Bill Text: IL SB3009 | 2015-2016 | 99th General Assembly | Introduced

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Bill Title: Creates the Business and Employment Development Tax Credit Act. Provides that the Department of Commerce and Economic Opportunity may certify a business as eligible for an income tax credit under the Act and may award credits to certified businesses. Sets forth the amount of the credit, which is calculated as a percentage of the wages paid to new or retained full-time and part-time employees. Provides that the duration of the credit is 5 taxable years, except that the credit may be carried forward for 5 years. Contains provisions concerning recapture of the credit. Amends the Illinois Income Tax Act to make conforming changes. Provides that the Business and Employment Development Tax Credit is exempt from the Act's automatic sunset provision. Effective immediately.

Spectrum: Bipartisan Bill

Status: (Introduced - Dead) 2016-05-13 - Rule 3-9(a) / Re-referred to Assignments [SB3009 Detail]

Download: Illinois-2015-SB3009-Introduced.html

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99TH GENERAL ASSEMBLY State of Illinois 2015 and 2016 SB3009 Introduced 2/18/2016, by Sen. Chuck Weaver SYNOPSIS AS INTRODUCED:
New Act
35 ILCS 5/224 new
Creates the Business and Employment Development Tax Credit Act. Provides that the Department of Commerce and Economic Opportunity may certify a business as eligible for an income tax credit under the Act and may award credits to certified businesses. Sets forth the amount of the credit, which is calculated as a percentage of the wages paid to new or retained full-time and part-time employees. Provides that the duration of the credit is 5 taxable years, except that the credit may be carried forward for 5 years. Contains provisions concerning recapture of the credit. Amends the Illinois Income Tax Act to make conforming changes. Provides that the Business and Employment Development Tax Credit is exempt from the Act's automatic sunset provision. 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 1. Short title. This Act may be cited as the
Business and Employment Development Tax Credit Act.
Section 5. Purpose. The General Assembly finds that, in an
increasingly global economy, the State's economy would benefit
from efficient use of State resources in support of business
development and increased employment. Tax credits shall be
granted under this Act only for genuine business development
and employment growth within the State.
Section 10. Definitions. As used in this Act:
"Applicant" means a taxpayer seeking certified business
status from the Department.
"Average number of employees" means, in the case of a
calendar year taxpayer, the sum of the total number of
full-time equivalent employees of the business in the State on
March 31, June 30, September 30, and December 31, divided by 4.
In the case of a fiscal year taxpayer, the sum of the total
number of full-time equivalent employees of the business in the
State at the end of each quarter of the taxable year of the
taxpayer divided by 4.

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"Certified business" means a taxpayer that is operating a
business located, or that the taxpayer plans to locate, within
the State that is certified as eligible for the credits awarded
under this Act.
"Credit" means the credits awarded pursuant to Section 20
of this Act.
"Department" means the Department of Commerce and Economic
Opportunity or its successor.
"Director" means the Director of Commerce and Economic
Opportunity.
"Eligible new employee" means a full-time or part-time
employee of a certified business. The term "eligible new
employee" does not include a person classified as an
independent contractor under laws and rules administered by the
Department of Employment Security.
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.
"New employee" means each Illinois-domiciled resident
hired as an eligible new employee employed in a net new job.

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"New job" means a job that did not exist in the business of
the taxpayer in this State prior to the taxable year in which
the new job was created. New jobs must be filled by new
employees.
"Net new employment" means the average number of new jobs
of a certified business in the State during the taxable year
that equals or exceeds the average number of employees of the
business in the State during the immediately preceding taxable
year.
"Net new job" means a job that: (1) is new to this State;
(2) has not been transferred from another business located in
this State through an acquisition, merger, consolidation, or
other reorganization of the business, or through the
acquisition of the assets of another business, or transferred
from the existing employees of a related person, as defined in
Section 465(b)(3)(C) of the Internal Revenue Code, located in
the State, to similar employment with the taxpayer unless the
business has received approval from the Department; and (3) is
not filled by an individual employed within the State within
the preceding 60 months by a related person.
"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 of the
Unemployment Insurance Act.

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"Related member" means a person who, 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
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

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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 that, 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.
"Retained job" means a full-time or part-time position of
employment by a taxpayer that would either be eliminated or
transferred outside of this State absent an award of the
credits in Section 20 of this Act.
"Taxpayer" means an individual, corporation, partnership,
or other entity that is subject to the Illinois Income Tax Act,
and means each individual member of a unitary business group,
as that term is defined in Section 1501 of the Illinois Income
Tax Act, and does not mean a unitary business group as a whole.
"Training costs" means 50% of employee wage costs for a new
employee during the first 6 months of employment of that new
employee.
Section 15. Powers of the Department. The Department, in
addition to those powers granted under the Civil Administrative

