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90_HB1339
30 ILCS 105/5.449 new
35 ILCS 5/211 new
Creates the Economic Development Income Tax Credit Board
Act. Creates the Economic Development Income Tax Credit Board
and authorizes the Board to enter into tax credit agreements
with taxpayers that grant income tax credits to taxpayers who
create jobs. The tax credits shall be in the amount and for
the duration determined by the Board on a case by case basis
not to exceed 10 years. Establishes certain conditions for
qualifying for a tax credit. Amends the State Finance Act to
establish the Economic Development for Illinois' Economy
Fund. Amends the Illinois Income Tax Act to provide for
credit awarded under the Economic Development Income Credit
Board Act. Effective immediately.
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1 AN ACT to create the Economic Development for Illinois
2 Economy Board.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 1. Short title. This Act may be cited as the
6 Economic Development for Illinois Economy Board Act.
7 Section 5. Definitions. As used in this Act:
8 "Board" means the Economic Development for Illinois
9 Economy Board established by this Act.
10 "Credit amount" means the amount agreed to between the
11 Board and an applicant under this Act, but not to exceed the
12 incremental income tax withholdings attributable to the
13 applicant's project.
14 "Director" means the Director of Commerce and Community
15 Affairs.
16 "Full-time employee" means an individual who is employed
17 for consideration for at least 35 hours each week or who
18 renders any other standard of service generally accepted by
19 custom or specified by contract as full-time employment.
20 "Incremental income tax withholdings" means the total
21 amount of income taxes withheld under the Illinois Income Tax
22 Act by the taxpayer during the taxable year from the
23 compensation of new employees.
24 "New employee" means a full-time employee first employed
25 by a taxpayer in the project that is the subject of a tax
26 credit agreement and who is employed after the taxpayer
27 enters into the tax credit agreement.
28 The term "new employee" does not include any of the
29 following:
30 (1) An employee of the taxpayer who performs a job that
31 was previously performed by another employee, if that job
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1 existed for at least 6 months before hiring the new employee.
2 (2) An employee of the taxpayer who was previously
3 employed in Illinois by a related member of the taxpayer and
4 whose employment was shifted to the taxpayer after the
5 taxpayer entered into the tax credit agreement. However, if a
6 new employee performs a job that was previously performed by
7 an employee who was treated under the agreement as a new
8 employee and promoted by the taxpayer to another job, the
9 employee may be considered a new employee under the
10 agreement.
11 (3) A child, grandchild, parent, or spouse, other than a
12 spouse who is legally separated from the individual, of any
13 individual who is an employee of the taxpayer and who has a
14 direct or an indirect ownership interest of at least 5% in
15 the profits, capital, or value of the taxpayer. An ownership
16 interest shall be determined in accordance with Section 1563
17 of the Internal Revenue Code of 1986 and regulations
18 prescribed under that Section.
19 "Pass-through entity" means a Subchapter S corporation or
20 a partnership.
21 "Related member" means a person who, with respect to the
22 taxpayer during all or any portion of the taxable year, is
23 any one of the following:
24 (1) An individual stockholder, or a member of the
25 stockholder's family enumerated in Section 318 of the
26 Internal Revenue Code of 1986, if the stockholder and the
27 member of the stockholder's family own directly, indirectly,
28 beneficially, or constructively, in the aggregate, at least
29 50% of the value of the taxpayer's outstanding stock.
30 (2) A stockholder, or a stockholder's partnership,
31 estate, trust, or corporation, if the stockholder and the
32 stockholder's partnership, estate, trust, or corporation owns
33 directly, indirectly, beneficially, or constructively, in the
34 aggregate, at least 50% of the value of the taxpayer's
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1 outstanding stock.
2 (3) A corporation, or a party related to the corporation
3 in a manner that would require an attribution of stock from
4 the corporation under the attribution rules of Section 318 of
5 the Internal Revenue Act of 1986, if the taxpayer owns
6 directly, indirectly, beneficially, or constructively at
7 least 50% of the value of the corporation's outstanding
8 stock.
9 (4) A component member as defined in Section 1563(b) of
10 the Internal Revenue Code of 1986.
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 of 1986 except, for purposes of
14 determining whether a person is a related member under this
15 subdivision, 20% shall be substituted for 5% wherever 5%
16 appears in Section 1563(e) of the Internal Revenue Code of
17 1986.
18 "Taxpayer" means a person, corporation, partnership, or
19 other entity that has any State income tax liability under
20 the Illinois Income Tax Act.
21 Section 10. Income tax credit. Subject to the conditions
22 set forth in this Act, a taxpayer is entitled to a credit
23 against any tax liability under subsections (a) and (b) of
24 Section 201 of the Illinois Income Tax Act that may be
25 imposed on the taxpayer for a taxable year beginning after
26 December 31, 1997, if the taxpayer is awarded a credit by the
27 Board under this Act for that taxable year.
28 Section 15. Economic Development for Illinois Economy
29 Board.
30 (a) The Economic Development for Illinois Economy Board
31 is established. The Board consists of the following 7
32 members:
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1 (1) The Director of Commerce and Community Affairs
2 or his or her designee.
