Bill Text: IL SB3498 | 2019-2020 | 101st General Assembly | Introduced
Bill Title: Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2020 and ending on June 30, 2026. Provides that the credit shall not exceed $5,000 per employee hired. Provides that the maximum amount of credits allowed is $75,000,000. Effective immediately.
Spectrum: Partisan Bill (Democrat 8-0)
Status: (Failed) 2021-01-13 - Session Sine Die [SB3498 Detail]
Download: Illinois-2019-SB3498-Introduced.html
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||
1 | AN ACT concerning revenue.
| ||||||||||||||||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois,
| ||||||||||||||||||||||||||||||||
3 | represented in the General Assembly:
| ||||||||||||||||||||||||||||||||
4 | Section 5. The Small Business Job Creation Tax Credit Act | ||||||||||||||||||||||||||||||||
5 | is amended by changing Sections 5, 10, 25, 30, and 35 as | ||||||||||||||||||||||||||||||||
6 | follows:
| ||||||||||||||||||||||||||||||||
7 | (35 ILCS 25/5)
| ||||||||||||||||||||||||||||||||
8 | Sec. 5. Findings and purpose. Small businesses provide for | ||||||||||||||||||||||||||||||||
9 | roughly half of the private workforce in Illinois. In the wake | ||||||||||||||||||||||||||||||||
10 | of one of the worst economic crises in Illinois history, it is | ||||||||||||||||||||||||||||||||
11 | necessary to assist and encourage small businesses in the | ||||||||||||||||||||||||||||||||
12 | hiring of new employees. The General Assembly finds that the | ||||||||||||||||||||||||||||||||
13 | Illinois economy is mired in one of the worst economic | ||||||||||||||||||||||||||||||||
14 | recessions it has ever suffered. Small businesses in particular | ||||||||||||||||||||||||||||||||
15 | have been hit hard by the economy, resulting in levels of high | ||||||||||||||||||||||||||||||||
16 | unemployment throughout the State. In order to reverse the | ||||||||||||||||||||||||||||||||
17 | trend of high unemployment and to help spur the economy to | ||||||||||||||||||||||||||||||||
18 | recovery, it is necessary to assist and encourage small | ||||||||||||||||||||||||||||||||
19 | businesses in the hiring of new employees.
| ||||||||||||||||||||||||||||||||
20 | (Source: P.A. 96-888, eff. 4-13-10.)
| ||||||||||||||||||||||||||||||||
21 | (35 ILCS 25/10)
| ||||||||||||||||||||||||||||||||
22 | Sec. 10. Definitions. In this Act: |
| |||||||
| |||||||
1 | "Applicant" means a person that is operating a business | ||||||
2 | located within the State of Illinois that is engaged in | ||||||
3 | interstate or intrastate commerce and either: | ||||||
4 | (1) has no more than 50 full-time employees, without | ||||||
5 | regard to the location of employment of such employees at | ||||||
6 | the beginning of the incentive period; or | ||||||
7 | (2) for the first set of incentive periods, hired | ||||||
8 | within the incentive period an employee who had | ||||||
9 | participated as worker-trainee in the Put Illinois to Work | ||||||
10 | Program during 2010. | ||||||
11 | In the case of any person that is a member of a unitary | ||||||
12 | business group within the meaning of subdivision (a)(27) of | ||||||
13 | Section 1501 of the Illinois Income Tax Act, "applicant" refers | ||||||
14 | to the unitary business group. | ||||||
15 | "Certificate" means the tax credit certificate issued by | ||||||
16 | the Department under Section 35 of this Act. | ||||||
17 | "Certificate of eligibility" means the certificate issued | ||||||
18 | by the Department under Section 20 of this Act. | ||||||
19 | "Credit" means the amount awarded by the Department to an | ||||||
20 | applicant by issuance of a certificate under Section 35 of this | ||||||
21 | Act for each new full-time equivalent employee hired or job | ||||||
22 | created. | ||||||
23 | "Department" means the Department of Commerce and Economic | ||||||
24 | Opportunity. | ||||||
25 | "Director" means the Director of the Department. | ||||||
26 | "Full-time employee" means an individual who is employed |
| |||||||
| |||||||
1 | for a basic wage for at least 35 hours each week or who renders | ||||||
