Bill Text: IL HB5554 | 2019-2020 | 101st General Assembly | Introduced

---

Bill Title: Creates the Build Illinois Homes Tax Credit Act. Provides that the Illinois Housing Development Authority and the City of Chicago Department of Housing may award credits for certain qualified low-income housing projects. Provides that the credits may be taken against any or all of the following: (i) the taxes imposed by the Illinois Income Tax Act; or (ii) any retaliatory or privilege tax imposed by the Illinois Insurance Code. Amends the Illinois Income Tax Act and the Illinois Insurance Code to make conforming changes. Effective immediately.

Spectrum: Moderate Partisan Bill (Democrat 9-2)

Status: (Introduced - Dead) 2020-09-24 - Added Co-Sponsor Rep. Barbara Hernandez [HB5554 Detail]

Download: Illinois-2019-HB5554-Introduced.html

---

101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB5554 Introduced , by Rep. Delia C. Ramirez SYNOPSIS AS INTRODUCED:
New Act
35 ILCS 5/232 new
215 ILCS 5/409 from Ch. 73, par. 1021
215 ILCS 5/444 from Ch. 73, par. 1056
Creates the Build Illinois Homes Tax Credit Act. Provides that the Illinois Housing Development Authority and the City of Chicago Department of Housing may award credits for certain qualified low-income housing projects. Provides that the credits may be taken against any or all of the following: (i) the taxes imposed by the Illinois Income Tax Act; or (ii) any retaliatory or privilege tax imposed by the Illinois Insurance Code. Amends the Illinois Income Tax Act and the Illinois Insurance Code to make conforming changes. Effective immediately.
LRB101 19774 HLH 69285 b
FISCAL NOTE ACT MAY APPLY
A BILL FOR
HB5554 LRB101 19774 HLH 69285 b
AN ACT concerning revenue.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the Build
Illinois Homes Tax Credit Act.
Section 5. Definitions. As used in this Act, unless the
context clearly requires otherwise:
"Allocation" means an award of tax credits to the owner of
a qualified development in any allocation round, to be claimed
ratably annually over the credit period.
"Allocation round" means all allocations by the Authority
of credits under this Act to qualified developments in any
calendar year.
"Authority" means:
(1) the Illinois Housing Development Authority; or
(2) the City of Chicago Department of Housing.
"Credit" means the credit allowed pursuant to Section 2 of
this Act.
"Credit period" means the period of 10 taxable years
beginning with the taxable year in which a qualified
development is placed in service. If a qualified development
consists of more than one building, the development is deemed
to be placed in service in the taxable year during which the

HB5554 - 2 - LRB101 19774 HLH 69285 b
last building of the qualified development is placed in
service.
"Department" means the Illinois Department of Revenue.
"Federal tax credit" means the federal low-income housing
tax credit provided by Section 42 of the federal Internal
Revenue Code, including federal low-income housing tax credits
issued pursuant to 26 U.S.C. 42(h)(3) and 26 U.S.C. 42(h)(4).
"Owner certification" means the certification issued by
the owner of a qualified development or its designee pursuant
to subsection (d) of Section 10 of this Act.
"Qualified allocation plan" means the qualified allocation
plan adopted by the Authority pursuant to Section 42(m) of the
federal Internal Revenue Code of 1986.
"Qualified basis" means the qualified basis of the
qualified development as determined pursuant to Section 42 of
the federal Internal Revenue Code of 1986.
"Qualified development" means a qualified low-income
housing project, as that term is defined in Section 42 of the
federal Internal Revenue Code of 1986, that is located in the
State and is determined to be eligible for the federal tax
credit set forth in Section 42 of the Internal Revenue Code,
whether or not a federal tax credit is allocated with respect
to that development.
"Qualified taxpayer" means an individual, person, firm,
corporation, or other entity that owns an interest, direct or
indirect, in a qualified development and is subject to any or

