Full Text of HB4646 103rd General Assembly
HB4646 103RD GENERAL ASSEMBLY | | | 103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024 HB4646 Introduced 2/6/2024, by Rep. Curtis J. Tarver, II SYNOPSIS AS INTRODUCED: | | 35 ILCS 25/10 | | 35 ILCS 25/25 | | 35 ILCS 25/30 | | 35 ILCS 25/35 | | 35 ILCS 25/45 | |
| Amends the Small Business Job Creation Tax Credit Act. Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2024 and ending on June 30, 2030. Provides that the basic wage for the second set of incentive periods is $15 per hour. Provides that the credit may not exceed $2,500 per new employee hired, except that, if the new employee is a returning citizen, then the credit for that employee may not exceed $3,500. Provides that the term "returning citizen" means an individual who (i) is a resident of Illinois, (ii) was formerly incarcerated in a federal, State, or local correctional institution, and (iii) is a new employee. Provides that the aggregate amount of credits that may be awarded under the Act is (i) $50,000,000 for new employees other than returning citizens and (ii) $5,000,000 for returning citizens. Adds provisions concerning recapture of the credit if the employee is terminated by the taxpayer within one year after the credit is awarded. 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 Small Business Job Creation Tax Credit Act | 5 | | is amended by changing Sections 10, 25, 30, 35, and 45 as | 6 | | follows: | 7 | | (35 ILCS 25/10) | 8 | | Sec. 10. Definitions. In this Act: | 9 | | "Applicant" means a person that is operating a business | 10 | | located within the State of Illinois that is engaged in | 11 | | interstate or intrastate commerce and either: | 12 | | (1) has no more than 50 full-time employees, without | 13 | | regard to the location of employment of such employees at | 14 | | the beginning of the incentive period; or | 15 | | (2) for incentive periods ending on or before June 30, | 16 | | 2016, hired within the incentive period an employee who | 17 | | had participated as worker-trainee in the Put Illinois to | 18 | | Work Program during 2010. | 19 | | In the case of any person that is a member of a unitary | 20 | | business group within the meaning of subdivision (a)(27) of | 21 | | Section 1501 of the Illinois Income Tax Act, "applicant" | 22 | | refers to the unitary business group. | 23 | | "Certificate" means the tax credit certificate issued by |
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| 1 | | the Department under Section 35 of this Act. | 2 | | "Certificate of eligibility" means the certificate issued | 3 | | by the Department under Section 20 of this Act. | 4 | | "Credit" means the amount awarded by the Department to an | 5 | | applicant by issuance of a certificate under Section 35 of | 6 | | this Act for each new full-time equivalent employee hired or | 7 | | job created. | 8 | | "Department" means the Department of Commerce and Economic | 9 | | Opportunity. | 10 | | "Director" means the Director of the Department. | 11 | | "Full-time employee" means an individual who is employed | 12 | | for a basic wage for at least 35 hours each week or who renders | 13 | | any other standard of service generally accepted by industry | 14 | | custom or practice as full-time employment . An individual for | 15 | | whom a W-2 is issued by a Professional Employer Organization | 16 | | is a full-time employee if he or she is employed in the service | 17 | | of the applicant for a basic wage for at least 35 hours each | 18 | | week or renders any other standard of service generally | 19 | | accepted by industry custom or practice as full-time | 20 | | employment . For the purposes of this Act, such an individual | 21 | | shall be considered a full-time employee of the applicant. | 22 | | "Professional Employer Organization" (PEO) shall have the | 23 | | same meaning as defined in Section 5-5 of the Economic | 24 | | Development for a Growing Economy Tax Credit Act. As used in | 25 | | this Section, "Professional Employer Organization" does not | 26 | | include a day and temporary labor service agency regulated |
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| 1 | | under the Day and Temporary Labor Services Act. | 2 | | "Incentive period" means the period beginning on July 1 | 3 | | and ending on June 30 of the following year. The first series | 4 | | of incentive periods period shall begin on July 1, 2010 and the | 5 | | last incentive period shall end on June 30, 2016. The second | 6 | | series of incentive periods shall begin on July 1, 2024 and end | 7 | | on June 30, 2030. | 8 | | "Basic wage" means compensation for employment that is no | 9 | | less than (i) $10 per hour for the first set of incentive | 10 | | periods or (ii) $15 per hour for the second set of incentive | 11 | | periods, or the equivalent salary for a new employee. | 12 | | "New employee" means a full-time employee who first became | 13 | | employed