Bill Text: IL SB2748 | 2015-2016 | 99th General Assembly | Introduced

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Bill Title: Amends the Illinois Income Tax Act and the Economic Development for a Growing Economy Tax Credit Act. Authorizes taxpayers to sell, assign, or transfer credits awarded under the Economic Development for a Growing Economy Tax Credit Act. Provides that credits awarded under the Economic Development for a Growing Economy Tax Credit Act may also be taken against privilege and retaliatory taxes paid under the Illinois Insurance Code. Amends the Illinois Insurance Code to make conforming changes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Introduced - Dead) 2016-05-13 - Rule 3-9(a) / Re-referred to Assignments [SB2748 Detail]

Download: Illinois-2015-SB2748-Introduced.html

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99TH GENERAL ASSEMBLY State of Illinois 2015 and 2016 SB2748 Introduced 2/16/2016, by Sen. Karen McConnaughay SYNOPSIS AS INTRODUCED:
35 ILCS 5/211
35 ILCS 10/5-5
35 ILCS 10/5-15
35 ILCS 10/5-45
215 ILCS 5/405.1 new
Amends the Illinois Income Tax Act and the Economic Development for a Growing Economy Tax Credit Act. Authorizes taxpayers to sell, assign, or transfer credits awarded under the Economic Development for a Growing Economy Tax Credit Act. Provides that credits awarded under the Economic Development for a Growing Economy Tax Credit Act may also be taken against privilege and retaliatory taxes paid under the Illinois Insurance Code. Amends the Illinois Insurance Code to make conforming changes. Effective immediately.
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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 211 as follows:
(35 ILCS 5/211)
Sec. 211. Economic Development for a Growing Economy Tax
Credit. For tax years beginning on or after January 1, 1999, a
Taxpayer who has entered into an Agreement under the Economic
Development for a Growing Economy Tax Credit Act is entitled to
a credit against the taxes imposed under subsections (a) and
(b) of Section 201 of this Act and the taxes imposed under
Sections 409, 444, and 444.1 of the Illinois Insurance Code in
an amount to be determined in the Agreement. If the Taxpayer is
a partnership or Subchapter S corporation, the credit shall be
allowed to the partners or shareholders in accordance with the
determination of income and distributive share of income under
Sections 702 and 704 and subchapter S of the Internal Revenue
Code. The Department, in cooperation with the Department of
Commerce and Economic Opportunity, shall prescribe rules to
enforce and administer the provisions of this Section. This
Section is exempt from the provisions of Section 250 of this
Act.

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The credit shall be subject to the conditions set forth in
the Agreement and the following limitations:
(1) The tax credit shall not exceed the Incremental
Income Tax (as defined in Section 5-5 of the Economic
Development for a Growing Economy Tax Credit Act) with
respect to the project.
(2) The amount of the credit allowed during the tax
year plus the sum of all amounts allowed in prior years
shall not exceed 100% of the aggregate amount expended by
the Taxpayer during all prior tax years on approved costs
defined by Agreement.
(3) The amount of the credit shall be determined on an
annual basis. Except as applied in a carryover year
pursuant to Section 211(4) of this Act, the credit may not
be applied against any State income tax liability in more
than 10 taxable years; provided, however, that (i) an
eligible business certified by the Department of Commerce
and Economic Opportunity under the Corporate Headquarters
Relocation Act may not apply the credit against any of its
State income tax liability in more than 15 taxable years
and (ii) credits allowed to that eligible business are
subject to the conditions and requirements set forth in
Sections 5-35 and 5-45 of the Economic Development for a
Growing Economy Tax Credit Act.
(4) The credit taken against the taxes imposed under
subsections (a) and (b) of Section 201 of this Act may not

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exceed the amount of taxes imposed pursuant to subsections
(a) and (b) of Section 201 of this Act. Any credit that is
unused in the year the credit is computed may be carried
forward and applied to the tax liability of the 5 taxable
years following the excess credit year or may be taken as a
credit against the taxes imposed under Section 409, 444, or
444.1 of the Illinois Insurance Code, as provided in the
Agreement. Credits that are carried forward The credit
shall be applied to the earliest year for which there is a
tax liability. If there are credits from more than one tax
year that are available to offset a liability, the earlier
credit shall be applied first.
(5) No credit shall be allowed with respect to any
Agreement for any taxable year ending after the
Noncompliance Date. Upon receiving notification by the
Department of Commerce and Economic Opportunity of the
noncompliance of a Taxpayer with an Agreement, the
Department shall notify the Taxpayer that no credit is
allowed with respect to that Agreement for any taxable year
ending after the Noncompliance Date, as stated in such
notification. If any credit has been allowed with respect
to an Agreement for a taxable year ending after the
Noncompliance Date for that Agreement, any refund paid to
the Taxpayer for that taxable year shall, to the extent of
that credit allowed, be an erroneous refund within the
meaning of Section 912 of this Act.