HB5554 - 3 - LRB101 19774 HLH 69285 b
all of the following: (i) the taxes imposed by the Illinois
Income Tax Act; or (ii) any retaliatory or privilege tax
imposed by the Illinois Insurance Code.
"State 8609 equivalent" means a statement issued by the
Authority with respect to each building within a qualified
development following construction or rehabilitation of a
qualified development certifying that each such building
within that qualified development qualifies for the credit and
specifying:
(1) the calendar year in which the last building of the
qualified development was placed in service;
(2) the amount of the credit allowed for each year of
the credit period; and
(3) the maximum qualified basis of the qualified
development taken into account in determining such annual
credit amount.
The State 8609 equivalent shall be issued by the Authority
simultaneously with IRS Form 8609, if the qualified development
was also allocated federal tax credits.
Section 10. Credit for low-income housing developments.
(a) The Authority shall include the credit in its annual
qualified allocation plan each year until expiration of this
Act. Each allocation round shall be simultaneous with
allocations of federal tax credits.
(b) For taxable years beginning on or after January 1,

HB5554 - 4 - LRB101 19774 HLH 69285 b
2021, the Authority may allocate a credit to the owner of a
qualified development in any allocation round in an amount
determined by the Authority, subject to the following
guidelines:
(1) the Authority finding that the credit is necessary
for the financial feasibility of the development;
(2) the aggregate sum of credits allocated to qualified
developments in any allocation round shall not exceed
$35,000,000, plus the amount of unallocated credits, if
any, from the preceding allocation round, plus the amount
of any credit recaptured or otherwise returned to the
Authority since the previous allocation round;
(3) of the $35,000,000 annual allocation: (i) 75.5% of
the available credits in each allocation round shall be
allocated by the Illinois Housing Development Authority,
plus any credits the Illinois Housing Development
Authority did not allocate from the previous allocation
round, plus the amount of any credits recaptured or
otherwise returned to the Illinois Housing Development
Authority since the previous allocation round; and (ii)
24.5% of the available credits in each allocation round
shall be allocated by the City of Chicago Department of
Housing, plus any credits the City of Chicago Department of
Housing did not allocate from the previous allocation
round, plus the amount of any credits recaptured or
otherwise returned to the City of Chicago Department of

HB5554 - 5 - LRB101 19774 HLH 69285 b
Housing since the previous allocation round;
(4) unless otherwise provided in this Act, or unless
the context clearly requires otherwise, the Authority must
determine eligibility for credits and allocate credits in
accordance with the standards and requirements set forth in
Section 42 of the federal Internal Revenue Code of 1986;
(c) For tax years during the credit period, any qualified
taxpayer is allowed a credit as provided in this Act against
any or all of the following: (i) the taxes imposed by
subsections (a), (b), and (c) of Section 201 of the Illinois
Income Tax Act; or (ii) any retaliatory or privilege tax
imposed under the Illinois Insurance Code.
(d) If an owner of a qualified development receiving an
allocation of a credit is a partnership, limited liability
company, S corporation, or similar pass-through entity, the
owner may allocate the credit available during a year in the
credit period among its partners, shareholders, members, or
other constituent taxpayers in any manner agreed to by such
persons and, in the case of multiple tiers of pass-through
entities, the credit may be so allocated through any number of
pass-through entities in any manner agreed by the owners of
those pass-through entities, whether or not such persons are
allocated or allowed any portion of any federal tax credit with
respect to the qualified development. To be eligible to receive
an allocation of credits, the partners, shareholders, members,
or other constituent taxpayers must be a member of the entity