by an applicant with less than 50 full-time employees | 14 | | within the incentive period whose hire results in a net | 15 | | increase in the applicant's full-time Illinois employees and | 16 | | who is receiving a basic wage as compensation. : | 17 | | (1) who first became employed by an applicant with | 18 | | less than 50 full-time employees within the incentive | 19 | | period whose hire results in a net increase in the | 20 | | applicant's full-time Illinois employees and who is | 21 | | receiving a basic wage as compensation; or | 22 | | (2) who participated as a worker-trainee in the Put | 23 | | Illinois to Work Program during 2010 and who is | 24 | | subsequently hired during the incentive period by an | 25 | | applicant and who is receiving a basic wage as | 26 | | compensation. |
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| 1 | | The term "new employee" does not include: | 2 | | (1) a person who was previously employed in Illinois | 3 | | by the applicant or a related member prior to the onset of | 4 | | the incentive period; or | 5 | | (2) any individual who has a direct or indirect | 6 | | ownership interest of at least 5% in the profits, capital, | 7 | | or value of the applicant or a related member. | 8 | | "Noncompliance date" means, in the case of an applicant | 9 | | that is not complying with the requirements of the provisions | 10 | | of this Act, the day following the last date upon which the | 11 | | taxpayer was in compliance with the requirements of the | 12 | | provisions of this Act, as determined by the Director, | 13 | | pursuant to Section 45 of this Act. | 14 | | "Put Illinois to Work Program" means a worker training and | 15 | | employment program that was established by the State of | 16 | | Illinois with funding from the United States Department of | 17 | | Health and Human Services of Emergency Temporary Assistance | 18 | | for Needy Families funds authorized by the American Recovery | 19 | | and Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA | 20 | | TANF funds were in turn used by the State of Illinois to fund | 21 | | the Put Illinois to Work Program. | 22 | | "Related member" means a person that, with respect to the | 23 | | applicant during any portion of the incentive period, is any | 24 | | one of the following, | 25 | | (1) An individual, if the individual and the members | 26 | | of the individual's family (as defined in Section 318 of |
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| 1 | | the Internal Revenue Code) own directly, indirectly, | 2 | | beneficially, or constructively, in the aggregate, at | 3 | | least 50% of the value of the outstanding profits, | 4 | | capital, stock, or other ownership interest in the | 5 | | applicant. | 6 | | (2) A partnership, estate, or trust and any partner or | 7 | | beneficiary, if the partnership, estate, or trust and its | 8 | | partners or beneficiaries own directly, indirectly, | 9 | | beneficially, or constructively, in the aggregate, at | 10 | | least 50% of the profits, capital, stock, or other | 11 | | ownership interest in the applicant. | 12 | | (3) A corporation, and any party related to the | 13 | | corporation in a manner that would require an attribution | 14 | | of stock from the corporation under the attribution rules | 15 | | of Section 318 of the Internal Revenue Code, if the | 16 | | applicant and any other related member own, in the | 17 | | aggregate, directly, indirectly, beneficially, or | 18 | | constructively, at least 50% of the value of the | 19 | | corporation's outstanding stock. | 20 | | (4) A corporation and any party related to that | 21 | | corporation in a manner that would require an attribution | 22 | | of stock from the corporation to the party or from the | 23 | | party to the corporation under the attribution rules of | 24 | | Section 318 of the Internal Revenue Code, if the | 25 | | corporation and all such related parties own, in the | 26 | | aggregate, at least 50% of the profits, capital, stock, or |
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| 1 | | other ownership interest in the applicant. | 2 | | (5) A person to or from whom there is attribution of | 3 | | stock ownership in accordance with Section 1563(e) of the | 4 | | Internal Revenue Code, except that for purposes of | 5 | | determining whether a person is a related member under | 6 | | this paragraph, "20%" shall be substituted for "5%" | 7 | | whenever "5%" appears in Section 1563(e) of the Internal | 8 | | Revenue Code. | 9 | | "Returning citizen" means an individual who (i) is a | 10 | | resident of Illinois, (ii) was formerly incarcerated in a | 11 | | federal, State, or local correctional institution, and (iii) | 12 | | is a new employee. | 13 | | (Source: P.A. 100-863, eff. 8-14-18.) | 14 | | (35 ILCS 25/25) | 15 | | Sec. 25. Tax credit. | 16 | | (a) Subject to the conditions set forth in this Act, an | 17 | | applicant is entitled to a credit against payment of taxes | 18 | | withheld under Section 704A of the Illinois Income Tax Act: | 19 | | (1) for new employees who participated as | 20 | | worker-trainees in the Put Illinois to Work Program during | 21 | | 2010 , for incentive periods ending on or before June 30, | 22 | | 2016 : | 23 | | (A) in the first calendar year ending on or after | 24 | | the date that is 6 months after December 31, 2010, or | 25 | | the date of hire, whichever is later. Under this |