2 | any other standard of service generally accepted by industry | ||||||
3 | custom or practice as full-time employment. An individual for | ||||||
4 | whom a W-2 is issued by a Professional Employer Organization is | ||||||
5 | a full-time employee if he or she is employed in the service of | ||||||
6 | the applicant for a basic wage for at least 35 hours each week | ||||||
7 | or renders any other standard of service generally accepted by | ||||||
8 | industry custom or practice as full-time employment. For the | ||||||
9 | purposes of this Act, such an individual shall be considered a | ||||||
10 | full-time employee of the applicant. | ||||||
11 | "Professional Employer Organization" (PEO) shall have the | ||||||
12 | same meaning as defined in Section 5-5 of the Economic | ||||||
13 | Development for a Growing Economy Tax Credit Act. As used in | ||||||
14 | this Section, "Professional Employer Organization" does not | ||||||
15 | include a day and temporary labor service agency regulated | ||||||
16 | under the Day and Temporary Labor Services Act. | ||||||
17 | "Incentive period" means the period beginning on July 1 and | ||||||
18 | ending on June 30 of the following year. The first set of | ||||||
19 | incentive periods period shall begin on July 1, 2010 and the | ||||||
20 | last incentive period shall end on June 30, 2016. The second | ||||||
21 | set of incentive periods shall begin on July 1, 2020 and end on | ||||||
22 | June 30, 2026. | ||||||
23 | "Basic wage" means compensation for employment that is no | ||||||
24 | less than $10 per hour or the equivalent salary for a new | ||||||
25 | employee. | ||||||
26 | "New employee" means a full-time employee: |
| |||||||
| |||||||
1 | (1) who first became employed by an applicant with less | ||||||
2 | than 50 full-time employees within the incentive period | ||||||
3 | whose hire results in a net increase in the applicant's | ||||||
4 | full-time Illinois employees and who is receiving a basic | ||||||
5 | wage as compensation; or | ||||||
6 | (2) for the first set of incentive periods, who | ||||||
7 | participated as a worker-trainee in the Put Illinois to | ||||||
8 | Work Program during 2010 and who is subsequently hired | ||||||
9 | during the incentive period by an applicant and who is | ||||||
10 | receiving a basic wage as compensation. | ||||||
11 | The term "new employee" does not include: | ||||||
12 | (1) a person who was previously employed in Illinois by | ||||||
13 | the applicant or a related member prior to the onset of the | ||||||
14 | incentive period; or | ||||||
15 | (2) any individual who has a direct or indirect | ||||||
16 | ownership interest of at least 5% in the profits, capital, | ||||||
17 | or value of the applicant or a related member. | ||||||
18 | "Noncompliance date" means, in the case of an applicant | ||||||
19 | that is not complying with the requirements of the provisions | ||||||
20 | of this Act, the day following the last date upon which the | ||||||
21 | taxpayer was in compliance with the requirements of the | ||||||
22 | provisions of this Act, as determined by the Director, pursuant | ||||||
23 | to Section 45 of this Act. | ||||||
24 | "Put Illinois to Work Program" means a worker training and | ||||||
25 | employment program that was established by the State of | ||||||
26 | Illinois with funding from the United States Department of |
| |||||||
| |||||||
1 | Health and Human Services of Emergency Temporary Assistance for | ||||||
2 | Needy Families funds authorized by the American Recovery and | ||||||
3 | Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF | ||||||
4 | funds were in turn used by the State of Illinois to fund the | ||||||
5 | Put Illinois to Work Program. | ||||||
6 | "Related member" means a person that, with respect to the | ||||||
7 | applicant during any portion of the incentive period, is any | ||||||
8 | one of the following, | ||||||
9 | (1) An individual, if the individual and the members of | ||||||
10 | the individual's family (as defined in Section 318 of the | ||||||
