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| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB4773 Introduced , by Rep. Curtis J. Tarver, II SYNOPSIS AS INTRODUCED:
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| 35 ILCS 25/10 | | 35 ILCS 25/25 | | 35 ILCS 25/30 | | 35 ILCS 25/35 | | 35 ILCS 25/45 | |
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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, 2020 and ending on June 30, 2026. 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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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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1 | | AN ACT concerning revenue.
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2 | | Be it enacted by the People of the State of Illinois,
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3 | | represented in the General Assembly:
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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:
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7 | | (35 ILCS 25/10)
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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 had |
17 | | participated as worker-trainee in the Put Illinois to Work |
18 | | 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" refers |
22 | | 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 this |
6 | | Act for each new full-time equivalent employee hired or job |
7 | | 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 is |
16 | | a full-time employee if he or she is employed in the service of |
17 | | the applicant for a basic wage for at least 35 hours each week |
18 | | or renders any other standard of service generally accepted by |
19 | | industry custom or practice as full-time employment . For the |
20 | | purposes of this Act, such an individual shall be considered a |
21 | | 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 and |
3 | | ending on June 30 of the following year. The first series of |
4 | | 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, 2020 and end |
7 | | on June 30, 2026. |
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 less |
18 | | than 50 full-time employees within the incentive period |
19 | | whose hire results in a net increase in the applicant's |
20 | | full-time Illinois employees and who is receiving a basic |
21 | | 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 by |
3 | | the applicant or a related member prior to the onset of the |
4 | | 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, pursuant |
13 | | 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 for |
18 | | Needy Families funds authorized by the American Recovery and |
19 | | Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF |
20 | | funds were in turn used by the State of Illinois to fund the |
21 | | 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 of |
26 | | the individual's family (as defined in Section 318 of the |
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1 | | Internal Revenue Code) own directly, indirectly, |
2 | | beneficially, or constructively, in the aggregate, at |
3 | | least 50% of the value of the outstanding profits, capital, |
4 | | stock, or other ownership interest in the applicant. |
5 | | (2) A partnership, estate, or trust and any partner or |
6 | | beneficiary, if the partnership, estate, or trust and its |
7 | | partners or beneficiaries own directly, indirectly, |
8 | | beneficially, or constructively, in the aggregate, at |
9 | | least 50% of the profits, capital, stock, or other |
10 | | ownership interest in the applicant. |
11 | | (3) A corporation, and any party related to the |
12 | | corporation in a manner that would require an attribution |
13 | | of stock from the corporation under the attribution rules |
14 | | of Section 318 of the Internal Revenue Code, if the |
15 | | applicant and any other related member own, in the |
16 | | aggregate, directly, indirectly, beneficially, or |
17 | | constructively, at least 50% of the value of the |
18 | | corporation's outstanding stock. |
19 | | (4) A corporation and any party related to that |
20 | | corporation in a manner that would require an attribution |
21 | | of stock from the corporation to the party or from the |
22 | | party to the corporation under the attribution rules of |
23 | | Section 318 of the Internal Revenue Code, if the |
24 | | corporation and all such related parties own, in the |
25 | | aggregate, at least 50% of the profits, capital, stock, or |
26 | | other ownership interest in the applicant. |
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1 | | (5) A person to or from whom there is attribution of |
2 | | stock ownership in accordance with Section 1563(e) of the |
3 | | Internal Revenue Code, except that for purposes of |
4 | | determining whether a person is a related member under this |
5 | | paragraph, "20%" shall be substituted for "5%" whenever |
6 | | "5%" appears in Section 1563(e) of the Internal Revenue |
7 | | Code.
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8 | | "Returning citizen" means an individual who (i) is a |
9 | | resident of Illinois, (ii) was formerly incarcerated in a |
10 | | federal, State, or local correctional institution, and (iii) is |
11 | | a new employee. |
12 | | (Source: P.A. 100-863, eff. 8-14-18.)