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| 1 | | subparagraph, the applicant is entitled to one-half of | 2 | | the credit allowable for each new employee who is | 3 | | employed for at least 6 months after the date of hire; | 4 | | and | 5 | | (B) in the first calendar year ending on or after | 6 | | the date that is 12 months after December 31, 2010, or | 7 | | the date of hire, whichever is later. Under this | 8 | | subparagraph, the applicant is entitled to one-half of | 9 | | the credit allowable for each new employee who is | 10 | | employed for at least 12 months after the date of hire; | 11 | | (2) for all other new employees, in the first | 12 | | calendar year ending on or after the date that is 12 months | 13 | | after the date of hire of a new employee. The credit shall | 14 | | be allowed as a credit to an applicant for each full-time | 15 | | employee hired during the incentive period that results in | 16 | | a net increase in full-time Illinois employees, where the | 17 | | net increase in the employer's full-time Illinois | 18 | | employees is maintained for at least 12 months. | 19 | | (b) The Department shall make credit awards under this Act | 20 | | to further job creation. | 21 | | (c) The credit shall be claimed for the first calendar | 22 | | year ending on or after the date on which the certificate is | 23 | | issued by the Department. | 24 | | (d) The credit shall not exceed $2,500 per new employee | 25 | | hired , except that, for the second set of incentive periods, | 26 | | if the new employee is a returning citizen, then the credit for |
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| 1 | | that employee may not exceed $3,500 . | 2 | | (e) The net increase in full-time Illinois employees, | 3 | | measured on an annual full-time equivalent basis, shall be the | 4 | | total number of full-time Illinois employees of the applicant | 5 | | on the final day of the incentive period, minus the number of | 6 | | full-time Illinois employees employed by the employer on the | 7 | | first day of that same incentive period. For purposes of the | 8 | | calculation, an employer that begins doing business in this | 9 | | State during the incentive period, as determined by the | 10 | | Director, shall be treated as having zero Illinois employees | 11 | | on the first day of the incentive period. | 12 | | (f) The net increase in the number of full-time Illinois | 13 | | employees of the applicant under subsection (e) must be | 14 | | sustained continuously for at least 12 months, starting with | 15 | | the date of hire of a new employee during the incentive period. | 16 | | Eligibility for the credit does not depend on the continuous | 17 | | employment of any particular individual. For purposes of this | 18 | | subsection (f), if a new employee ceases to be employed before | 19 | | the completion of the 12-month period for any reason, the net | 20 | | increase in the number of full-time Illinois employees shall | 21 | | be treated as continuous if a different new employee is hired | 22 | | as a replacement within a reasonable time for the same | 23 | | position within 8 weeks after the position becomes vacant . | 24 | | (g) The Department shall promulgate rules to enable an | 25 | | applicant for which a PEO has been contracted to issue W-2s and | 26 | | make payment of taxes withheld under Section 704A of the |
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| 1 | | Illinois Income Tax Act for new employees to retain the | 2 | | benefit of tax credits to which the applicant is otherwise | 3 | | entitled under this Act. | 4 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11; | 5 | | 97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.) | 6 | | (35 ILCS 25/30) | 7 | | Sec. 30. Maximum amount of credits allowed. The Department | 8 | | shall limit the monetary amount of credits awarded under this | 9 | | Act to no more than (i) $50,000,000 for new employees other | 10 | | than returning citizens and (ii) $5,000,000 for returning | 11 | | citizens. If a new employee is a returning citizen, but the | 12 | | $5,000,000 limit under this Section has been reached, then the | 13 | | applicant may request a credit for that employee under the | 14 | | $50,000,000 limit; however, the credit awarded for that new | 15 | | employee may not exceed $2,500 . If applications for a greater | 16 | | amount are received, credits shall be allowed on a | 17 | | first-come-first-served basis, based on the date on which each | 18 | | properly completed application for a certificate of | 19 | | eligibility is received by the Department. If more than one | 20 | | certificate of eligibility is received on the same day, the | 21 | | credits will be awarded based on the time of submission for | 22 | | that particular day. | 23 | | (Source: P.A. 96-888, eff. 4-13-10.) | 24 | | (35 ILCS 25/35) |
