Full Text of SB3498 101st General Assembly
SB3498 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 SB3498 Introduced 2/14/2020, by Sen. Ram Villivalam SYNOPSIS AS INTRODUCED: |
| 35 ILCS 25/5 | | 35 ILCS 25/10 | | 35 ILCS 25/25 | | 35 ILCS 25/30 | | 35 ILCS 25/35 | |
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Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2020 and ending on June 30, 2026. Provides that the credit shall not exceed $5,000 per employee hired. Provides that the maximum amount of credits allowed is $75,000,000. Effective immediately.
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| | | FISCAL NOTE ACT MAY APPLY | |
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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 Small Business Job Creation Tax Credit Act | 5 | | is amended by changing Sections 5, 10, 25, 30, and 35 as | 6 | | follows: | 7 | | (35 ILCS 25/5)
| 8 | | Sec. 5. Findings and purpose. Small businesses provide for | 9 | | roughly half of the private workforce in Illinois. In the wake | 10 | | of one of the worst economic crises in Illinois history, it is | 11 | | necessary to assist and encourage small businesses in the | 12 | | hiring of new employees. The General Assembly finds that the | 13 | | Illinois economy is mired in one of the worst economic | 14 | | recessions it has ever suffered. Small businesses in particular | 15 | | have been hit hard by the economy, resulting in levels of high | 16 | | unemployment throughout the State. In order to reverse the | 17 | | trend of high unemployment and to help spur the economy to | 18 | | recovery, it is necessary to assist and encourage small | 19 | | businesses in the hiring of new employees.
| 20 | | (Source: P.A. 96-888, eff. 4-13-10.) | 21 | | (35 ILCS 25/10)
| 22 | | Sec. 10. Definitions. In this Act: |
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| 1 | | "Applicant" means a person that is operating a business | 2 | | located within the State of Illinois that is engaged in | 3 | | interstate or intrastate commerce and either: | 4 | | (1) has no more than 50 full-time employees, without | 5 | | regard to the location of employment of such employees at | 6 | | the beginning of the incentive period; or | 7 | | (2) for the first set of incentive periods, hired | 8 | | within the incentive period an employee who had | 9 | | participated as worker-trainee in the Put Illinois to Work | 10 | | Program during 2010. | 11 | | In the case of any person that is a member of a unitary | 12 | | business group within the meaning of subdivision (a)(27) of | 13 | | Section 1501 of the Illinois Income Tax Act, "applicant" refers | 14 | | to the unitary business group. | 15 | | "Certificate" means the tax credit certificate issued by | 16 | | the Department under Section 35 of this Act. | 17 | | "Certificate of eligibility" means the certificate issued | 18 | | by the Department under Section 20 of this Act. | 19 | | "Credit" means the amount awarded by the Department to an | 20 | | applicant by issuance of a certificate under Section 35 of this | 21 | | Act for each new full-time equivalent employee hired or job | 22 | | created. | 23 | | "Department" means the Department of Commerce and Economic | 24 | | Opportunity. | 25 | | "Director" means the Director of the Department. | 26 | | "Full-time employee" means an individual who is employed |
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| 1 | | for a basic wage for at least 35 hours each week or who renders | 2 | | any other standard of service generally accepted by industry | 3 | | custom or practice as full-time employment. An individual for | 4 | | whom a W-2 is issued by a Professional Employer Organization is | 5 | | a full-time employee if he or she is employed in the service of | 6 | | the applicant for a basic wage for at least 35 hours each week | 7 | | or renders any other standard of service generally accepted by | 8 | | industry custom or practice as full-time employment. For the | 9 | | purposes of this Act, such an individual shall be considered a | 10 | | full-time employee of the applicant. | 11 | | "Professional Employer Organization" (PEO) shall have the | 12 | | same meaning as defined in Section 5-5 of the Economic | 13 | | Development for a Growing Economy Tax Credit Act. As used in | 14 | | this Section, "Professional Employer Organization" does not | 15 | | include a day and temporary labor service agency regulated | 16 | | under the Day and Temporary Labor Services Act. | 17 | | "Incentive period" means the period beginning on July 1 and | 18 | | ending on June 30 of the following year. The first set of | 19 | | incentive periods period shall begin on July 1, 2010 and the | 20 | | last incentive period shall end on June 30, 2016. The second | 21 | | set of incentive periods shall begin on July 1, 2020 and end on | 22 | | June 30, 2026. | 23 | | "Basic wage" means compensation for employment that is no | 24 | | less than $10 per hour or the equivalent salary for a new | 25 | | employee. | 26 | | "New employee" means a full-time employee: |
