Public Act 096-0888
Public Act 0888 96TH GENERAL ASSEMBLY
|Public Act 096-0888
||LRB096 11014 MJR 21301 b
AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
This Act may be cited as the
Business Job Creation Tax Credit Act.
Findings and purpose.
The General Assembly finds
that the Illinois economy is mired in one of the worst economic
recessions it has ever suffered. Small businesses in particular
have been hit hard by the economy, resulting in levels of high
unemployment throughout the State. In order to reverse the
trend of high unemployment and to help spur the economy to
recovery, it is necessary to assist and encourage small
businesses in the hiring of new employees.
In this Act:
"Applicant" means a person that is operating a business
located within the State of Illinois that is engaged in
interstate or intrastate commerce and has no more than 50
full-time employees, without regard to the location of
employment of such employees at the beginning of the incentive
period. In the case of any person that is a member of a unitary
business group within the meaning of subdivision (a)(27) of
Section 1501 of the Illinois Income Tax Act, "applicant" refers
to the unitary business group.
"Certificate" means the tax credit certificate issued by
the Department under Section 35 of this Act.
"Certificate of eligibility" means the certificate issued
by the Department under Section 20 of this Act.
"Credit" means the amount awarded by the Department to an
applicant by issuance of a certificate under Section 35 of this
Act for each new full-time equivalent employee hired or job
"Department" means the Department of Commerce and Economic
"Director" means the Director of the Department.
"Full-time employee" means an individual who is employed
for a basic wage for at least 35 hours each week or who renders
any other standard of service generally accepted by industry
custom or practice as full-time employment.
"Incentive period" means the period beginning July 1, 2010
and ending on June 30, 2011.
"Basic wage" means compensation for employment that is no
less than $13.75 per hour or the equivalent salary for a new
"New employee" means a full-time employee first employed by
an applicant within the incentive period whose hire results in
a net increase in the applicant's full-time Illinois employees
and who is receiving a basic wage as compensation. The term
"new employee" does not include:
(1) a person who was previously employed in Illinois by
the applicant or a related member prior to the onset of the
incentive period; or
(2) any individual who has a direct or indirect
ownership interest of at least 5% in the profits, capital,
or value of the applicant or a related member.
"Noncompliance date" means, in the case of an applicant
that is not complying with the requirements of the provisions
of this Act, the day following the last date upon which the
taxpayer was in compliance with the requirements of the
provisions of this Act, as determined by the Director, pursuant
to Section 45 of this Act.
"Related member" means a person that, with respect to the
applicant during any portion of the incentive period, is any
one of the following,
(1) An individual, if the individual and the members of
the individual's family (as defined in Section 318 of the
Internal Revenue Code) own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the value of the outstanding profits, capital,
stock, or other ownership interest in the applicant.
(2) A partnership, estate, or trust and any partner or
beneficiary, if the partnership, estate, or trust and its
partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the profits, capital, stock, or other
ownership interest in the applicant.
(3) A corporation, and any party related to the
corporation in a manner that would require an attribution
of stock from the corporation under the attribution rules
of Section 318 of the Internal Revenue Code, if the
applicant and any other related member own, in the
aggregate, directly, indirectly, beneficially, or
constructively, at least 50% of the value of the
corporation's outstanding stock.
(4) A corporation and any party related to that
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the
corporation and all such related parties own, in the
aggregate, at least 50% of the profits, capital, stock, or
other ownership interest in the applicant.
(5) A person to or from whom there is attribution of
stock ownership in accordance with Section 1563(e) of the
Internal Revenue Code, except that for purposes of
determining whether a person is a related member under this
paragraph, "20%" shall be substituted for "5%" whenever
"5%" appears in Section 1563(e) of the Internal Revenue
Powers of the Department.
The Department, in
addition to those powers granted under the Civil Administrative
Code of Illinois, is granted and shall have all the powers
necessary or convenient to carry out and effectuate the
purposes and provisions of this Act, including, but not limited
to, power and authority to:
(1) Promulgate procedures, rules, or regulations
deemed necessary and appropriate for the administration of
this Act; establish forms for applications, notifications,
contracts, or any other agreements; and accept
applications at any time during the year and require that
all applications be submitted via the Internet. The
Department shall require that applications be submitted in
(2) Provide guidance and assistance to applicants
pursuant to the provisions of this Act, and cooperate with
applicants to promote, foster, and support job creation
within the State.