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Code of Illinois, is granted and shall have all the powers
necessary or convenient to carry out and effectuate the
purposes and provisions of this Act, including, but not limited
to, power and authority to:
(1) adopt rules deemed necessary and appropriate for
the administration of the this Act;
(2) establish forms for applications, notifications,
contracts, or any other agreements, and accept
applications for credits under this Act at any time
during the year;
(3) provide and assist taxpayers pursuant to the
provisions of this Act and cooperate with taxpayers that
are certified businesses to promote, foster, and support
economic development, capital investment, and job creation
or retention within the State;
(4) enter into agreements and memoranda of
understanding for participation of and engage in
cooperation with agencies of the federal government, units
of local government, universities, research foundations or
institutions, regional economic development corporations,
or other organizations for the purposes of this Act;
(5) establish, negotiate, and effectuate any term,
agreement, or other document with any person, necessary or
appropriate to accomplish the purposes of this Act;
(6) provide for sufficient personnel to permit the
administration, staffing, operation, and related support

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required to adequately discharge the Department's duties
and responsibilities described in this Act from funds as
may be appropriated by the General Assembly for the
administration of this Act;
(7) require applicants, upon written request, to issue
any necessary authorization to the appropriate federal,
State, or local authority for the release of information
concerning a project being considered under the provisions
of this Act, with the information requested to include, but
not be limited to, financial reports, returns, or records
relating to the taxpayer or the project; and
(8) require that a certified business shall at all
times keep proper books of record and account in accordance
with generally accepted accounting principles consistently
applied, with the books, records, or papers related in the
custody or control of the certified business open for
reasonable Department inspection and audits, and
including, without limitation, the making of copies of the
books, records, or papers, and the inspection or appraisal
of any assets of the certified business or project.
Section 20. Tax credit awards.
(a)For taxable years beginning after December 31, 2016, the
Department shall award credits against the tax imposed under
subsections (a) and (b) of Section 201 of the Illinois Income
Tax Act to certified businesses for jobs created or retained in

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an amount equal to:
(1) 10% of the wages paid to each eligible new
full-time employee during the taxable year in which he or
she is hired and each of the subsequent 4 taxable years;
10% of the wages paid to each eligible retained full-time
employee in the first year in which the taxpayer is a
certified business and each of the subsequent 4 taxable
years; and an additional 5% of the wages paid to an
eligible new or retained full-time employee during those
taxable years if the wages paid to that eligible new or
retained full-time employee are more than 150% of the
Illinois minimum wage when calculated on an hourly basis;
and
(2) 5% of the wages paid to each eligible new part-time
employee during the taxable year in which he or she is
hired and the subsequent 4 taxable years; 5% of the wages
paid to each eligible retained part-time employee in the
first year in which the taxpayer is a certified business
and each of the subsequent 4 taxable years; and
(3) an additional amount of 10% of the wages of an
eligible new or retained full-time or part-time employee
employed by the certified business in a labor market area
that meets any one of the following criteria:
(A) the labor market area has a poverty rate of at
least 20%, according to the latest federal decennial
census;

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(B) 50% or more of the children in the local labor
market participate in the federal free lunch program,
according to reported statistics from the State Board
of Education, or
(C) 20% or more of the households in the local
labor market area receive food stamps, according to the
latest federal decennial census.
(4) In lieu of the credits provided under paragraphs
(1), (2), and (3) of this subsection (a), an amount equal
to 50% of the training costs, as defined in Section 10,
associated with each new employee.
(b) The Department shall award credits for investment in an
amount equal to:
(1) 50% of the amount claimed by the certified business
for the taxable year pursuant to subsection (e) of Section
201 of the Illinois Income Tax Act; or
(2) 50% of the amount claimed by the Certified Business
for the taxable year pursuant to subsection (h) or (f) of
Section 201 of the Illinois Income Tax.
(c) The maximum amount of all new credits awarded by the
Department during any calendar year may not exceed $50,000,000.
Any taxpayer who is otherwise qualified for a credit but is not
awarded a credit in a taxable year solely because the
$50,000,000 cap has been reached is eligible for the credit in
the following taxable year.
(d) Any tax credits awarded under this Act and not

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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
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 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 may be used. The carry-forward period for a tax
credit that is transferred or sold shall begin on the date

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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 is later
determined to not be in entitled to the credit, the
Department of Revenue shall hold the transferor liable for
any tax, penalty, or interest due as a result of such
determination.
Section 25. Application to be a certified business.
(a) Any taxpayer proposing to increase investment and
employment in Illinois may request designation as a certified
business by application to the Department in which the taxpayer
states its intent to hire or retain a specified number of
full-time or full-time equivalent employees at designated
locations in Illinois.
(b) In order to qualify for credits under this Act, the
applicant must create net new jobs or retain existing jobs that
would be eliminated or transferred to locations outside of
Illinois but for the credits to be received by the taxpayer.
(c) After review of the application, the Department may
certify the applicant as a certified business.

