Bill Text: IL SB1427 | 2015-2016 | 99th General Assembly | Engrossed
Bill Title: Amends the Economic Development for a Growing Economy Tax Credit Act. Makes a technical change in a Section concerning the purpose of the Act.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Engrossed - Dead) 2015-05-15 - Rule 19(a) / Re-referred to Rules Committee [SB1427 Detail]
Download: Illinois-2015-SB1427-Engrossed.html
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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, | ||||||
3 | represented in the General Assembly:
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4 | Section 5. The Economic Development for a Growing Economy | ||||||
5 | Tax Credit Act is amended by changing Sections 5-5, 5-20, 5-25, | ||||||
6 | and 5-50 as follows:
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7 | (35 ILCS 10/5-5)
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8 | Sec. 5-5. Definitions. As used in this Act:
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9 | "Agreement" means the Agreement between a Taxpayer and the | ||||||
10 | Department under
the provisions of Section 5-50 of this Act.
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11 | "Applicant" means a Taxpayer that is operating a business | ||||||
12 | located or that
the Taxpayer plans to locate within the State | ||||||
13 | of Illinois and that is engaged
in interstate or intrastate | ||||||
14 | commerce for the purpose of manufacturing,
processing, | ||||||
15 | assembling, warehousing, or distributing products, conducting
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16 | research and development, providing tourism services, or | ||||||
17 | providing services
in interstate commerce, office industries, | ||||||
18 | or agricultural processing, but
excluding retail, retail food, | ||||||
19 | health, or professional services.
"Applicant" does not include | ||||||
20 | a Taxpayer who closes or
substantially reduces an operation at | ||||||
21 | one location in the State and relocates
substantially the same | ||||||
22 | operation to another location in the State. This does
not | ||||||
23 | prohibit a Taxpayer from expanding its operations at another |
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1 | location in
the State, provided that existing operations of a | ||||||
2 | similar nature located within
the State are not closed or | ||||||
3 | substantially reduced. This also does not prohibit
a Taxpayer | ||||||
4 | from moving its operations from one location in the State to | ||||||
5 | another
location in the State for the purpose of expanding the | ||||||
6 | operation provided that
the Department determines that | ||||||
7 | expansion cannot reasonably be accommodated
within the | ||||||
8 | municipality in which the business is located, or in the case | ||||||
9 | of a
business located in an incorporated area of the county, | ||||||
10 | within the county in
which the business is located, after | ||||||
11 | conferring with the chief elected
official of the municipality | ||||||
12 | or county and taking into consideration any
evidence offered by | ||||||
13 | the municipality or county regarding the ability to
accommodate | ||||||
14 | expansion within the municipality or county.
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15 | "Committee" means the Illinois Business Investment | ||||||
16 | Committee created under
Section 5-25 of this Act within the | ||||||
17 | Illinois Economic Development Board.
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18 | "Credit" means the amount agreed to between the Department | ||||||
19 | and Applicant
under this Act, but not to exceed the Incremental | ||||||
20 | Income Tax attributable to
the Applicant's project.
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21 | "Department" means the Department of Commerce and Economic | ||||||
22 | Opportunity.
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23 | "Director" means the Director of Commerce and Economic | ||||||
24 | Opportunity.
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25 | "Full-time Employee" means an individual who is employed | ||||||
26 | for consideration
for at least 35 hours each week or who |
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1 | renders any other standard of service
generally accepted by | ||||||
2 | industry custom or practice as full-time employment. An | ||||||
3 | individual for whom a W-2 is issued by a Professional Employer | ||||||
4 | Organization (PEO) is a full-time employee if employed in the | ||||||
5 | service of the Applicant for consideration for at least 35 | ||||||
6 | hours each week or who renders any other standard of service | ||||||
7 | generally accepted by industry custom or practice as full-time | ||||||
8 | employment to Applicant.
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9 | "Incremental Income Tax" means the total amount withheld | ||||||
10 | during the taxable
year from the compensation of New Employees | ||||||
11 | under Article 7 of the Illinois
Income Tax Act arising from | ||||||
12 | employment at a project that is the subject of an
Agreement.
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13 | "New Employee" means:
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14 | (a) A Full-time Employee first employed by a Taxpayer | ||||||
15 | in the project
that is the subject of an Agreement and who | ||||||
16 | is hired after the Taxpayer
enters into the tax credit | ||||||
17 | Agreement.