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(5.5) A sale, assignment, or transfer of the tax credit
award may be made by the taxpayer in accordance with rules
adopted by the Department of Commerce and Economic
Opportunity.
(6) For purposes of this Section, the terms
"Agreement", "Incremental Income Tax", and "Noncompliance
Date" have the same meaning as when used in the Economic
Development for a Growing Economy Tax Credit Act.
(Source: P.A. 94-793, eff. 5-19-06.)
Section 10. The Economic Development for a Growing Economy
Tax Credit Act is amended by changing Sections 5-5, 5-15, and
5-45 as follows:
(35 ILCS 10/5-5)
Sec. 5-5. Definitions. As used in this Act:
"Agreement" means the Agreement between a Taxpayer and the
Department under the provisions of Section 5-50 of this Act.
"Applicant" means a Taxpayer that is operating a business
located or that the Taxpayer plans to locate within the State
of Illinois and that is engaged in interstate or intrastate
commerce for the purpose of manufacturing, processing,
assembling, warehousing, or distributing products, conducting
research and development, providing tourism services, or
providing services in interstate commerce, office industries,
or agricultural processing, but excluding retail, retail food,

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health, or professional services. "Applicant" does not include
a Taxpayer who closes or substantially reduces an operation at
one location in the State and relocates substantially the same
operation to another location in the State. This does not
prohibit a Taxpayer from expanding its operations at another
location in the State, provided that existing operations of a
similar nature located within the State are not closed or
substantially reduced. This also does not prohibit a Taxpayer
from moving its operations from one location in the State to
another location in the State for the purpose of expanding the
operation provided that the Department determines that
expansion cannot reasonably be accommodated within the
municipality in which the business is located, or in the case
of a business located in an incorporated area of the county,
within the county in which the business is located, after
conferring with the chief elected official of the municipality
or county and taking into consideration any evidence offered by
the municipality or county regarding the ability to accommodate
expansion within the municipality or county.
"Committee" means the Illinois Business Investment
Committee created under Section 5-25 of this Act within the
Illinois Economic Development Board.
"Credit" means the amount agreed to between the Department
and Applicant under this Act, but not to exceed the Incremental
Income Tax attributable to the Applicant's project.
"Department" means the Department of Commerce and Economic

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Opportunity.
"Director" means the Director of Commerce and Economic
Opportunity.
"Full-time Employee" means an individual who is employed
for consideration 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. An
individual for whom a W-2 is issued by a Professional Employer
Organization (PEO) is a full-time employee if employed in the
service of the Applicant for consideration 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 to Applicant.
"Incremental Income Tax" means the total amount withheld
during the taxable year from the compensation of New Employees
under Article 7 of the Illinois Income Tax Act arising from
employment at a project that is the subject of an Agreement.
"New Employee" means:
(a) A Full-time Employee first employed by a Taxpayer
in the project that is the subject of an Agreement and who
is hired after the Taxpayer enters into the tax credit
Agreement.
(b) The term "New Employee" does not include:
(1) an employee of the Taxpayer who performs a job
that was previously performed by another employee, if
that job existed for at least 6 months before hiring

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the employee;
(2) an employee of the Taxpayer who was previously
employed in Illinois by a Related Member of the
Taxpayer and whose employment was shifted to the
Taxpayer after the Taxpayer entered into the tax credit
Agreement; or
(3) a child, grandchild, parent, or spouse, other
than a spouse who is legally separated from the
individual, of any individual who has a direct or an
indirect ownership interest of at least 5% in the
profits, capital, or value of the Taxpayer.
(c) Notwithstanding paragraph (1) of subsection (b),
an employee may be considered a New Employee under the
Agreement if the employee performs a job that was
previously performed by an employee who was:
(1) treated under the Agreement as a New Employee;
and
(2) promoted by the Taxpayer to another job.
(d) Notwithstanding subsection (a), the Department may
award Credit to an Applicant with respect to an employee
hired prior to the date of the Agreement if:
(1) the Applicant is in receipt of a letter from
the Department stating an intent to enter into a credit
Agreement;
(2) the letter described in paragraph (1) is issued
by the Department not later than 15 days after the