3 (2) The Director of the Bureau of the Budget or his
4 or her designee.
5 (3) The Director of Revenue or his or her designee.
6 (4) Four members appointed by the Governor, not
7 more than 2 of whom may be members of the same political
8 party.
9 (b) The Director of Commerce and Community Affairs shall
10 serve as chairperson of the Board. Four members of the Board
11 constitute a quorum to transact and vote on the business of
12 the Board.
13 (c) The Department of Commerce and Community Affairs
14 shall assist the Board in carrying out the Board's duties.
15 Section 20. Award of tax credits.
16 (a) The Board may award tax credits under this Act to
17 foster job creation in Illinois.
18 (b) The credit shall be claimed for the taxable years
19 specified in the taxpayer's tax credit agreement not to
20 exceed 10 years.
21 Section 25. Application for credit. A person that
22 proposes a project to create new jobs in Illinois may apply
23 to the Board to enter into an agreement for a tax credit
24 under this Act. The Director of Commerce and Community
25 Affairs shall prescribe the form of the application.
26 Section 30. Conditions for credit. After receipt of an
27 application, the Board may enter into an agreement with the
28 applicant for a credit under this Act if the Board determines
29 that all of the following conditions exist:
30 (1) The applicant's project will create new jobs that
31 were not jobs previously performed by employees of the
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1 applicant in Illinois.
2 (2) The applicant's project is economically sound and
3 will benefit the people of Illinois by increasing
4 opportunities for employment and strengthening the economy.
5 (3) There is at least one other state that the applicant
6 verifies is being considered for the project.
7 (4) A significant disparity is identified, using best
8 available data, in the projected costs for the applicant's
9 project compared to the costs in the competing state,
10 including the impact of the competing state's incentive
11 programs. The competing state's incentive programs shall
12 include state, local, private, and federal funds available.
13 (5) The units of local government affected by the
14 project have committed significant local incentives with
15 respect to the project.
16 (6) Receiving the tax credit is a major factor in the
17 applicant's decision to go forward with the project and not
18 receiving the tax credit will result in the applicant not
19 creating new jobs in Illinois.
20 (7) Awarding the tax credit will result in an overall
21 positive fiscal impact to the State, as certified by the
22 Bureau of the Budget using the best available data.
23 (8) The credit is not prohibited under Section 35 of
24 this Act.
25 Section 35. Relocated jobs; ineligible for credit. A
26 person is not entitled to claim the credit provided by this
27 Act for any jobs that the person relocates from one site in
28 Illinois to another site in Illinois. Determinations under
29 this Section shall be made by the Board.
30 Section 40. Credit amount; criteria; Board determination.
31 (a) In determining the credit amount that should be
32 awarded, the Board shall take into consideration the
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1 following factors:
2 (1) The economy of the county where the project
3 will be located.
4 (2) The potential impact on the economy of
5 Illinois.
6 (3) The magnitude of the cost differential between
7 Illinois and the competing state.
8 (4) The incremental payroll attributable to the
9 project.
10 (5) The capital investment attributable to the
11 project.
12 (6) The amount that the average wage paid by the
13 applicant exceeds the average wage paid within the county
14 in which the project will be located.
15 (7) The costs to Illinois and the affected
16 political subdivisions with respect to the project.
17 (8) The financial assistance that is otherwise
18 provided by Illinois and the affected units of local
19 government.
20 (b) The Board shall determine the amount and duration of
21 a tax credit awarded under this Act. The duration of the
22 credit may not exceed 10 taxable years. The credit may be
23 stated as a percentage of the incremental income tax
24 withholdings attributable to the applicant's project and may
25 include a fixed dollar limitation. The credit amount may not
26 exceed the incremental income tax withholdings. A credit
27 under this Act shall not reduce the taxpayer's liability
28 under the Illinois Income Tax Act to less than zero.
29 Section 45. Tax credit agreement. The Board shall enter
30 into an agreement with an applicant that is awarded a credit
31 under this Act. The agreement must include all of the
32 following:
33 (1) A detailed description of the project that is the
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1 subject of the agreement.
2 (2) The duration of the tax credit and the first taxable
3 year for which the credit may be claimed.
4 (3) The credit amount that will be allowed for each
5 taxable year.
6 (4) A requirement that the taxpayer shall maintain
7 operations at the project location for at least 2 times the
8 number of years as the term of the tax credit.
9 (5) A specific method for determining the number of new
10 employees employed during a taxable year who are performing
11 jobs not previously performed by an employee.
12 (6) A requirement that the taxpayer shall annually
13 report to the Board the number of new employees who are
14 performing jobs not previously performed by an employee, the
15 new income tax revenue withheld in connection with the new
16 employees, and any other information the Director of Commerce
17 and Community needs to perform the Director's duties under
18 this Act.
19 (7) A requirement that the Director verify with the
20 appropriate State agencies the amounts reported under
21 paragraph (6) of this Section, and after doing so shall issue
22 a certificate to the taxpayer stating that the amounts have
23 been verified.
