.
| 24 | | (Source: P.A. 94-793, eff. 5-19-06.)
| 25 | | (35 ILCS 10/5-50)
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| 1 | | Sec. 5-50. Contents of Agreements with Applicants. The | 2 | | Department shall
enter into an Agreement with an
Applicant that | 3 | | is awarded a Credit under this Act. The Agreement
must include | 4 | | all of the following:
| 5 | | (1) A detailed description of the project that is the | 6 | | subject of the
Agreement, including the location and amount | 7 | | of the investment and jobs created
or retained.
| 8 | | (2) The duration of the Credit and the first taxable | 9 | | year for which
the Credit may be claimed.
| 10 | | (3) The Credit amount that will be allowed for each | 11 | | taxable year.
| 12 | | (4) A requirement that the Taxpayer shall maintain | 13 | | operations at the
project location that shall be stated as | 14 | | a minimum number of years not to
exceed 10.
| 15 | | (5) A specific method for determining the number of New | 16 | | Employees
employed during a taxable year.
| 17 | | (6) A requirement that the Taxpayer shall annually | 18 | | report to the
Department the number of New Employees and | 19 | | Retained Employees ,
the Incremental Income Tax
withheld in | 20 | | connection with the New Employees and Retained Employees , | 21 | | and any other
information the Director needs to perform the | 22 | | Director's duties under
this Act.
| 23 | | (7) A requirement that the Director is authorized to | 24 | | verify with the
appropriate State agencies the amounts | 25 | | reported under paragraph
(6), and after doing so shall | 26 | | issue a certificate to the Taxpayer
stating that the |
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| 1 | | amounts have been verified.
| 2 | | (8) A requirement that the Taxpayer shall provide | 3 | | written
notification to the Director not more than 30
days | 4 | | after the Taxpayer makes or receives a proposal that would
| 5 | | transfer the Taxpayer's State tax liability obligations to | 6 | | a
successor Taxpayer.
| 7 | | (9) A detailed description of the number of New | 8 | | Employees to be
hired, Retained Employees to be retained, | 9 | | and the occupation and
payroll of the full-time jobs to be | 10 | | created or retained as a result of the
project.
| 11 | | (10) The minimum investment the business enterprise | 12 | | will make in
capital improvements, the time period
for | 13 | | placing the property in service, and the designated | 14 | | location in Illinois
for the investment.
| 15 | | (11) A requirement that the Taxpayer shall provide | 16 | | written
notification to the Director and
the Committee not | 17 | | more than 30 days after the Taxpayer determines
that the | 18 | | minimum
job creation or retention, employment payroll, or | 19 | | investment no longer is being
or will be achieved or
| 20 | | maintained as set forth in the terms and conditions of the
| 21 | | Agreement.
| 22 | | (12) A provision that, if the total number of New | 23 | | Employees or Retained Employees falls
below a specified | 24 | | level, the
allowance of Credit shall be suspended until the | 25 | | number of New
Employees and Retained Employees equals or | 26 | | exceeds
the Agreement amount.
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| 1 | | (13) A detailed description of the items for which the | 2 | | costs incurred by
the Taxpayer will be included
in the | 3 | | limitation on the Credit provided in Section 5-30.
| 4 | | (13.5) A provision that, if the Taxpayer never meets | 5 | | either the investment or job creation and retention | 6 | | requirements specified in the Agreement during the entire | 7 | | 5-year period beginning on the first day of the first | 8 | | taxable year in which the Agreement is executed and ending | 9 | | on the last day of the fifth taxable year after the | 10 | | Agreement is executed, then the Agreement is automatically | 11 | | terminated on the last day of the fifth taxable year after | 12 | | the Agreement is executed and the Taxpayer is not entitled | 13 | | to the award of any credits for any of that 5-year period.
| 14 | | (14) Any other performance conditions or contract | 15 | | provisions as the
Department determines are
appropriate.
| 16 | | The Department shall post on its website the terms of each | 17 | | Agreement entered into under this Act on or after the effective | 18 | | date of this amendatory Act of the 97th General Assembly. | 19 | | (Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)
| 20 | | Section 99. Effective date. This Act takes effect upon | 21 | | becoming law.
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