(3) Enter into agreements and memoranda of
understanding for participation of and engage in
cooperation with agencies of the federal government, units
of local government, universities, research foundations or
institutions, regional economic development corporations,
or other organizations for the purposes of this Act.
(4) Gather information and conduct inquiries, in the
manner and by the methods it deems desirable, including,
without limitation, gathering information with respect to
applicants for the purpose of making any designations or
certifications necessary or desirable or to gather
information in furtherance of the purposes of this Act.
(5) Establish, negotiate, and effectuate any term,
agreement, or other document with any person necessary or
appropriate to accomplish the purposes of this Act; and
consent, subject to the provisions of any agreement with
another party, to the modification or restructuring of any
agreement to which the Department is a party.
(6) Provide for sufficient personnel to permit
administration, staffing, operation, and related support
required to adequately discharge its duties and
responsibilities described in this Act from funds made
available through charges to applicants or from funds as
may be appropriated by the General Assembly for the
administration of this Act.
(7) Require applicants, upon written request, to issue
any necessary authorization to the appropriate federal,
State, or local authority or any other person for the
release to the Department of information requested by the
Department, with the information requested to include, but
not be limited to, financial reports, returns, or records
relating to the applicant or to the amount of credit
allowable under this Act.
(8) Require that an applicant shall at all times keep
proper books of record and account in accordance with
generally accepted accounting principles consistently
applied, with the books, records, or papers related to the
agreement in the custody or control of the applicant open
for reasonable Department inspection and audits, and
including, without limitation, the making of copies of the
books, records, or papers.
(9) Take whatever actions are necessary or appropriate
to protect the State's interest in the event of bankruptcy,
default, foreclosure, or noncompliance with the terms and
conditions of financial assistance or participation
required under this Act, including the power to sell,
dispose of, lease, or rent, upon terms and conditions
determined by the Director to be appropriate, real or
personal property that the Department may recover as a
result of these actions.
Certificate of eligibility for tax credit.
(a) An applicant that has hired a new employee during the
incentive period may apply for a certificate of eligibility for
the credit with respect to that position on or after the date
of hire of the new employee. The date of hire shall be the
first day on which the employee begins providing services for
basic wage compensation.
(b) An applicant may apply for a certificate of eligibility
for the credit for more than one new employee on or after the
date of hire of each qualifying new employee.
(c) After receipt of an application under this Section, the
Department shall issue a certificate of eligibility to the
(1) The date and time on which the application was
received by the Department and an identifying number
assigned to the applicant by the Department.
(2) The maximum amount of the credit the applicant
could potentially receive under this Act with respect to
the new employees listed on the application.
(3) The maximum amount of the credit potentially
allowable on certificates of eligibility issued for
applications received prior to the application for which
the certificate of eligibility is issued.
(a) Subject to the conditions set forth in this Act, an
applicant is entitled to a credit against payment of taxes
withheld under Section 704A of the Illinois Income Tax Act for
calendar years ending on or after the date that is 12 months
after the date of hire of a new employee. The credit shall be
allowed as a credit to an applicant for each full-time employee
hired during the incentive period that results in a net
increase in full-time Illinois employees, where the net
increase in the employer's full-time Illinois employees is
maintained for at least 12 months.
(b) The Department shall make credit awards under this Act
to further job creation.
(c) The credit shall be claimed for the first calendar year
ending on or after the date on which the certificate is issued
by the Department.
(d) The credit shall not exceed $2,500 per new employee
(e) The net increase in full-time Illinois employees,
measured on an annual full-time equivalent basis, shall be the
total number of full-time Illinois employees of the applicant
on June 30, 2011, minus the number of full-time Illinois
employees employed by the employer on July 1, 2010. For
purposes of the calculation, an employer that begins doing
business in this State during the incentive period, as
determined by the Director, shall be treated as having zero
Illinois employees on July 1, 2010.
