Bill Text: IL HB4492 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act. Creates a credit against withholding tax payments for employers with 250 or fewer full-time equivalent employees in an amount equal to a percentage of the compensation paid to qualified employees who received a raise from the employer.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2020-06-23 - Rule 19(b) / Re-referred to Rules Committee [HB4492 Detail]

Download: Illinois-2019-HB4492-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB4492 Introduced , by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED:
35 ILCS 5/704A
Amends the Illinois Income Tax Act. Creates a credit against withholding tax payments for employers with 250 or fewer full-time equivalent employees in an amount equal to a percentage of the compensation paid to qualified employees who received a raise from the employer.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Income Tax Act is amended by
changing Section 704A as follows:
(35 ILCS 5/704A)
Sec. 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
that quarter.
(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:

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(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
Tuesday;
(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
Friday.
Beginning with calendar year 2011, payments made under
this paragraph (1) of subsection (c) must be made by
electronic funds transfer.
(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

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return is due and not previously paid to the Department.
(d) Regulatory authority. The Department may, by rule:
(1) Permit employers, in lieu of the requirements of
subsections (b) and (c), to file annual returns due on or
before January 31 of the year for taxes withheld or
required to be withheld during the previous calendar year
and, if the aggregate amounts required to be withheld by
the employer under this Article 7 (other than amounts
required to be withheld under Section 709.5) do not exceed
$1,000 for the previous calendar year, 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

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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. With respect to
taxes withheld in calendar years prior to 2017, 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
Department.
With respect to taxes withheld in 2017 and subsequent
calendar years, the Department may, by rule, require that any
return (including any amended return) under this Section and
any W-2 Form that is required to be submitted to the Department
must be submitted on magnetic media or electronically.
The due date for submitting W-2 Forms shall be as
prescribed by the Department by rule.
(g) For amounts deducted or withheld after December 31,

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2009, a taxpayer who makes an election under subsection (f) of
Section 5-15 of the Economic Development for a Growing Economy
Tax Credit 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 for the
incremental income tax attributable to full-time employees of
the taxpayer awarded to the taxpayer by the Department of
Commerce and Economic Opportunity under the Economic
Development for a Growing Economy Tax Credit Act for the
taxable year and credits not previously claimed and allowed to
be carried forward under Section 211(4) of this Act as provided
in subsection (f) of Section 5-15 of the Economic Development
for a Growing Economy Tax Credit Act. The credit or credits may
not reduce the taxpayer's obligation for any payment due under
this Section to less than zero. If the amount of the credit or
credits 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 succeeding
calendar years as allowed to be carried forward under paragraph
(4) of Section 211 of this Act. The credit or credits 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. Each employer who deducts and withholds

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or is required to deduct and withhold tax under this Act and
who retains income tax withholdings under subsection (f) of
Section 5-15 of the Economic Development for a Growing Economy
Tax Credit Act must make a return with respect to such taxes
and retained amounts in the form and manner that the
Department, by rule, requires and pay to the Department or to a
depositary designated by the Department those withheld taxes
not retained by the taxpayer. For purposes of this subsection
(g), the term taxpayer shall include taxpayer and members of
the taxpayer's unitary business group as defined under
paragraph (27) of subsection (a) of Section 1501 of this Act.
This Section is exempt from the provisions of Section 250 of
this Act. No credit awarded under the Economic Development for
a Growing Economy Tax Credit Act for agreements entered into on
or after January 1, 2015 may be credited against payments due
under this Section.
(h) An employer may claim a credit against payments due
under this Section for amounts withheld during the first
calendar year ending after the 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

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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.
(i) Each employer with 50 or fewer full-time equivalent
employees during the reporting period may claim a credit
against the payments due under this Section for each qualified
employee in an amount equal to the maximum credit allowable.
The credit may be taken against payments due for reporting
periods that begin on or after January 1, 2020, and end on or
before December 31, 2027. An employer may not claim a credit
for an employee who has worked fewer than 90 consecutive days
immediately preceding the reporting period; however, such
credits may accrue during that 90-day period and be claimed
against payments under this Section for future reporting
periods after the employee has worked for the employer at least
90 consecutive days. In no event may the credit exceed the
employer's liability for the reporting period. Each employer
who deducts and withholds or is required to deduct and withhold
tax under this Act and who retains income tax withholdings
under this subsection must make a return with respect to such
taxes and retained amounts in the form and manner that the
Department, by rule, requires and pay to the Department or to a

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depositary designated by the Department those withheld taxes
not retained by the employer.
For each reporting period, the employer may not claim a
credit or credits for more employees than the number of
employees making less than the minimum or reduced wage for the
current calendar year during the last reporting period of the
preceding calendar year. Notwithstanding any other provision
of this subsection, an employer shall not be eligible for
credits for a reporting period unless the average wage paid by
the employer per employee for all employees making less than
$55,000 during the reporting period is greater than the average
wage paid by the employer per employee for all employees making
less than $55,000 during the same reporting period of the prior
calendar year.
For purposes of this subsection (i):
"Compensation paid in Illinois" has the meaning ascribed to
that term under Section 304(a)(2)(B) of this Act.
"Employer" and "employee" have the meaning ascribed to
those terms in the Minimum Wage Law, except that "employee"
also includes employees who work for an employer with fewer
than 4 employees. Employers that operate more than one
establishment pursuant to a franchise agreement or that
constitute members of a unitary business group shall aggregate
their employees for purposes of determining eligibility for the
credit.
"Full-time equivalent employees" means the ratio of the