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18 | (b) The term "New Employee" does not include:
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19 | (1) an employee of the Taxpayer who performs a job | ||||||
20 | that was previously
performed by another employee, if | ||||||
21 | that job existed for at least 6
months before hiring | ||||||
22 | the employee;
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23 | (2) an employee of the Taxpayer who was previously | ||||||
24 | employed in
Illinois by a Related Member of the | ||||||
25 | Taxpayer and whose employment was
shifted to the | ||||||
26 | Taxpayer after the Taxpayer entered into the tax credit
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1 | Agreement; or
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2 | (3) a child, grandchild, parent, or spouse, other | ||||||
3 | than a spouse who
is legally separated from the | ||||||
4 | individual, of any individual who has a direct
or an | ||||||
5 | indirect ownership interest of at least 5% in the | ||||||
6 | profits, capital, or
value of the Taxpayer ; or .
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7 | (4) an employee of the Taxpayer who was previously | ||||||
8 | employed in Illinois by the Taxpayer and whose | ||||||
9 | employment was shifted to the project after the | ||||||
10 | Taxpayer entered into the Agreement.
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11 | (c) Notwithstanding paragraph (1) of subsection (b), | ||||||
12 | an employee may be
considered a New Employee under the | ||||||
13 | Agreement if the employee performs a job
that was | ||||||
14 | previously performed by an employee who was:
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15 | (1) treated under the Agreement as a New Employee; | ||||||
16 | and
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17 | (2) promoted by the Taxpayer to another job.
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18 | (d) Notwithstanding subsection (a), the Department may | ||||||
19 | award Credit to an
Applicant with respect to an employee | ||||||
20 | hired prior to the date of the Agreement
if:
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21 | (1) the Applicant is in receipt of a letter from | ||||||
22 | the Department stating
an
intent to enter into a credit | ||||||
23 | Agreement;
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24 | (2) the letter described in paragraph (1) is issued | ||||||
25 | by the
Department not later than 15 days after the | ||||||
26 | effective date of this Act; and
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1 | (3) the employee was hired after the date the | ||||||
2 | letter described in
paragraph (1) was issued.
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3 | "Noncompliance Date" means, in the case of a Taxpayer that | ||||||
4 | is not complying
with the requirements of the Agreement or the | ||||||
5 | provisions of this Act, the day
following the last date upon | ||||||
6 | which the Taxpayer was in compliance with the
requirements of | ||||||
7 | the Agreement and the provisions of this Act, as determined
by | ||||||
8 | the Director, pursuant to Section 5-65.
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9 | "Pass Through Entity" means an entity that is exempt from | ||||||
10 | the tax under
subsection (b) or (c) of Section 205 of the | ||||||
11 | Illinois Income Tax Act.
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12 | "Project" means a for-profit economic development activity | ||||||
13 | or activities at a single site, or of one or more taxpayers at | ||||||
14 | multiple sites if the economic activities are vertically | ||||||
15 | integrated. | ||||||
16 | "Professional Employer Organization" (PEO) means an | ||||||
17 | employee leasing company, as defined in Section 206.1(A)(2) of | ||||||
18 | the Illinois Unemployment Insurance Act.
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19 | "Related Member" means a person that, with respect to the | ||||||
20 | Taxpayer during
any portion of the taxable year, is any one of | ||||||
21 | the following:
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22 | (1) An individual stockholder, if the stockholder and | ||||||
23 | the members of the
stockholder's family (as defined in | ||||||
24 | Section 318 of the Internal Revenue Code)
own directly, | ||||||
25 | indirectly, beneficially, or constructively, in the | ||||||
26 | aggregate,
at least 50% of the value of the Taxpayer's |
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1 | outstanding stock.
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2 | (2) A partnership, estate, or trust and any partner or | ||||||
3 | beneficiary,
if the partnership, estate, or trust, and its | ||||||
4 | partners or beneficiaries own
directly, indirectly, | ||||||
5 | beneficially, or constructively, in the aggregate, at
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6 | least 50% of the profits, capital, stock, or value of the
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7 | Taxpayer.