(f) The net increase in the number of full-time Illinois
employees of the applicant must be sustained continuously for
at least 12 months, starting with the date of hire of a new
employee during the incentive period. Eligibility for the
credit does not depend on the continuous employment of any
particular individual. For purposes of this subsection (f), if
a new employee ceases to be employed before the completion of
the 12-month period for any reason, the net increase in the
number of full-time Illinois employees shall be treated as
continuous if a different new employee is hired as a
replacement within a reasonable time for the same position.
Maximum amount of credits allowed.
Department shall limit the monetary amount of credits awarded
under this Act to no more than $50,000,000. If applications for
a greater amount are received, credits shall be allowed on a
first-come-first-served basis, based on the date on which each
properly completed application for a certificate of
eligibility is received by the Department. If more than one
certificate of eligibility is received on the same day, the
credits will be awarded based on the time of submission for
that particular day.
Application for award of tax credit; tax credit
(a) On or after the conclusion of the 12-month period after
a new employee has been hired, an applicant shall file with the
Department an application for award of a credit. The
application shall include the following:
(1) The names, Social Security numbers, job
descriptions, salary or wage rates, and dates of hire of
the new employees with respect to whom the credit is being
(2) A certification that each new employee listed has
been retained on the job for one year from the date of
(3) The number of new employees hired by the applicant
during the incentive period.
(4) The net increase in the number of full-time
Illinois employees of the applicant (including the new
employees listed in the request) between the beginning of
the incentive period and the dates on which the new
employees listed in the request were hired.
(5) An agreement that the Director is authorized to
verify with the appropriate State agencies the information
contained in the request before issuing a certificate to
(6) Any other information the Department determines to
(b) Although an application may be filed at any time after
the conclusion of the 12-month period after a new employee was
hired, an application filed more than 90 days after the
earliest date on which it could have been filed shall not be
awarded any credit if, prior to the date it is filed, the
Department has received applications under this Section for
credits totaling more than $50,000,000.
(c) The Department shall issue a certificate to each
applicant awarded a credit under this Act. The certificate
shall include the following:
(1) The name and taxpayer identification number of the
(2) The date on which the certificate is issued.
(3) The credit amount that will be allowed.
(4) Any other information the Department determines to
Submission of tax credit certificate to
Department of Revenue.
An applicant claiming a credit under
this Act shall submit to the Department of Revenue a copy of
each certificate issued under Section 35 of this Act with the
first return for which the credit shown on the certificate is
claimed. However, failure to submit a copy of the certificate
with the applicant's return shall not invalidate a claim for a
Noncompliance with Act.
If the Director
determines that an applicant who has received a credit under
this Act is not complying with the requirements of the
provisions of this Act, the Director shall provide notice to
the applicant of the alleged noncompliance, and allow the
taxpayer a hearing under the provisions of the Illinois
Administrative Procedure Act. If, after such notice and any
hearing, the Director determines that a noncompliance exists,
the Director shall issue to the Department of Revenue notice to
that effect, stating the noncompliance date.
The Department may adopt rules necessary
to implement this Act. The rules may provide for recipients of
credits under this Act to be charged fees to cover
administrative costs of the tax credit program.
The Illinois Income Tax Act is amended by
changing Section 704A as follows:
(35 ILCS 5/704A)
Employer's return and payment of tax withheld.
(a) In general, every employer who deducts and withholds or
is required to deduct and withhold tax under this Act on or
after January 1, 2008 shall make those payments and returns as
provided in this Section.
(b) Returns. Every employer shall, in the form and manner
required by the Department, make returns with respect to taxes
withheld or required to be withheld under this Article 7 for
each quarter beginning on or after January 1, 2008, on or
before the last day of the first month following the close of
(c) Payments. With respect to amounts withheld or required
to be withheld on or after January 1, 2008:
(1) Semi-weekly payments. For each calendar year, each
employer who withheld or was required to withhold more than
$12,000 during the one-year period ending on June 30 of the
immediately preceding calendar year, payment must be made:
(A) on or before each Friday of the calendar year,
for taxes withheld or required to be withheld on the
immediately preceding Saturday, Sunday, Monday, or
(B) on or before each Wednesday of the calendar
year, for taxes withheld or required to be withheld on
the immediately preceding Wednesday, Thursday, or
(2) Semi-weekly payments. Any employer who withholds
or is required to withhold more than $12,000 in any quarter
of a calendar year is required to make payments on the
dates set forth under item (1) of this subsection (c) for
each remaining quarter of that calendar year and for the
subsequent calendar year.