24 (8) A requirement that the taxpayer provide written
25 notification to the Director and the Board not more than 30
26 days after the taxpayer makes or receives a proposal that
27 would transfer the taxpayer's tax liability under the
28 Illinois Income Tax Act to a successor taxpayer.
29 (9) Any other performance conditions that the Board
30 determines are appropriate.
31 (10) A statement that the credit received under this Act
32 shall not reduce the taxpayer's liability under the Illinois
33 Income Tax Act to less than zero.
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1 Section 50. Submission of verification. A taxpayer
2 claiming a credit under this Act shall submit to the
3 Department of Revenue, along with the taxpayer's Illinois
4 Income Tax form, a copy of the Director's certificate of
5 verification under this Act for the taxable year. Failure to
6 submit a copy of the certificate, however, does not
7 invalidate a claim for a credit.
8 Section 55. Pass through entities.
9 (a) If a pass-through entity does not have tax liability
10 under the Illinois Income Tax Act against which the tax
11 credit may be applied, a shareholder or partner of the
12 pass-through entity is entitled to a tax credit equal to the
13 tax credit determined for the pass-through entity for the
14 taxable year multiplied by the percentage of the pass-through
15 entity's distributive income to which the shareholder or
16 partner is entitled.
17 (b) The credit provided under subsection (a) is in
18 addition to a tax credit to which a shareholder or partner of
19 a pass-through entity is otherwise entitled under a separate
20 agreement under this Act. A pass-through entity and a
21 shareholder or partner of the pass-through entity may not
22 claim more than one credit under the same agreement.
23 Section 60. Noncompliance; assessment. If the Director
24 determines that a taxpayer who has received a credit under
25 this Act is not complying with the requirements of the tax
26 credit agreement or all of the provisions of this Act, the
27 Director shall, after giving the taxpayer an opportunity to
28 explain and remedy the noncompliance, notify the Department
29 of Revenue of the noncompliance and request an assessment.
30 The Director shall state the amount of the assessment, which
31 may not exceed the sum of any previously allowed credits
32 under this Act. After receiving the notice, the Department of
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1 Revenue shall make an assessment against the taxpayer for the
2 amount stated in the Director's notice.
3 Section 65. Annual report. On or before March 31 each
4 year, the Director shall submit a report to the Board and to
5 the General Assembly on the tax credit program under this
6 Act. The report shall include information on the number of
7 agreements that were entered into under this Act during the
8 preceding calendar year, a description of the project that is
9 the subject of each agreement, an update on the status of
10 projects under agreements entered into before the preceding
11 calendar year, and the sum of the credits awarded under this
12 Act.
13 Section 70. Periodic evaluation. Every 2 years the
14 Department of Commerce and Community Affairs and the
15 Department of Revenue shall evaluate the tax credit program.
16 The evaluation shall include an assessment of the
17 effectiveness of the program in creating new jobs in Illinois
18 and of the revenue impact of the program. The evaluation may
19 include a review of the practices and experiences of other
20 states with similar programs. The Director of Commerce and
21 Community Affairs shall submit a report on the evaluation to
22 the Governor and the General Assembly after June 30 and
23 before November 1 of each odd-numbered year.
24 Section 75. Rules. The Department of Commerce and
25 Community Affair may adopt rules necessary to implement this
26 Act. The rules may provide for recipients of tax credits
27 under this Act to be charged fees to cover administrative
28 costs of the tax credit program. Fees collected shall be
29 deposited in the Economic Development for Illinois' Economy
30 Fund.
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1 Section 80. Economic Development for Illinois' Economy
2 Fund.
3 (a) The Economic Development for Illinois' Economy Fund
4 is established in the State Treasury to be used exclusively
5 for the purposes of this Act, including paying for the costs
6 of administering this Act. The Fund shall be administered by
7 the Department of Commerce and Community Affairs.
8 (b) The Fund consists of collected fees, appropriations
9 from the General Assembly, and gifts and grants to the Fund.
10 (c) The Treasurer shall invest the money in the Fund not
11 currently needed to meet the obligations of the Fund in the
12 same manner as other public funds may be invested. Interest
13 that accrues from these investments shall be deposited into
14 the Fund.
15 (d) The money in the Fund at the end of the fiscal year
16 does not revert to the General Revenue Fund but remains in
17 the Fund to be used exclusively for the purposes of this Act.
18 Expenditures from the Fund are subject to appropriation by
19 the General Assembly.
20 Section 90. The State Finance Act is amended by adding
21 Section 5.449 as follows:
22 (30 ILCS 105/5.449 new)
23 Sec. 5.449. The Economic Development for Illinois'
24 Economy Fund.
25 Section 95. The Illinois Income Tax Act is amended by
26 adding Section 211 as follows:
27 (35 ILCS 5/211 new)
28 Sec. 211. Economic Development Income Tax Credit. A
29 taxpayer qualified to receive a tax credit under the Economic
30 Development Income Tax Credit Board Act is entitled to a
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1 credit against the tax imposed under subsection (a) and (b)
2 of Section 201 as determined under the Economic Development
3 Income Tax Credit Board Act.
4 Section 99. Effective date. This Act take effect upon
5 becoming law.