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| 1 | | (1) who first became employed by an applicant with less | 2 | | than 50 full-time employees within the incentive period | 3 | | whose hire results in a net increase in the applicant's | 4 | | full-time Illinois employees and who is receiving a basic | 5 | | wage as compensation; or | 6 | | (2) for the first set of incentive periods, who | 7 | | participated as a worker-trainee in the Put Illinois to | 8 | | Work Program during 2010 and who is subsequently hired | 9 | | during the incentive period by an applicant and who is | 10 | | receiving a basic wage as compensation. | 11 | | The term "new employee" does not include: | 12 | | (1) a person who was previously employed in Illinois by | 13 | | the applicant or a related member prior to the onset of the | 14 | | incentive period; or | 15 | | (2) any individual who has a direct or indirect | 16 | | ownership interest of at least 5% in the profits, capital, | 17 | | or value of the applicant or a related member. | 18 | | "Noncompliance date" means, in the case of an applicant | 19 | | that is not complying with the requirements of the provisions | 20 | | of this Act, the day following the last date upon which the | 21 | | taxpayer was in compliance with the requirements of the | 22 | | provisions of this Act, as determined by the Director, pursuant | 23 | | to Section 45 of this Act. | 24 | | "Put Illinois to Work Program" means a worker training and | 25 | | employment program that was established by the State of | 26 | | Illinois with funding from the United States Department of |
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| 1 | | Health and Human Services of Emergency Temporary Assistance for | 2 | | Needy Families funds authorized by the American Recovery and | 3 | | Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF | 4 | | funds were in turn used by the State of Illinois to fund the | 5 | | Put Illinois to Work Program. | 6 | | "Related member" means a person that, with respect to the | 7 | | applicant during any portion of the incentive period, is any | 8 | | one of the following, | 9 | | (1) An individual, if the individual and the members of | 10 | | the individual's family (as defined in Section 318 of the | 11 | | Internal Revenue Code) own directly, indirectly, | 12 | | beneficially, or constructively, in the aggregate, at | 13 | | least 50% of the value of the outstanding profits, capital, | 14 | | stock, or other ownership interest in the applicant. | 15 | | (2) A partnership, estate, or trust and any partner or | 16 | | beneficiary, if the partnership, estate, or trust and its | 17 | | partners or beneficiaries own directly, indirectly, | 18 | | beneficially, or constructively, in the aggregate, at | 19 | | least 50% of the profits, capital, stock, or other | 20 | | ownership interest in the applicant. | 21 | | (3) A corporation, and any party related to the | 22 | | corporation in a manner that would require an attribution | 23 | | of stock from the corporation under the attribution rules | 24 | | of Section 318 of the Internal Revenue Code, if the | 25 | | applicant and any other related member own, in the | 26 | | aggregate, directly, indirectly, beneficially, or |
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| 1 | | constructively, at least 50% of the value of the | 2 | | corporation's outstanding stock. | 3 | | (4) A corporation and any party related to that | 4 | | corporation in a manner that would require an attribution | 5 | | of stock from the corporation to the party or from the | 6 | | party to the corporation under the attribution rules of | 7 | | Section 318 of the Internal Revenue Code, if the | 8 | | corporation and all such related parties own, in the | 9 | | aggregate, at least 50% of the profits, capital, stock, or | 10 | | other ownership interest in the applicant. | 11 | | (5) A person to or from whom there is attribution of | 12 | | stock ownership in accordance with Section 1563(e) of the | 13 | | Internal Revenue Code, except that for purposes of | 14 | | determining whether a person is a related member under this | 15 | | paragraph, "20%" shall be substituted for "5%" whenever | 16 | | "5%" appears in Section 1563(e) of the Internal Revenue | 17 | | Code.