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13 | | (35 ILCS 25/25)
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14 | | Sec. 25. Tax credit. |
15 | | (a) Subject to the conditions set forth in this Act, an |
16 | | applicant is entitled to a credit against payment of taxes |
17 | | withheld under Section 704A of the Illinois Income Tax Act: |
18 | | (1) for new employees who participated as |
19 | | worker-trainees in the Put Illinois to Work Program during |
20 | | 2010 , for incentive periods ending on or before June 30, |
21 | | 2016 : |
22 | | (A) in the first calendar year ending on or after |
23 | | the date that is 6 months after December 31, 2010, or |
24 | | the date of hire, whichever is later. Under this |
25 | | subparagraph, the applicant is entitled to one-half of |
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1 | | the credit allowable for each new employee who is |
2 | | employed for at least 6 months after the date of hire; |
3 | | and |
4 | | (B) in the first calendar year ending on or after |
5 | | the date that is 12 months after December 31, 2010, or |
6 | | the date of hire, whichever is later. Under this |
7 | | subparagraph, the applicant is entitled to one-half of |
8 | | the credit allowable for each new employee who is |
9 | | employed for at least 12 months after the date of hire; |
10 | | (2) for all other new employees, in the first calendar |
11 | | year ending on or after the date that is 12 months after |
12 | | the date of hire of a new employee. The credit shall be |
13 | | allowed as a credit to an applicant for each full-time |
14 | | employee hired during the incentive period that results in |
15 | | a net increase in full-time Illinois employees, where the |
16 | | net increase in the employer's full-time Illinois |
17 | | employees is maintained for at least 12 months. |
18 | | (b) The Department shall make credit awards under this Act |
19 | | to further job creation. |
20 | | (c) The credit shall be claimed for the first calendar year |
21 | | ending on or after the date on which the certificate is issued |
22 | | by the Department. |
23 | | (d) The credit shall not exceed $2,500 per new employee |
24 | | hired , except that, for the second set of incentive periods, if |
25 | | the new employee is a returning citizen, then the credit for |
26 | | that employee may not exceed $3,500 . |
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1 | | (e) The net increase in full-time Illinois employees, |
2 | | measured on an annual full-time equivalent basis, shall be the |
3 | | total number of full-time Illinois employees of the applicant |
4 | | on the final day of the incentive period, minus the number of |
5 | | full-time Illinois employees employed by the employer on the |
6 | | first day of that same incentive period. For purposes of the |
7 | | calculation, an employer that begins doing business in this |
8 | | State during the incentive period, as determined by the |
9 | | Director, shall be treated as having zero Illinois employees on |
10 | | the first day of the incentive period. |
11 | | (f) The net increase in the number of full-time Illinois |
12 | | employees of the applicant under subsection (e) must be |
13 | | sustained continuously for at least 12 months, starting with |
14 | | the date of hire of a new employee during the incentive period. |
15 | | Eligibility for the credit does not depend on the continuous |
16 | | employment of any particular individual. For purposes of this |
17 | | subsection (f), if a new employee ceases to be employed before |
18 | | the completion of the 12-month period for any reason, the net |
19 | | increase in the number of full-time Illinois employees shall be |
20 | | treated as continuous if a different new employee is hired as a |
21 | | replacement within a reasonable time for the same position |
22 | | within 8 weeks after the position becomes vacant .
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23 | | (g) The Department shall promulgate rules to enable an |
24 | | applicant for which a PEO has been contracted to issue W-2s and |
25 | | make payment of taxes withheld under Section 704A of the |
26 | | Illinois Income Tax Act for new employees to retain the benefit |
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1 | | of tax credits to which the applicant is otherwise entitled |
2 | | under this Act. |
3 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11; |
4 | | 97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)
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5 | | (35 ILCS 25/30)
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6 | | Sec. 30. Maximum amount of credits allowed. The Department |
7 | | shall limit the monetary amount of credits awarded under this |
8 | | Act to no more than (i) $50,000,000 for new employees other |
9 | | than returning citizens and (ii) $5,000,000 for returning |
10 | | citizens. If a new employee is a returning citizen, but the |
11 | | $5,000,000 limit under this Section has been reached, then the |
12 | | applicant may request a credit for that employee under the |
13 | | $50,000,000 limit; however, the credit awarded for that new |
14 | | employee may not exceed $2,500 . If applications for a greater |
15 | | amount are received, credits shall be allowed on a |
16 | | first-come-first-served basis, based on the date on which each |
17 | | properly completed application for a certificate of |
18 | | eligibility is received by the Department. If more than one |
19 | | certificate of eligibility is received on the same day, the |
20 | | credits will be awarded based on the time of submission for |
21 | | that particular day.