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effective date of this Act; and
(3) the employee was hired after the date the
letter described in paragraph (1) was issued.
"Noncompliance Date" means, in the case of a Taxpayer that
is not complying with the requirements of the Agreement or the
provisions of this Act, the day following the last date upon
which the Taxpayer was in compliance with the requirements of
the Agreement and the provisions of this Act, as determined by
the Director, pursuant to Section 5-65.
"Pass Through Entity" means an entity that is exempt from
the tax under subsection (b) or (c) of Section 205 of the
Illinois Income Tax Act.
"Professional Employer Organization" (PEO) means an
employee leasing company, as defined in Section 206.1(A)(2) of
the Illinois Unemployment Insurance Act.
"Related Member" means a person that, with respect to the
Taxpayer during any portion of the taxable year, is any one of
the following:
(1) An individual stockholder, if the stockholder and
the members of the stockholder's family (as defined in
Section 318 of the Internal Revenue Code) own directly,
indirectly, beneficially, or constructively, in the
aggregate, at least 50% of the value of the Taxpayer's
outstanding stock.
(2) A partnership, estate, or trust and any partner or
beneficiary, if the partnership, estate, or trust, and its

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partners or beneficiaries own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the profits, capital, stock, or value of the
Taxpayer.
(3) A corporation, and any party related to the
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the Taxpayer
owns directly, indirectly, beneficially, or constructively
at least 50% of the value of the corporation's outstanding
stock.
(4) A corporation and any party related to that
corporation in a manner that would require an attribution
of stock from the corporation to the party or from the
party to the corporation under the attribution rules of
Section 318 of the Internal Revenue Code, if the
corporation and all such related parties own in the
aggregate at least 50% of the profits, capital, stock, or
value of the Taxpayer.
(5) A person to or from whom there is attribution of
stock ownership in accordance with Section 1563(e) of the
Internal Revenue Code, except, for purposes of determining
whether a person is a Related Member under this paragraph,
20% shall be substituted for 5% wherever 5% appears in
Section 1563(e) of the Internal Revenue Code.

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"Taxpayer" means an individual, corporation, partnership,
or other entity that has any Illinois Income Tax liability or
any liability under Section 409, 444, or 444.1 of the Illinois
Insurance Code.
(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
(35 ILCS 10/5-15)
Sec. 5-15. Tax Credit Awards. Subject to the conditions set
forth in this Act, a Taxpayer is entitled to a Credit against
or, as described in subsection (g) of this Section, a payment
towards (i) taxes imposed pursuant to subsections (a) and (b)
of Section 201 of the Illinois Income Tax Act that may be
imposed on the Taxpayer for a taxable year beginning on or
after January 1, 1999, (ii) taxes imposed on or after the
effective date of this amendatory Act of the 99th General
Assembly pursuant to Section 409, 444, or 444.1 of the Illinois
Insurance Code, or (iii) both (i) and (ii), if the Taxpayer is
awarded a Credit by the Department under this Act for that
taxable year.
(a) The Department shall make Credit awards under this Act
to foster job creation and retention in Illinois.
(b) A person that proposes a project to create new jobs in
Illinois must enter into an Agreement with the Department for
the Credit under this Act.
(c) The Credit shall be claimed for the taxable years
specified in the Agreement.

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(d) The Credit shall not exceed the Incremental Income Tax
attributable to the project that is the subject of the
Agreement.
(e) Nothing herein shall prohibit a Tax Credit Award to an
Applicant that uses a PEO if all other award criteria are
satisfied.
(f) In lieu of the Credit allowed under this Act against
the taxes imposed pursuant to subsections (a) and (b) of
Section 201 of the Illinois Income Tax Act for any taxable year
ending on or after December 31, 2009, the Taxpayer may elect to
claim the Credit against its obligation to pay over withholding
under Section 704A of the Illinois Income Tax Act.
(1) The election under this subsection (f) may be made
only by a Taxpayer that (i) is primarily engaged in one of
the following business activities: water purification and
treatment, motor vehicle metal stamping, automobile
manufacturing, automobile and light duty motor vehicle
manufacturing, motor vehicle manufacturing, light truck
and utility vehicle manufacturing, heavy duty truck
manufacturing, motor vehicle body manufacturing, cable
television infrastructure design or manufacturing, or
wireless telecommunication or computing terminal device
design or manufacturing for use on public networks and (ii)
meets the following criteria:
(A) the Taxpayer (i) had an Illinois net loss or an
Illinois net loss deduction under Section 207 of the