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8 | (3) A corporation, and any party related to the | ||||||
9 | corporation in a manner
that would require an attribution | ||||||
10 | of stock from the corporation to the
party or from the | ||||||
11 | party to the corporation under the attribution rules
of | ||||||
12 | Section 318 of the Internal Revenue Code, if the Taxpayer | ||||||
13 | owns
directly, indirectly, beneficially, or constructively | ||||||
14 | at least
50% of the value of the corporation's outstanding | ||||||
15 | stock.
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16 | (4) A corporation and any party related to that | ||||||
17 | corporation in a manner
that would require an attribution | ||||||
18 | of stock from the corporation to the party or
from the | ||||||
19 | party to the corporation under the attribution rules of | ||||||
20 | Section 318 of
the Internal Revenue Code, if the | ||||||
21 | corporation and all such related parties own
in the | ||||||
22 | aggregate at least 50% of the profits, capital, stock, or | ||||||
23 | value of the
Taxpayer.
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24 | (5) A person to or from whom there is attribution of | ||||||
25 | stock ownership
in accordance with Section 1563(e) of the | ||||||
26 | Internal Revenue Code, except,
for purposes of determining |
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1 | whether a person is a Related Member under
this paragraph, | ||||||
2 | 20% shall be substituted for 5% wherever 5% appears in
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3 | Section 1563(e) of the Internal Revenue Code.
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4 | "Retained Employee" means a full-time employee employed by | ||||||
5 | a taxpayer during the term of the Agreement whose job duties | ||||||
6 | are directly and substantially related to the project. The term | ||||||
7 | "Retained Employee" does not include a child, grandchild, | ||||||
8 | parent, or spouse, other than a spouse who is legally separated | ||||||
9 | from the individual, of any individual who has direct or | ||||||
10 | indirect ownership interest of at least 5% in the profits, | ||||||
11 | capital, or value of the taxpayer. For purposes of this | ||||||
12 | definition, "directly and substantially related to the | ||||||
13 | project" means at least two-thirds of the employee's job duties | ||||||
14 | must be directly related to the project and the employee must | ||||||
15 | devote at least two-thirds of his or her time to the project. | ||||||
16 | "Taxpayer" means an individual, corporation, partnership, | ||||||
17 | or other entity
that has any Illinois Income Tax liability.
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18 | (Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
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19 | (35 ILCS 10/5-20)
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20 | Sec. 5-20. Application for a project to create and retain | ||||||
21 | new jobs.
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22 | (a) Any Taxpayer proposing a project located or planned to | ||||||
23 | be located in
Illinois may request consideration
for | ||||||
24 | designation of its project, by formal written letter of request | ||||||
25 | or by
formal application to the Department,
in which the |
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1 | Applicant states its intent to make at least a specified level | ||||||
2 | of
investment and
intends to hire or retain a
specified number | ||||||
3 | of full-time employees at a designated location in Illinois.
As
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4 | circumstances require, the
Department may require a formal | ||||||
5 | application from an Applicant and a formal
letter of request | ||||||
6 | for
assistance.
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7 | (b) In order to qualify for Credits under this Act, an | ||||||
8 | Applicant's project
must:
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9 | (1) involve an investment of at least $5,000,000 in | ||||||
10 | capital improvements
to be placed in service and to employ | ||||||
11 | at least 25 New Employees within the
State as a direct | ||||||
12 | result of the project;
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13 | (2) involve an investment in capital improvements to be | ||||||
14 | placed in
service in the State at a level of at least an | ||||||
15 | amount (to be expressly specified
by the Department and the | ||||||
16 | Committee) in capital improvements to be placed in
service | ||||||
17 | and will employ at least an amount (to be expressly | ||||||
18 | specified by the
Department and the Committee) of New | ||||||
19 | Employees
or Retained Employees within the State as | ||||||
20 | specified by the Department , provided that the Department | ||||||
21 | has and the Committee have
determined that the project will | ||||||
22 | provide a substantial economic benefit to the
State; or | ||||||
23 | (3) if the applicant has 100 or fewer employees, | ||||||
24 | involve an investment of at least $1,000,000 in capital | ||||||
25 | improvements to be placed in service and to employ at least | ||||||
26 | 5 New Employees within the State as a direct result of the |
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1 | project.