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number of paid hours during the reporting period and the number
of working hours in that period.
"Maximum credit" means the percentage listed below of the
difference between the amount of compensation paid in Illinois
to employees who are paid not more than the required minimum
wage reduced by the amount of compensation paid in Illinois to
employees who were paid less than the current required minimum
wage during the reporting period prior to each increase in the
required minimum wage on January 1. If an employer pays an
employee more than the required minimum wage and that employee
previously earned less than the required minimum wage, the
employer may include the portion that does not exceed the
required minimum wage as compensation paid in Illinois to
employees who are paid not more than the required minimum wage.
(1) 25% for reporting periods beginning on or after
January 1, 2020 and ending on or before December 31, 2020;
(2) 21% for reporting periods beginning on or after
January 1, 2021 and ending on or before December 31, 2021;
(3) 17% for reporting periods beginning on or after
January 1, 2022 and ending on or before December 31, 2022;
(4) 13% for reporting periods beginning on or after
January 1, 2023 and ending on or before December 31, 2023;
(5) 9% for reporting periods beginning on or after
January 1, 2024 and ending on or before December 31, 2024;
(6) 5% for reporting periods beginning on or after
January 1, 2025 and ending on or before December 31, 2025.

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The amount computed under this subsection may continue to
be claimed for reporting periods beginning on or after January
1, 2026 and:
(A) ending on or before December 31, 2026 for employers
with more than 5 employees; or
(B) ending on or before December 31, 2027 for employers
with no more than 5 employees.
"Qualified employee" means an employee who is paid not more
than the required minimum wage and has an average wage paid per
hour by the employer during the reporting period equal to or
greater than his or her average wage paid per hour by the
employer during each reporting period for the immediately
preceding 12 months. A new qualified employee is deemed to have
earned the required minimum wage in the preceding reporting
period.
"Reporting period" means the quarter for which a return is
required to be filed under subsection (b) of this Section.
(j) Each employer with 250 or fewer full-time equivalent
employees during the reporting period may claim a credit
against the payments due under this Section for each qualified
employee in an amount equal to the credit amount. The credit
may be taken against payments due for reporting periods that
begin on or after January 1, 2021 and end on or before December
31, 2029. Credits for a particular qualified employee may not
be taken for reporting periods that begin more than 2 years
after the effective date of the raise. An employer may not

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claim a credit for an employee who has worked fewer than 180
consecutive days immediately preceding the first day of the
first pay period during which the raise is in effect. In no
event may the credit exceed the employer's liability for the
reporting period. Each employer who deducts and withholds or is
required to deduct and withhold tax under this Act and who
retains income tax withholdings under this subsection must make
a return with respect to such taxes and retained amounts in the
form and manner that the Department, by rule, requires and pay
to the Department or to a depositary designated by the
Department those withheld taxes not retained by the employer.
Notwithstanding any other provision of this subsection, an
employer is not eligible for credits under this subsection for
a reporting period unless the average wage paid by the employer
per employee for all employees making less than $52,000 during
the reporting period is greater than the average wage paid by
the employer per employee for all employees making less than
$52,000 during the same reporting period of the prior calendar
year.
For purposes of this subsection (j):
"Base period" means the employer's reporting period that
immediately precedes the reporting period in which the
qualified employee's raise takes effect.
"Compensation paid in Illinois" has the meaning ascribed to
that term under paragraph (B) of item (2) of subsection (a) of
Section 304 of this Act.

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"Credit amount" means the amount listed below:
(1) 25% of the difference between the amount of
compensation paid in Illinois by the employer to the
qualified employee in the base period and the portion of
the compensation paid in Illinois by the employer to the
qualified employee in the reporting period for which the
credit is taken that does not exceed $37,400 when
annualized; plus
(2) 20% of the compensation paid in Illinois by the
employer to the qualified employee in the reporting period
for which the credit is taken that exceeds the greater of
(i) the amount of compensation paid in Illinois by the
employer to the qualified employee in the base period or
(ii) $37,400 when annualized but does not exceed $41,600
when annualized; plus
(3) 15% of the compensation paid in Illinois by the
employer to the qualified employee in the reporting period
for which the credit is taken that exceeds the greater of
(i) the amount of compensation paid in Illinois by the
employer to the qualified employee in the base period or
(ii) $41,600 when annualized but does not exceed $52,000
when annualized.
"Employer" and "employee" have the meanings ascribed to
those terms in the Minimum Wage Law, except that "employee"
also includes employees who work for an employer with fewer
than 4 employees. Employers that operate more than one

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establishment pursuant to a franchise agreement or that
constitute members of a unitary business group shall aggregate
their employees for purposes of determining eligibility for the
credit.
"Full-time equivalent 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.
"Qualified employee" means an employee who receives a raise
from an employer, whose post-raise annual salary attributable
to that employer is not less than $31,200, and who continues to
be employed by the employer during the reporting period for
which the credit is taken.
"Raise" means a permanent increase in an employee's hourly
pay or salary that does not result in reduced hours or reduced
benefits and is not a temporary bonus.
"Reporting period" means the quarter for which a return is
required to be filed under subsection (b) of this Section.
(Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17;
100-863, eff. 8-14-18; 101-1, eff. 2-19-19.)