| 18 | | (Source: P.A. 100-863, eff. 8-14-18.) | 19 | | (35 ILCS 25/25)
| 20 | | Sec. 25. Tax credit. | 21 | | (a) Subject to the conditions set forth in this Act, for | 22 | | the first set of incentive periods, an applicant is entitled to | 23 | | a credit against payment of taxes withheld under Section 704A | 24 | | of the Illinois Income Tax Act: | 25 | | (1) for new employees who participated as |
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| 1 | | worker-trainees in the Put Illinois to Work Program during | 2 | | 2010: | 3 | | (A) in the first calendar year ending on or after | 4 | | the date that is 6 months after December 31, 2010, or | 5 | | the date of hire, whichever is later. Under this | 6 | | subparagraph, the applicant is entitled to one-half of | 7 | | the credit allowable for each new employee who is | 8 | | employed for at least 6 months after the date of hire; | 9 | | and | 10 | | (B) in the first calendar year ending on or after | 11 | | the date that is 12 months after December 31, 2010, or | 12 | | the date of hire, whichever is later. Under this | 13 | | subparagraph, the applicant is entitled to one-half of | 14 | | the credit allowable for each new employee who is | 15 | | employed for at least 12 months after the date of hire; | 16 | | (2) for all other new employees, in the first calendar | 17 | | year ending on or after the date that is 12 months after | 18 | | the date of hire of a new employee. The credit shall be | 19 | | allowed as a credit to an applicant for each full-time | 20 | | employee hired during the incentive period that results in | 21 | | a net increase in full-time Illinois employees, where the | 22 | | net increase in the employer's full-time Illinois | 23 | | employees is maintained for at least 12 months. | 24 | | (a-5) Subject to the conditions set forth in this Act, for | 25 | | the second set of incentive periods, an applicant is entitled | 26 | | to a credit against payment of taxes withheld under Section |
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| 1 | | 704A of the Illinois Income Tax Act in the first calendar year | 2 | | ending on or after the date that is 12 months after the date of | 3 | | hire of a new employee. The credit shall be allowed as a credit | 4 | | to an applicant for each full-time employee hired during the | 5 | | incentive period that results in a net increase in full-time | 6 | | Illinois employees, where the net increase in the employer's | 7 | | full-time Illinois employees is maintained for at least 12 | 8 | | months. | 9 | | (b) The Department shall make credit awards under this Act | 10 | | to further job creation. | 11 | | (c) The credit shall be claimed for the first calendar year | 12 | | ending on or after the date on which the certificate is issued | 13 | | by the Department. | 14 | | (d) The credit shall not exceed $5,000 $2,500 per new | 15 | | employee hired. | 16 | | (e) The net increase in full-time Illinois employees, | 17 | | measured on an annual full-time equivalent basis, shall be the | 18 | | total number of full-time Illinois employees of the applicant | 19 | | on the final day of the incentive period, minus the number of | 20 | | full-time Illinois employees employed by the employer on the | 21 | | first day of that same incentive period. For purposes of the | 22 | | calculation, an employer that begins doing business in this | 23 | | State during the incentive period, as determined by the | 24 | | Director, shall be treated as having zero Illinois employees on | 25 | | the first day of the incentive period. | 26 | | (f) The net increase in the number of full-time Illinois |
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| 1 | | employees of the applicant under subsection (e) must be | 2 | | sustained continuously for at least 12 months, starting with | 3 | | the date of hire of a new employee during the incentive period. | 4 | | Eligibility for the credit does not depend on the continuous | 5 | | employment of any particular individual. For purposes of this | 6 | | subsection (f), if a new employee ceases to be employed before | 7 | | the completion of the 12-month period for any reason, the net | 8 | | increase in the number of full-time Illinois employees shall be | 9 | | treated as continuous if a different new employee is hired as a | 10 | | replacement within a reasonable time for the same position.