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2 | The Director may approve projects that do not meet the | ||||||
3 | specified minimum job creation and investment thresholds set | ||||||
4 | forth in this subsection (b) for an applicant meeting all other | ||||||
5 | requirements of this Act provided that one or more of the | ||||||
6 | following conditions are met: | ||||||
7 | (A) approval would support a business with potential to | ||||||
8 | generate additional growth by attracting companion | ||||||
9 | businesses; or | ||||||
10 | (B) approval would avert loss of one of the area's | ||||||
11 | major sources of employment. | ||||||
12 | (c) After receipt of an application, the Department may | ||||||
13 | enter into an
Agreement with the Applicant if the
application | ||||||
14 | is accepted in accordance with Section 5-25.
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15 | (Source: P.A. 93-882, eff. 1-1-05.)
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16 | (35 ILCS 10/5-25)
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17 | Sec. 5-25. Review of Application.
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18 | (a) In addition to those duties granted under the Illinois | ||||||
19 | Economic
Development Board Act, the Illinois
Economic | ||||||
20 | Development Board shall form a Business Investment Committee | ||||||
21 | for the
purpose of making
recommendations for applications. At | ||||||
22 | the request of the Board, the Director of
Commerce and
Economic | ||||||
23 | Opportunity or his or her designee, the Director of the
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24 | Governor's Office of Management and Budget or
his or her | ||||||
25 | designee, the
Director of Revenue or his or her designee, the |
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1 | Director of Employment
Security or his or her designee,
and an | ||||||
2 | elected official of the affected locality, such as the chair of | ||||||
3 | the
county board or the mayor, may
serve as members of the | ||||||
4 | Committee to assist with its analysis and
deliberations.
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5 | (b) At the Department's request, the Committee
shall
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6 | convene, make inquiries,
and conduct studies in the manner and | ||||||
7 | by the methods as it deems desirable,
review information with
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8 | respect to Applicants, and make recommendations for
projects to | ||||||
9 | benefit the State. In making its recommendation that
an | ||||||
10 | Applicant's application for Credit should or should not be | ||||||
11 | accepted, which
shall occur
within a reasonable time frame
as | ||||||
12 | determined by the nature of the application, the Committee | ||||||
13 | shall determine
that
all the following conditions
exist:
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14 | (1) The Applicant's project intends, as required by | ||||||
15 | subsection (b) of
Section 5-20 to make
the required | ||||||
16 | investment in the State and intends to hire or retain the | ||||||
17 | required
number of
New Employees or Retained Employees in | ||||||
18 | Illinois as a result of that project.
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19 | (2) The Applicant's project is economically sound and | ||||||
20 | will benefit the
people of the State of
Illinois by | ||||||
21 | increasing opportunities for employment and strengthen the | ||||||
22 | economy
of Illinois.
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23 | (3) That, if not for the Credit, the project would not | ||||||
24 | occur in Illinois,
which may be demonstrated
by any means | ||||||
25 | including, but not limited to, evidence the Applicant has
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26 | multi-state
location options and
could reasonably and |
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1 | efficiently locate outside of the State, or demonstration
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2 | that at least one other
state is being considered for the | ||||||
3 | project, or evidence the receipt of the
Credit is a major | ||||||
4 | factor in
the Applicant's decision and that without the | ||||||
5 | Credit,
the Applicant likely would not
create new jobs in | ||||||
6 | Illinois, or demonstration that receiving the Credit is
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7 | essential to the Applicant's
decision to create or retain | ||||||
8 | new jobs in the State.
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9 | (4) A cost differential is identified, using best | ||||||
10 | available
data, in the projected costs for the Applicant's | ||||||
11 | project compared to
the costs in the competing state, | ||||||
12 | including the impact of the competing
state's incentive | ||||||
13 | programs. The competing state's incentive
programs shall | ||||||
14 | include state, local, private, and federal funds
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15 | available.
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16 | (5) The political subdivisions affected by the project | ||||||
17 | have
committed local incentives with respect to the | ||||||
18 | project, considering local
ability to assist.
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19 | (6) Awarding the Credit will result in an overall | ||||||
20 | positive fiscal
impact to the State, as certified by the | ||||||
21 | Committee using
the best
available data.
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22 | (7) The Credit is not prohibited by Section 5-35 of | ||||||
23 | this Act.
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24 | (Source: P.A. 94-793, eff. 5-19-06.)