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| 1 | | Sec. 35. Application for award of tax credit; tax credit | 2 | | certificate. | 3 | | (a) On or after the conclusion of the 12-month period (or | 4 | | 6-month period, for purposes of subparagraph (A) of item (1) | 5 | | of subsection (a) of Section 25) after a new employee has been | 6 | | hired, an applicant shall file with the Department an | 7 | | application for award of a credit. The application shall | 8 | | include the following: | 9 | | (1) The names, Social Security numbers, job | 10 | | descriptions, salary or wage rates, and dates of hire of | 11 | | the new employees with respect to whom the credit is being | 12 | | requested , and an indication of whether each new employee | 13 | | listed participated as a worker-trainee in the Put | 14 | | Illinois to Work Program . | 15 | | (2) A certification that each new employee listed has | 16 | | been retained on the job for one year (or 6 months, for | 17 | | purposes of subparagraph (A) of item (1) of subsection (a) | 18 | | of Section 25) from the date of hire. | 19 | | (3) The number of new employees hired by the applicant | 20 | | during the incentive period. | 21 | | (4) The net increase in the number of full-time | 22 | | Illinois employees of the applicant (including the new | 23 | | employees listed in the request) between the beginning of | 24 | | the incentive period and the dates on which the new | 25 | | employees listed in the request were hired. This | 26 | | requirement does not apply for tax credits the applicant |
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| 1 | | is seeking because the new employee had participated as a | 2 | | worker-trainee in the Put Illinois to Work Program. | 3 | | (5) An agreement that the Director is authorized to | 4 | | verify with the appropriate State agencies the information | 5 | | contained in the request before issuing a certificate to | 6 | | the applicant. | 7 | | (6) Any other information the Department determines to | 8 | | be appropriate. | 9 | | (b) Although an application may be filed at any time after | 10 | | the conclusion of the 12-month period (or 6-month period, for | 11 | | purposes of subparagraph (A) of item (1) of subsection (a) of | 12 | | Section 25) after a new employee was hired, an application | 13 | | filed more than 90 days after the earliest date on which it | 14 | | could have been filed shall not be awarded any credit if, prior | 15 | | to the date it is filed, the Department has received | 16 | | applications under this Section for credits totaling more than | 17 | | $50,000,000. | 18 | | (c) The Department shall issue a certificate to each | 19 | | applicant awarded a credit under this Act. The certificate | 20 | | shall include the following: | 21 | | (1) The name and taxpayer identification number of the | 22 | | applicant. | 23 | | (2) The date on which the certificate is issued. | 24 | | (3) The credit amount that will be allowed. | 25 | | (4) Any other information the Department determines to | 26 | | be appropriate. |
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| 1 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.) | 2 | | (35 ILCS 25/45) | 3 | | Sec. 45. Noncompliance with Act ; recapture . | 4 | | (a) If the Director determines that an applicant who has | 5 | | received a credit under this Act is not complying with the | 6 | | requirements of the provisions of this Act, the Director shall | 7 | | provide notice to the applicant of the alleged noncompliance, | 8 | | and allow the taxpayer a hearing under the provisions of the | 9 | | Illinois Administrative Procedure Act. If, after such notice | 10 | | and any hearing, the Director determines that a noncompliance | 11 | | exists, the Director shall issue to the Department of Revenue | 12 | | notice to that effect, stating the noncompliance date. | 13 | | (b) For tax credits awarded during the second set of | 14 | | incentive periods, if an employee for whom a tax credit was | 15 | | awarded under this Act is terminated by the taxpayer within | 16 | | one year after the credit is awarded, then the Department | 17 | | shall recapture the amount of the credit awarded for that | 18 | | employee. This subsection (b) does not apply if the person is | 19 | | terminated for cause or if the person voluntarily resigns. | 20 | | (Source: P.A. 96-888, eff. 4-13-10.) | 21 | | Section 99. Effective date. This Act takes effect upon | 22 | | becoming law. |
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