HB5554 - 6 - LRB101 19774 HLH 69285 b
at the end of the taxable year in which the allocation occurs.
The owner must submit an owner certification to the Department
detailing the amount of credit allocated to each constituent
taxpayer, or the owner must notify the Department that it has
assigned the duty of the owner certification to one such
constituent taxpayer who must provide such owner certification
to the Department. Each constituent taxpayer is allowed to
claim such amount of credit subject to any restrictions set
forth in this Section.
(e) Any partner, shareholder, member or other constituent
taxpayer that receives a direct or indirect allocation of
credits from the owner of a qualified development may transfer
the credit to any third party subject to taxes imposed by the
Illinois Income Tax Act or the Illinois Insurance Code. The
transferring partner, shareholder, member, or other
constituent taxpayer shall be liable for any recapture pursuant
to Section 15, and the transferee shall not be liable for
recapture pursuant to Section 15. The owner of the qualified
development may not transfer the credit.
(f) No credit may be allocated pursuant to this Act unless
the qualified development is the subject of a recorded
restrictive covenant requiring the development to be
maintained and operated as a qualified development; this
requirement for a recorded restrictive covenant may be
satisfied by the agreement for an extended low-income housing
commitment required for the federal tax credits as defined in

HB5554 - 7 - LRB101 19774 HLH 69285 b
Section 42(h)(6)(B) of the federal Internal Revenue Code of
1986.
(g) If, during a taxable year, there is a determination
that no recorded restrictive covenant meeting the requirements
of subsection (f) was in effect as of the beginning of that
year, such determination shall not apply to any period before
that year and subsection (f) shall be applied without regard to
that determination if the failure is corrected within one year
from the date of the determination.
(h) The credit amount may be taken against the taxes
imposed by the Illinois Income Tax Act for each taxable year of
the credit period. The credit amount may be taken against the
taxes imposed by the Illinois Insurance Code for each reporting
period in the credit period. Any credit amount that exceeds the
tax due for a taxable year may be carried forward as a tax
credit against payments due for up to 5 taxable years following
the tax year to which the credit relates and must be applied
first to the earliest reporting periods possible. Credits that
are not claimed may not be refunded to the taxpayer.
Section 15. Recapture. If, under Section 42 of the Internal
Revenue Code of 1986, a portion of any federal tax credit
claimed with respect to a qualified development is required to
be recaptured during the first 10 years after a project is
placed in service, then the Department shall recapture a
portion of the related credits under this Act from the taxpayer

HB5554 - 8 - LRB101 19774 HLH 69285 b
who claimed the credit or, in the case of a transfer, from the
transferee. The amount of credit subject to recapture shall be
proportionately equal to the amount of the qualified
development's federal tax credits which are subject to
recapture. If that recapture of any credit is required in any
tax year, the return submitted for that tax year by the owner
of the qualified development to the Department must include the
proportion of credit required to be recaptured, the identity of
the taxpayer subject to recapture, and the amount of credit
previously allocated to that taxpayer. The taxpayer subject to
recapture shall increase such taxpayer's tax by the amount of
any credit wrongfully claimed by itself or its transferee.
Those adjustments shall be made in the year the reduction in
qualified basis is identified.
Section 20. Filing requirements. An owner of a qualified
development that has received an allocation and each qualified
taxpayer to which that owner has allocated a portion of the
credit, if any, must file with their State tax returns a copy
of the State 8609 equivalent issued by the Authority for that
development as well as a copy of the owner certification.
Section 25. Rules. The Illinois Housing Development
Authority and the Department, in consultation with each other,
shall adopt such rules as are necessary to carry out their
respective responsibilities under this Act.

HB5554 - 9 - LRB101 19774 HLH 69285 b
Section 30. Compliance monitoring. The Authority, in
consultation with the Department, shall monitor and oversee
compliance with the provisions of this Act and shall report
specific occurrences of noncompliance to the Department.
Section 35. Report to the General Assembly.
(a) The Illinois Housing Development Authority must, by
December 31 of each allocation year, provide a written report
to the General Assembly and must publish that report on its
website.
(b) The report shall:
(1) set forth the number of qualified developments that
have been allocated tax credits under this Act during the
allocation year and the total number of units supported by
each development;
(2) describe each qualified development that has been
allocated such credits including, without limitation, the
geographic location of the development, the household type
and any specific demographic information available about
residents intended to be served by the development, the
income levels intended to be served by the development, and
the rents or set-asides authorized for each development;
(3) provide housing market and demographic information
that demonstrates how the qualified developments supported
by the tax credits are addressing the need for affordable