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25 | (35 ILCS 10/5-50)
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1 | Sec. 5-50. Contents of Agreements with Applicants. The | ||||||
2 | Department shall
enter into an Agreement with an
Applicant that | ||||||
3 | is awarded a Credit under this Act. The Agreement
must include | ||||||
4 | all of the following:
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5 | (1) A detailed description of the project that is the | ||||||
6 | subject of the
Agreement, including the location and amount | ||||||
7 | of the investment and jobs created
or retained.
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8 | (2) The duration of the Credit and the first taxable | ||||||
9 | year for which
the Credit may be claimed.
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10 | (3) The Credit amount that will be allowed for each | ||||||
11 | taxable year.
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12 | (4) A requirement that the Taxpayer shall maintain | ||||||
13 | operations at the
project location that shall be stated as | ||||||
14 | a minimum number of years not to
exceed 10.
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15 | (5) A specific method for determining the number of New | ||||||
16 | Employees
employed during a taxable year.
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17 | (6) A requirement that the Taxpayer shall annually | ||||||
18 | report to the
Department the number of New Employees and | ||||||
19 | Retained Employees ,
the Incremental Income Tax
withheld in | ||||||
20 | connection with the New Employees and Retained Employees , | ||||||
21 | and any other
information the Director needs to perform the | ||||||
22 | Director's duties under
this Act.
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23 | (7) A requirement that the Director is authorized to | ||||||
24 | verify with the
appropriate State agencies the amounts | ||||||
25 | reported under paragraph
(6), and after doing so shall | ||||||
26 | issue a certificate to the Taxpayer
stating that the |
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1 | amounts have been verified.
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2 | (8) A requirement that the Taxpayer shall provide | ||||||
3 | written
notification to the Director not more than 30
days | ||||||
4 | after the Taxpayer makes or receives a proposal that would
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5 | transfer the Taxpayer's State tax liability obligations to | ||||||
6 | a
successor Taxpayer.
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7 | (9) A detailed description of the number of New | ||||||
8 | Employees to be
hired, Retained Employees to be retained, | ||||||
9 | and the occupation and
payroll of the full-time jobs to be | ||||||
10 | created or retained as a result of the
project.
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11 | (10) The minimum investment the business enterprise | ||||||
12 | will make in
capital improvements, the time period
for | ||||||
13 | placing the property in service, and the designated | ||||||
14 | location in Illinois
for the investment.
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15 | (11) A requirement that the Taxpayer shall provide | ||||||
16 | written
notification to the Director and
the Committee not | ||||||
17 | more than 30 days after the Taxpayer determines
that the | ||||||
18 | minimum
job creation or retention, employment payroll, or | ||||||
19 | investment no longer is being
or will be achieved or
| ||||||
20 | maintained as set forth in the terms and conditions of the
| ||||||
21 | Agreement.
| ||||||
22 | (12) A provision that, if the total number of New | ||||||
23 | Employees or Retained Employees falls
below a specified | ||||||
24 | level, the
allowance of Credit shall be suspended until the | ||||||
25 | number of New
Employees and Retained Employees equals or | ||||||
26 | exceeds
the Agreement amount.
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1 | (13) A detailed description of the items for which the | ||||||
2 | costs incurred by
the Taxpayer will be included
in the | ||||||
3 | limitation on the Credit provided in Section 5-30.
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4 | (13.5) A provision that, if the Taxpayer never meets | ||||||
5 | either the investment or job creation and retention | ||||||
6 | requirements specified in the Agreement during the entire | ||||||
7 | 5-year period beginning on the first day of the first | ||||||
8 | taxable year in which the Agreement is executed and ending | ||||||
9 | on the last day of the fifth taxable year after the | ||||||
10 | Agreement is executed, then the Agreement is automatically | ||||||
11 | terminated on the last day of the fifth taxable year after | ||||||
12 | the Agreement is executed and the Taxpayer is not entitled | ||||||
13 | to the award of any credits for any of that 5-year period.
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14 | (14) Any other performance conditions or contract | ||||||
15 | provisions as the
Department determines are
appropriate.
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16 | The Department shall post on its website the terms of each | ||||||
17 | Agreement entered into under this Act on or after the effective | ||||||
18 | date of this amendatory Act of the 97th General Assembly. | ||||||
19 | (Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)
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20 | Section 99. Effective date. This Act takes effect upon | ||||||
21 | becoming law.
|