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Illinois Income Tax Act for the taxable year in which
the Credit is awarded, (ii) employed a minimum of 1,000
full-time employees in this State during the taxable
year in which the Credit is awarded, (iii) has an
Agreement under this Act on December 14, 2009 (the
effective date of Public Act 96-834), and (iv) is in
compliance with all provisions of that Agreement;
(B) the Taxpayer (i) had an Illinois net loss or an
Illinois net loss deduction under Section 207 of the
Illinois Income Tax Act for the taxable year in which
the Credit is awarded, (ii) employed a minimum of 1,000
full-time employees in this State during the taxable
year in which the Credit is awarded, and (iii) has
applied for an Agreement within 365 days after December
14, 2009 (the effective date of Public Act 96-834);
(C) the Taxpayer (i) had an Illinois net operating
loss carryforward under Section 207 of the Illinois
Income Tax Act in a taxable year ending during calendar
year 2008, (ii) has applied for an Agreement within 150
days after the effective date of this amendatory Act of
the 96th General Assembly, (iii) creates at least 400
new jobs in Illinois, (iv) retains at least 2,000 jobs
in Illinois that would have been at risk of relocation
out of Illinois over a 10-year period, and (v) makes a
capital investment of at least $75,000,000;
(D) the Taxpayer (i) had an Illinois net operating

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loss carryforward under Section 207 of the Illinois
Income Tax Act in a taxable year ending during calendar
year 2009, (ii) has applied for an Agreement within 150
days after the effective date of this amendatory Act of
the 96th General Assembly, (iii) creates at least 150
new jobs, (iv) retains at least 1,000 jobs in Illinois
that would have been at risk of relocation out of
Illinois over a 10-year period, and (v) makes a capital
investment of at least $57,000,000; or
(E) the Taxpayer (i) employed at least 2,500
full-time employees in the State during the year in
which the Credit is awarded, (ii) commits to make at
least $500,000,000 in combined capital improvements
and project costs under the Agreement, (iii) applies
for an Agreement between January 1, 2011 and June 30,
2011, (iv) executes an Agreement for the Credit during
calendar year 2011, and (v) was incorporated no more
than 5 years before the filing of an application for an
Agreement.
(1.5) The election under this subsection (f) may also
be made by a Taxpayer for any Credit awarded pursuant to an
agreement that was executed between January 1, 2011 and
June 30, 2011, if the Taxpayer (i) is primarily engaged in
the manufacture of inner tubes or tires, or both, from
natural and synthetic rubber, (ii) employs a minimum of
2,400 full-time employees in Illinois at the time of

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application, (iii) creates at least 350 full-time jobs and
retains at least 250 full-time jobs in Illinois that would
have been at risk of being created or retained outside of
Illinois, and (iv) makes a capital investment of at least
$200,000,000 at the project location.
(1.6) The election under this subsection (f) may also
be made by a Taxpayer for any Credit awarded pursuant to an
agreement that was executed within 150 days after the
effective date of this amendatory Act of the 97th General
Assembly, if the Taxpayer (i) is primarily engaged in the
operation of a discount department store, (ii) maintains
its corporate headquarters in Illinois, (iii) employs a
minimum of 4,250 full-time employees at its corporate
headquarters in Illinois at the time of application, (iv)
retains at least 4,250 full-time jobs in Illinois that
would have been at risk of being relocated outside of
Illinois, (v) had a minimum of $40,000,000,000 in total
revenue in 2010, and (vi) makes a capital investment of at
least $300,000,000 at the project location.
(1.7) Notwithstanding any other provision of law, the
election under this subsection (f) may also be made by a
Taxpayer for any Credit awarded pursuant to an agreement
that was executed or applied for on or after July 1, 2011
and on or before March 31, 2012, if the Taxpayer is
primarily engaged in the manufacture of original and
aftermarket filtration parts and products for automobiles,

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motor vehicles, light duty motor vehicles, light trucks and
utility vehicles, and heavy duty trucks, (ii) employs a
minimum of 1,000 full-time employees in Illinois at the
time of application, (iii) creates at least 250 full-time
jobs in Illinois, (iv) relocates its corporate
headquarters to Illinois from another state, and (v) makes
a capital investment of at least $4,000,000 at the project
location.
(2) An election under this subsection shall allow the
credit to be taken against payments otherwise due under
Section 704A of the Illinois Income Tax Act during the
first calendar year beginning after the end of the taxable
year in which the credit is awarded under this Act.
(3) The election shall be made in the form and manner
required by the Illinois Department of Revenue and, once
made, shall be irrevocable.
(4) If a Taxpayer who meets the requirements of
subparagraph (A) of paragraph (1) of this subsection (f)
elects to claim the Credit against its withholdings as
provided in this subsection (f), then, on and after the
date of the election, the terms of the Agreement between
the Taxpayer and the Department may not be further amended
during the term of the Agreement.
(g) A pass-through entity that has been awarded a credit
under this Act, its shareholders, or its partners may treat
some or all of the credit awarded pursuant to this Act as a tax