| 11 | | (g) The Department shall promulgate rules to enable an | 12 | | applicant for which a PEO has been contracted to issue W-2s and | 13 | | make payment of taxes withheld under Section 704A of the | 14 | | Illinois Income Tax Act for new employees to retain the benefit | 15 | | of tax credits to which the applicant is otherwise entitled | 16 | | under this Act. | 17 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11; | 18 | | 97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.) | 19 | | (35 ILCS 25/30)
| 20 | | Sec. 30. Maximum amount of credits allowed. The Department | 21 | | shall limit the monetary amount of credits awarded under this | 22 | | Act to no more than $75,000,000 $50,000,000 . If applications | 23 | | for a greater amount are received, credits shall be allowed on | 24 | | a first-come-first-served basis, based on the date on which | 25 | | each properly completed application for a certificate of |
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| 1 | | eligibility is received by the Department. If more than one | 2 | | certificate of eligibility is received on the same day, the | 3 | | credits will be awarded based on the time of submission for | 4 | | that particular day.
| 5 | | (Source: P.A. 96-888, eff. 4-13-10.) | 6 | | (35 ILCS 25/35)
| 7 | | Sec. 35. Application for award of tax credit; tax credit | 8 | | certificate. | 9 | | (a) On or after the conclusion of the 12-month period (or | 10 | | 6-month period, for purposes of subparagraph (A) of item (1) of | 11 | | subsection (a) of Section 25) after a new employee has been | 12 | | hired, an applicant shall file with the Department an | 13 | | application for award of a credit. The application shall | 14 | | include the following: | 15 | | (1) The names, Social Security numbers, job | 16 | | descriptions, salary or wage rates, and dates of hire of | 17 | | the new employees with respect to whom the credit is being | 18 | | requested, and an indication of whether each new employee | 19 | | listed participated as a worker-trainee in the Put Illinois | 20 | | to Work Program. | 21 | | (2) A certification that each new employee listed has | 22 | | been retained on the job for one year (or 6 months, for | 23 | | purposes of subparagraph (A) of item (1) of subsection (a) | 24 | | of Section 25) from the date of hire. | 25 | | (3) The number of new employees hired by the applicant |
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| 1 | | during the incentive period. | 2 | | (4) The net increase in the number of full-time | 3 | | Illinois employees of the applicant (including the new | 4 | | employees listed in the request) between the beginning of | 5 | | the incentive period and the dates on which the new | 6 | | employees listed in the request were hired. This | 7 | | requirement does not apply for tax credits the applicant is | 8 | | seeking because the new employee had participated as a | 9 | | worker-trainee in the Put Illinois to Work Program. | 10 | | (5) An agreement that the Director is authorized to | 11 | | verify with the appropriate State agencies the information | 12 | | contained in the request before issuing a certificate to | 13 | | the applicant. | 14 | | (6) Any other information the Department determines to | 15 | | be appropriate. | 16 | | (b) Although an application may be filed at any time after | 17 | | the conclusion of the 12-month period (or 6-month period, for | 18 | | purposes of subparagraph (A) of item (1) of subsection (a) of | 19 | | Section 25) after a new employee was hired, an application | 20 | | filed more than 90 days after the earliest date on which it | 21 | | could have been filed shall not be awarded any credit if, prior | 22 | | to the date it is filed, the Department has received | 23 | | applications under this Section for credits totaling more than | 24 | | $75,000,000 $50,000,000 . | 25 | | (c) The Department shall issue a certificate to each | 26 | | applicant awarded a credit under this Act. The certificate |
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| 1 | | shall include the following: | 2 | | (1) The name and taxpayer identification number of the | 3 | | applicant. | 4 | | (2) The date on which the certificate is issued. | 5 | | (3) The credit amount that will be allowed. | 6 | | (4) Any other information the Department determines to | 7 | | be appropriate.
| 8 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.) | 9 | | Section 99. Effective date. This Act takes effect upon | 10 | | becoming law.
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