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22 | | (Source: P.A. 96-888, eff. 4-13-10.)
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23 | | (35 ILCS 25/35)
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24 | | Sec. 35. Application for award of tax credit; tax credit |
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1 | | certificate. |
2 | | (a) On or after the conclusion of the 12-month period (or |
3 | | 6-month period, for purposes of subparagraph (A) of item (1) of |
4 | | subsection (a) of Section 25) after a new employee has been |
5 | | hired, an applicant shall file with the Department an |
6 | | application for award of a credit. The application shall |
7 | | include the following: |
8 | | (1) The names, Social Security numbers, job |
9 | | descriptions, salary or wage rates, and dates of hire of |
10 | | the new employees with respect to whom the credit is being |
11 | | requested , and an indication of whether each new employee |
12 | | listed participated as a worker-trainee in the Put Illinois |
13 | | to Work Program . |
14 | | (2) A certification that each new employee listed has |
15 | | been retained on the job for one year (or 6 months, for |
16 | | purposes of subparagraph (A) of item (1) of subsection (a) |
17 | | of Section 25) from the date of hire. |
18 | | (3) The number of new employees hired by the applicant |
19 | | during the incentive period. |
20 | | (4) The net increase in the number of full-time |
21 | | Illinois employees of the applicant (including the new |
22 | | employees listed in the request) between the beginning of |
23 | | the incentive period and the dates on which the new |
24 | | employees listed in the request were hired. This |
25 | | requirement does not apply for tax credits the applicant is |
26 | | seeking because the new employee had participated as a |
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1 | | worker-trainee in the Put Illinois to Work Program. |
2 | | (5) An agreement that the Director is authorized to |
3 | | verify with the appropriate State agencies the information |
4 | | contained in the request before issuing a certificate to |
5 | | the applicant. |
6 | | (6) Any other information the Department determines to |
7 | | be appropriate. |
8 | | (b) Although an application may be filed at any time after |
9 | | the conclusion of the 12-month period (or 6-month period, for |
10 | | purposes of subparagraph (A) of item (1) of subsection (a) of |
11 | | Section 25) after a new employee was hired, an application |
12 | | filed more than 90 days after the earliest date on which it |
13 | | could have been filed shall not be awarded any credit if, prior |
14 | | to the date it is filed, the Department has received |
15 | | applications under this Section for credits totaling more than |
16 | | $50,000,000. |
17 | | (c) The Department shall issue a certificate to each |
18 | | applicant awarded a credit under this Act. The certificate |
19 | | shall include the following: |
20 | | (1) The name and taxpayer identification number of the |
21 | | applicant. |
22 | | (2) The date on which the certificate is issued. |
23 | | (3) The credit amount that will be allowed. |
24 | | (4) Any other information the Department determines to |
25 | | be appropriate.
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26 | | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
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1 | | (35 ILCS 25/45)
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2 | | Sec. 45. Noncompliance with Act ; recapture . |
3 | | (a) If the Director determines that an applicant who has |
4 | | received a credit under this Act is not complying with the |
5 | | requirements of the provisions of this Act, the Director shall |
6 | | provide notice to the applicant of the alleged noncompliance, |
7 | | and allow the taxpayer a hearing under the provisions of the |
8 | | Illinois Administrative Procedure Act. If, after such notice |
9 | | and any hearing, the Director determines that a noncompliance |
10 | | exists, the Director shall issue to the Department of Revenue |
11 | | notice to that effect, stating the noncompliance date.
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12 | | (b) For tax credits awarded during the second set of |
13 | | incentive periods, if an employee for whom a tax credit was |
14 | | awarded under this Act is terminated by the taxpayer within one |
15 | | year after the credit is awarded, then the Department shall |
16 | | recapture the amount of the credit awarded for that employee. |
17 | | This subsection (b) does not apply if the person is terminated |
18 | | for cause or if the person voluntarily resigns. |
19 | | (Source: P.A. 96-888, eff. 4-13-10.)
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20 | | Section 99. Effective date. This Act takes effect upon |
21 | | becoming law.
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