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payment for purposes of the Illinois Income Tax Act. The term
"tax payment" means a payment as described in Article 6 or
Article 8 of the Illinois Income Tax Act or a composite payment
made by a pass-through entity on behalf of any of its
shareholders or partners to satisfy such shareholders' or
partners' taxes imposed pursuant to subsections (a) and (b) of
Section 201 of the Illinois Income Tax Act. In no event shall
the amount of the award credited pursuant to this Act exceed
the Illinois income tax liability of the pass-through entity or
its shareholders or partners for the taxable year.
(h) Effective July 1, 2016, any tax credits awarded under
this Act and not previously claimed by a taxpayer against its
income tax liability under Section 201 of the Illinois Income
Tax Act may be sold, assigned, or transferred, in whole or in
part, to another Illinois taxpayer subject to all of the
following conditions:
(1) A taxpayer awarded an income tax credit under this
Act may make only a single sale, assignment, or transfer of
the tax credit earned in a taxable year; however, the
credit may be sold, assigned, or transferred to one or more
transferees.
(2) The tax credit earned by the transferor may be
transferred before the due date, including extensions, of
the Illinois income tax return of the transferor. The
amount of the credit transferred to the transferee or
transferees may not exceed the amount of the credit earned

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by the transferor in the transferor's taxable year.
(3) Written notification of the transfer or sale of
credits awarded under this Act shall be submitted to the
Department of Commerce and Economic Opportunity and the
Department of Revenue within 30 days after the sale,
assignment, or transfer. The Department of Revenue shall
provide by rule the information required to be provided in
such written notification.
(4) The transfer or sale of tax credits under this
subsection does not extend the time during which those tax
credits can be used. The carry-forward period for a tax
credit that is transferred or sold shall begin on the date
on which the tax credit was originally earned.
(5) A transferee shall have only those rights to claim
and use the tax credit that were available to the taxpayer
that earned the credit, except that credits sold or
transferred may not be used against a transferee's
withholding tax liability.
(6) If the taxpayer earning the credit fails to comply
with the terms and requirements of the Agreement, and,
pursuant to the provisions of Section 5-65 of this Act,
notice is provided to the Department of Revenue of the
taxpayer's non-compliance, the Department shall hold the
transferor liable for any tax, penalty, or interest due as
a result of non-compliance with the Agreement.
(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;

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96-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
3-4-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
(35 ILCS 10/5-45)
Sec. 5-45. Amount and duration of the credit.
(a) The Department shall determine the amount and duration
of the credit awarded under this Act. The duration of the
credit may not exceed 10 taxable years. The credit may be
stated as a percentage of the Incremental Income Tax
attributable to the applicant's project and may include a fixed
dollar limitation.
(b) Notwithstanding subsection (a), and except as the
credit may be applied in a carryover year pursuant to Section
211(4) of the Illinois Income Tax Act, the credit may be
applied against the State income tax liability, or the tax
liability under Section 409, 444, or 444.1 of the Illinois
Insurance Code, in more than 10 taxable years but not in more
than 15 taxable years for an eligible business that (i)
qualifies under this Act and the Corporate Headquarters
Relocation Act and has in fact undertaken a qualifying project
within the time frame specified by the Department of Commerce
and Economic Opportunity under that Act, and (ii) applies
against its State income tax liability and insurance tax
liability, during the entire 15-year period, no more than 60%
of the maximum credit per year that would otherwise be
available under this Act.

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(Source: P.A. 94-793, eff. 5-19-06.)
Section 15. The Illinois Insurance Code is amended by
adding Section 405.1 as follows:
(215 ILCS 5/405.1 new)
Sec. 405.1. Economic Development for a Growing Economy Tax
Credit. Credits may be granted against the taxes imposed under
Section 409, 444, or 444.1 of this Act on or after the
effective date of this amendatory Act of the 99th General
Assembly as provided in Section 211 of the Illinois Income Tax
Act or the Economic Development for a Growing Economy Tax
Credit Act.