HB5554 - 10 - LRB101 19774 HLH 69285 b
housing within the communities they are intended to serve
as well as information about any remaining disparities in
the affordability of housing within those communities;
(4) provide information on the percentage of
developments allocated credits that received incentive
scoring points in the qualified allocation plan as a result
of the general contractor, property manager, architect, or
sponsor being certified under the Business Enterprise
Program for Minorities, Females, and Persons with a
Disability.
Section 40. Exempt from automatic sunset. The credit under
this Act is exempt from the provisions of Section 250 of the
Illinois Income Tax Act.
Section 90. The Illinois Income Tax Act is amended by
adding Section 232 as follows:
(35 ILCS 5/232 new)
Sec. 232. Build Illinois Homes Tax Credit Act. For taxable
years beginning on or after January 1, 2021, taxpayers are
entitled to credits against the taxes imposed by subsections
(a), (b), and (c) of Section 201 as provided in the Build
Illinois Homes Tax Credit Act.
Section 95. The Illinois Insurance Code is amended by

HB5554 - 11 - LRB101 19774 HLH 69285 b
changing Sections 409 and 444 as follows:
(215 ILCS 5/409) (from Ch. 73, par. 1021)
Sec. 409. Annual privilege tax payable by companies.
(1) As of January 1, 1999 for all health maintenance
organization premiums written; as of July 1, 1998 for all
premiums written as accident and health business, voluntary
health service plan business, dental service plan business, or
limited health service organization business; and as of January
1, 1998 for all other types of insurance premiums written,
every company doing any form of insurance business in this
State, including, but not limited to, every risk retention
group, and excluding all fraternal benefit societies, all farm
mutual companies, all religious charitable risk pooling
trusts, and excluding all statutory residual market and special
purpose entities in which companies are statutorily required to
participate, whether incorporated or otherwise, shall pay, for
the privilege of doing business in this State, to the Director
for the State treasury a State tax equal to 0.5% of the net
taxable premium written, together with any amounts due under
Section 444 of this Code, except that the tax to be paid on any
premium derived from any accident and health insurance or on
any insurance business written by any company operating as a
health maintenance organization, voluntary health service
plan, dental service plan, or limited health service
organization shall be equal to 0.4% of such net taxable premium

HB5554 - 12 - LRB101 19774 HLH 69285 b
written, together with any amounts due under Section 444. Upon
the failure of any company to pay any such tax due, the
Director may, by order, revoke or suspend the company's
certificate of authority after giving 20 days written notice to
the company, or commence proceedings for the suspension of
business in this State under the procedures set forth by
Section 401.1 of this Code. The gross taxable premium written
shall be the gross amount of premiums received on direct
business during the calendar year on contracts covering risks
in this State, except premiums on annuities, premiums on which
State premium taxes are prohibited by federal law, premiums
paid by the State for health care coverage for Medicaid
eligible insureds as described in Section 5-2 of the Illinois
Public Aid Code, premiums paid for health care services
included as an element of tuition charges at any university or
college owned and operated by the State of Illinois, premiums
on group insurance contracts under the State Employees Group
Insurance Act of 1971, and except premiums for deferred
compensation plans for employees of the State, units of local
government, or school districts. The net taxable premium shall
be the gross taxable premium written reduced only by the
following:
(a) the amount of premiums returned thereon which shall
be limited to premiums returned during the same preceding
calendar year and shall not include the return of cash
surrender values or death benefits on life policies