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Section 30. Relocation of jobs in Illinois. A taxpayer may
not claim the credits provided by this Act with respect to any
jobs that the taxpayer relocates from one site in Illinois to
another site in Illinois, except for those jobs certified as
retained jobs. Determinations under this Section shall be made
by the Department.
Section 35. Duration of the credit. The duration of the
credit is 5 taxable years, except as the credit may be applied
in a carryover year pursuant to Section 224 of the Illinois
Income Tax Act.
Section 40. Recapture of the credit. If a taxpayer fails to
maintain any retained job or net new job for the year in which
the job was created or retained, then no credit shall be
granted for that net new job. If a taxpayer fails to maintain
any retained job or net new job for the subsequent 4 taxable
years after the year of creation or retention, the credits
granted under this Act for those jobs shall be recaptured. Any
amounts recaptured pursuant to this Section shall be reported
and paid to the Department of Revenue on the income tax return
for the taxable year in which the recapture is triggered. Any
such amounts repaid by the original due date of the income tax
return on which the recapture is reported shall be subject to
only to interest, but not penalties under the Uniform Penalty
and Interest Act.

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Section 45. Certificate of verification.
(a) A certified business claiming credits under this Act
shall submit to the Department of Revenue a copy of the
Department's certificate of verification under this Act for the
taxable year. However, a failure to submit a copy of the
certificate with the tax return of the certified business shall
not invalidate a claim for a credit.
(b) For a certified business to be eligible for a
certificate of verification, the certified business shall
provide proof as required by the Department prior to the end of
each calendar year, including, but not limited to, attestation
by the certified business of the retained jobs and net new
employment in the State during the taxable year.
Section 50. Pass-through entity. The shareholders or
partners of a certified business that is a pass-through entity
shall be entitled to the credits awarded under this Act.
Section 55. Rulemaking. The Department and the Department
of Revenue shall adopt rules necessary to implement this Act.
Section 60. Noncompliance; notice; assessment. If the
Department determines that a taxpayer who has received a credit
under this Act is not complying with the requirements of this
Act, the Department shall provide written notice to the

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taxpayer of the alleged noncompliance. The notice shall provide
the basis for the Department's determination and shall allow
the taxpayer to request a hearing before the Department of
Revenue, provided such request is made within 60 days after the
notice is provided to the taxpayer. Any hearing authorized
pursuant to this Section shall be subject to the rules of the
Department of Revenue and shall be open to the public in the
same manner as any other matter before the Department of
Revenue. If, after such notice and any hearing, the Department
of Revenue determines that a noncompliance exists, the
Department of Revenue shall issue to the Department of Commerce
and Economic Opportunity a notice to that effect, stating the
revocation date.
Section 65. Annual report. On or before July 1 each year,
the Department shall submit a report on the tax credit program
under this Act to the Governor and the General Assembly. The
report shall include information on the number of
certifications made under this Act during the preceding
calendar year, a description of the subject of each
certification, an update of the status of certifications
entered into in preceding calendar years, and the sum of
credits awarded under this Act.
Section 100. The Illinois Income Tax Act is amended by
adding Section 224 as follows:

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(35 ILCS 5/224 new)
Sec. 224. Business and employment development tax credit.
(a) For tax years beginning on or after January 1, 2017, a
taxpayer who has been certified by the Department of Commerce
and Economic Opportunity as a certified business under the
Business and Employment Development Tax Credit Act is entitled
to a credit against the taxes imposed under subsections (a) and
(b) of Section 201 of this Act as provided in this Act. 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
adopt rules to enforce and administer the provisions of this
Section. This Section is exempt from the provisions of Section
250 of this Act.
(b) The amount of the credit shall be determined on an
annual basis. Except as applied in a carryover year, the credit
may not be applied against any State income tax liability in
more than 10 taxable years.
(c) In no event shall a credit under this Section reduce
the taxpayer's liability to less than zero. If the amount of
the credit exceeds the tax liability for the year, the excess
may be carried forward and applied to the tax liability of the

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5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is
a tax liability. If there are credits for more than one year
that are available to offset a liability, the earlier credit
shall be applied first.
(d) No credit shall be allowed with respect to any
certification for any taxable year ending after the revocation
of the certification by the Department of Commerce and Economic
Opportunity. Upon receiving notification by the Department of
Commerce and Economic Opportunity of the revocation of
certification, the Department shall notify the taxpayer that no
credit is allowed for any taxable year ending after the
revocation date, as stated in such notification. If any credit
has been allowed with respect to a certification for a taxable
year ending after the revocation date, 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.
(e) 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.
(f) The terms used in this Section have the meanings given
to those terms in the Business and Employment Development Tax
Credit Act.
Section 999. Effective date. This Act takes effect upon
becoming law.