(3) Monthly payments. Each employer, other than an
employer described in items (1) or (2) of this subsection,
shall pay to the Department, on or before the 15th day of
each month the taxes withheld or required to be withheld
during the immediately preceding month.
(4) Payments with returns. Each employer shall pay to
the Department, on or before the due date for each return
required to be filed under this Section, any tax withheld
or required to be withheld during the period for which the
return is due and not previously paid to the Department.
(d) Regulatory authority. The Department may, by rule:
(1) If the aggregate amounts required to be withheld
under this Article 7 do not exceed $1,000 for the calendar
year, permit employers, in lieu of the requirements of
subsections (b) and (c), to file annual returns due on or
before January 31 of the following year for taxes withheld
or required to be withheld during that calendar year and to
pay the taxes required to be shown on each such return no
later than the due date for such return.
(2) Provide that any payment required to be made under
subsection (c)(1) or (c)(2) is deemed to be timely to the
extent paid by electronic funds transfer on or before the
due date for deposit of federal income taxes withheld from,
or federal employment taxes due with respect to, the wages
from which the Illinois taxes were withheld.
(3) Designate one or more depositories to which payment
of taxes required to be withheld under this Article 7 must
be paid by some or all employers.
(4) Increase the threshold dollar amounts at which
employers are required to make semi-weekly payments under
subsection (c)(1) or (c)(2).
(e) Annual return and payment. Every employer who deducts
and withholds or is required to deduct and withhold tax from a
person engaged in domestic service employment, as that term is
defined in Section 3510 of the Internal Revenue Code, may
comply with the requirements of this Section with respect to
such employees by filing an annual return and paying the taxes
required to be deducted and withheld on or before the 15th day
of the fourth month following the close of the employer's
taxable year. The Department may allow the employer's return to
be submitted with the employer's individual income tax return
or to be submitted with a return due from the employer under
Section 1400.2 of the Unemployment Insurance Act.
(f) Magnetic media and electronic filing. Any W-2 Form
that, under the Internal Revenue Code and regulations
promulgated thereunder, is required to be submitted to the
Internal Revenue Service on magnetic media or electronically
must also be submitted to the Department on magnetic media or
electronically for Illinois purposes, if required by the
(g) For amounts deducted or withheld after December 31,
2009, a taxpayer who makes an election under Section 5-15(f) of
the Economic Development for a Growing Economy Act for a
taxable year shall be allowed a credit against payments due
under this Section for amounts withheld during the first
calendar year beginning after the end of that taxable year
equal to the amount of the credit awarded to the taxpayer by
the Department of Commerce and Economic Opportunity under the
Economic Development for a Growing Economy Act for the taxable
year. The credit may not reduce the taxpayer's obligation for
any payment due under this Section to less than zero. If the
amount of the credit exceeds the total payments due under this
Section with respect to amounts withheld during the calendar
year, the excess may be carried forward and applied against the
taxpayer's liability under this Section in the 5 succeeding
calendar years. The credit shall be applied to the earliest
year for which there is a tax liability. If there are credits
from more than one taxable year that are available to offset a
liability, the earlier credit shall be applied first. This
Section is exempt from the provisions of Section 250 of this
(h) An employer may claim a credit against payments due
under this Section for amounts withheld during the first
calendar year ending after date on which a tax credit
certificate was issued under Section 35 of the Small Business
Job Creation Tax Credit Act. The credit shall be equal to the
amount shown on the certificate, but may not reduce the
taxpayer's obligation for any payment due under this Section to
less than zero. If the amount of the credit exceeds the total
payments due under this Section with respect to amounts
withheld during the calendar year, the excess may be carried
forward and applied against the taxpayer's liability under this
Section in the 5 succeeding calendar years. The credit shall be
applied to the earliest year for which there is a tax
liability. If there are credits from more than one calendar
year that are available to offset a liability, the earlier
credit shall be applied first. This Section is exempt from the
provisions of Section 250 of this Act.
(Source: P.A. 95-8, eff. 6-29-07; 95-707, eff. 1-11-08; 96-834,
This Act takes effect upon
Effective Date: 04/13/2010