HB5554 - 13 - LRB101 19774 HLH 69285 b
including annuities;
(b) dividends on such direct business that have been
paid in cash, applied in reduction of premiums or left to
accumulate to the credit of policyholders or annuitants. In
the case of life insurance, no deduction shall be made for
the payment of deferred dividends paid in cash to
policyholders on maturing policies; dividends left to
accumulate to the credit of policyholders or annuitants
shall be included as gross taxable premium written when
such dividend accumulations are applied to purchase
paid-up insurance or to shorten the endowment or premium
paying period.
(2) The annual privilege tax payment due from a company
under subsection (4) of this Section may be reduced by: (a) the
excess amount, if any, by which the aggregate income taxes paid
by the company, on a cash basis, for the preceding calendar
year under Sections 601 and 803 of the Illinois Income Tax Act
exceed 1.5% of the company's net taxable premium written for
that prior calendar year, as determined under subsection (1) of
this Section; and (b) the amount of any fire department taxes
paid by the company during the preceding calendar year under
Section 11-10-1 of the Illinois Municipal Code. Any deductible
amount or offset allowed under items (a) and (b) of this
subsection for any calendar year will not be allowed as a
deduction or offset against the company's privilege tax
liability for any other taxing period or calendar year.

HB5554 - 14 - LRB101 19774 HLH 69285 b
(3) If a company survives or was formed by a merger,
consolidation, reorganization, or reincorporation, the
premiums received and amounts returned or paid by all companies
party to the merger, consolidation, reorganization, or
reincorporation shall, for purposes of determining the amount
of the tax imposed by this Section, be regarded as received,
returned, or paid by the surviving or new company.
(4)(a) All companies subject to the provisions of this
Section shall make an annual return for the preceding calendar
year on or before March 15 setting forth such information on
such forms as the Director may reasonably require. Payments of
quarterly installments of the taxpayer's total estimated tax
for the current calendar year shall be due on or before April
15, June 15, September 15, and December 15 of such year, except
that all companies transacting insurance in this State whose
annual tax for the immediately preceding calendar year was less
than $5,000 shall make only an annual return. Failure of a
company to make the annual payment, or to make the quarterly
payments, if required, of at least 25% of either (i) the total
tax paid during the previous calendar year or (ii) 80% of the
actual tax for the current calendar year shall subject it to
the penalty provisions set forth in Section 412 of this Code.
(b) Notwithstanding the foregoing provisions, no annual
return shall be required or made on March 15, 1998, under this
subsection. For the calendar year 1998:
(i) each health maintenance organization shall have no

HB5554 - 15 - LRB101 19774 HLH 69285 b
estimated tax installments;
(ii) all companies subject to the tax as of July 1,
1998 as set forth in subsection (1) shall have estimated
tax installments due on September 15 and December 15 of
1998 which installments shall each amount to no less than
one-half of 80% of the actual tax on its net taxable
premium written during the period July 1, 1998, through
December 31, 1998; and
(iii) all other companies shall have estimated tax
installments due on June 15, September 15, and December 15
of 1998 which installments shall each amount to no less
than one-third of 80% of the actual tax on its net taxable
premium written during the calendar year 1998.
In the year 1999 and thereafter all companies shall make
annual and quarterly installments of their estimated tax as
provided by paragraph (a) of this subsection.
(5) In addition to the authority specifically granted under
Article XXV of this Code, the Director shall have such
authority to adopt rules and establish forms as may be
reasonably necessary for purposes of determining the
allocation of Illinois corporate income taxes paid under
subsections (a) through (d) of Section 201 of the Illinois
Income Tax Act amongst members of a business group that files
an Illinois corporate income tax return on a unitary basis, for
purposes of regulating the amendment of tax returns, for
purposes of defining terms, and for purposes of enforcing the

HB5554 - 16 - LRB101 19774 HLH 69285 b
provisions of Article XXV of this Code. The Director shall also
have authority to defer, waive, or abate the tax imposed by
this Section if in his opinion the company's solvency and
ability to meet its insured obligations would be immediately
threatened by payment of the tax due.
(6) This Section is subject to the provisions of Section 10
of the New Markets Development Program Act.
(7) This Section is subject to the provisions of the Build
Illinois Homes Tax Credit Act.
(Source: P.A. 97-813, eff. 7-13-12; 98-1169, eff. 1-9-15.)
(215 ILCS 5/444) (from Ch. 73, par. 1056)
Sec. 444. Retaliation.
(1) Whenever the existing or future laws of any other state
or country shall require of companies incorporated or organized
under the laws of this State as a condition precedent to their
doing business in such other state or country, compliance with
laws, rules, regulations, and prohibitions more onerous or
burdensome than the rules and regulations imposed by this State
on foreign or alien companies, or shall require any deposit of
securities or other obligations in such state or country, for
the protection of policyholders or otherwise or require of such
companies or agents thereof or brokers the payment of
penalties, fees, charges, or taxes greater than the penalties,
fees, charges, or taxes required in the aggregate for like
purposes by this Code or any other law of this State, of

HB5554 - 17 - LRB101 19774 HLH 69285 b
foreign or alien companies, agents thereof or brokers, then
such laws, rules, regulations, and prohibitions of said other
state or country shall apply to companies incorporated or
organized under the laws of such state or country doing
business in this State, and all such companies, agents thereof,
or brokers doing business in this State, shall be required to
make deposits, pay penalties, fees, charges, and taxes, in
amounts equal to those required in the aggregate for like
purposes of Illinois companies doing business in such state or
country, agents thereof or brokers. Whenever any other state or
country shall refuse to permit any insurance company
incorporated or organized under the laws of this State to
transact business according to its usual plan in such other
state or country, the director may, if satisfied that such
company of this State is solvent, properly managed, and can
operate legally under the laws of such other state or country,
forthwith suspend or cancel the license of every insurance
company doing business in this State which is incorporated or
organized under the laws of such other state or country to the
extent that it insures in this State against any of the risks
or hazards which are sought to be insured against by the
company of this State in such other state or country.
(2) The provisions of this Section shall not apply to
residual market or special purpose assessments or guaranty fund
or guaranty association assessments, both under the laws of
this State and under the laws of any other state or country,

HB5554 - 18 - LRB101 19774 HLH 69285 b
and any tax offset or credit for any such assessment shall, for
purposes of this Section, be treated as a tax paid both under
the laws of this State and under the laws of any other state or
country.
(3) The terms "penalties", "fees", "charges", and "taxes"
in subsection (1) of this Section shall include: the penalties,
fees, charges, and taxes collected on a cash basis under State
law and referenced within Article XXV exclusive of any items
referenced by subsection (2) of this Section, but including any
tax offset allowed under Section 531.13 of this Code; the
aggregate Illinois corporate income taxes paid under Sections
601 and 803 of the Illinois Income Tax Act during the calendar
year for which the retaliatory tax calculation is being made,
less the recapture of any Illinois corporate income tax cash
refunds to the extent that the amount of tax refunded was
reported as part of the Illinois basis in the calculation of
the retaliatory tax for a prior tax year, provided that such
recaptured refund shall not exceed the amount necessary for
equivalence of the Illinois basis with the state of
incorporation basis in such tax year, and after any tax offset
allowed under Section 531.13 of this Code; income or personal
property taxes imposed by other states or countries; penalties,
fees, charges, and taxes of other states or countries imposed
for purposes like those of the penalties, fees, charges, and
taxes specified in Article XXV of this Code exclusive of any
item referenced in subsection (2) of this Section; and any

HB5554 - 19 - LRB101 19774 HLH 69285 b
penalties, fees, charges, and taxes required as a franchise,
privilege, or licensing tax for conducting the business of
insurance whether calculated as a percentage of income, gross
receipts, premium, or otherwise.
(4) Nothing contained in this Section or Section 409 or
Section 444.1 is intended to authorize or expand any power of
local governmental units or municipalities to impose taxes,
fees, or charges.
(5) This Section is subject to the provisions of Section 10
of the New Markets Development Program Act.
(6) This Section is subject to the provisions of the Build
Illinois Homes Tax Credit Act.
(Source: P.A. 98-1169, eff. 1-9-15.)
Section 99. Effective date. This Act takes effect upon
becoming law.