11 | Internal Revenue Code) own directly, indirectly, | ||||||
12 | beneficially, or constructively, in the aggregate, at | ||||||
13 | least 50% of the value of the outstanding profits, capital, | ||||||
14 | stock, or other ownership interest in the applicant. | ||||||
15 | (2) A partnership, estate, or trust and any partner or | ||||||
16 | beneficiary, if the partnership, estate, or trust and its | ||||||
17 | partners or beneficiaries own directly, indirectly, | ||||||
18 | beneficially, or constructively, in the aggregate, at | ||||||
19 | least 50% of the profits, capital, stock, or other | ||||||
20 | ownership interest in the applicant. | ||||||
21 | (3) A corporation, and any party related to the | ||||||
22 | corporation in a manner that would require an attribution | ||||||
23 | of stock from the corporation under the attribution rules | ||||||
24 | of Section 318 of the Internal Revenue Code, if the | ||||||
25 | applicant and any other related member own, in the | ||||||
26 | aggregate, directly, indirectly, beneficially, or |
| |||||||
| |||||||
1 | constructively, at least 50% of the value of the | ||||||
2 | corporation's outstanding stock. | ||||||
3 | (4) A corporation and any party related to that | ||||||
4 | corporation in a manner that would require an attribution | ||||||
5 | of stock from the corporation to the party or from the | ||||||
6 | party to the corporation under the attribution rules of | ||||||
7 | Section 318 of the Internal Revenue Code, if the | ||||||
8 | corporation and all such related parties own, in the | ||||||
9 | aggregate, at least 50% of the profits, capital, stock, or | ||||||
10 | other ownership interest in the applicant. | ||||||
11 | (5) A person to or from whom there is attribution of | ||||||
12 | stock ownership in accordance with Section 1563(e) of the | ||||||
13 | Internal Revenue Code, except that for purposes of | ||||||
14 | determining whether a person is a related member under this | ||||||
15 | paragraph, "20%" shall be substituted for "5%" whenever | ||||||
16 | "5%" appears in Section 1563(e) of the Internal Revenue | ||||||
17 | Code.
| ||||||
18 | (Source: P.A. 100-863, eff. 8-14-18.)
| ||||||
19 | (35 ILCS 25/25)
| ||||||
20 | Sec. 25. Tax credit. | ||||||
21 | (a) Subject to the conditions set forth in this Act, for | ||||||
22 | the first set of incentive periods, an applicant is entitled to | ||||||
23 | a credit against payment of taxes withheld under Section 704A | ||||||
24 | of the Illinois Income Tax Act: | ||||||
25 | (1) for new employees who participated as |
| |||||||
| |||||||
1 | worker-trainees in the Put Illinois to Work Program during | ||||||
2 | 2010: | ||||||
3 | (A) in the first calendar year ending on or after | ||||||
4 | the date that is 6 months after December 31, 2010, or | ||||||
5 | the date of hire, whichever is later. Under this | ||||||
6 | subparagraph, the applicant is entitled to one-half of | ||||||
7 | the credit allowable for each new employee who is | ||||||
8 | employed for at least 6 months after the date of hire; | ||||||
9 | and | ||||||
10 | (B) in the first calendar year ending on or after | ||||||
11 | the date that is 12 months after December 31, 2010, or | ||||||
12 | the date of hire, whichever is later. Under this | ||||||
13 | subparagraph, the applicant is entitled to one-half of | ||||||
14 | the credit allowable for each new employee who is | ||||||
15 | employed for at least 12 months after the date of hire; | ||||||
16 | (2) for all other new employees, in the first calendar | ||||||
17 | year ending on or after the date that is 12 months after | ||||||
18 | the date of hire of a new employee. The credit shall be | ||||||
19 | allowed as a credit to an applicant for each full-time | ||||||
20 | employee hired during the incentive period that results in | ||||||
21 | a net increase in full-time Illinois employees, where the | ||||||
22 | net increase in the employer's full-time Illinois | ||||||
23 | employees is maintained for at least 12 months. | ||||||
24 | (a-5) Subject to the conditions set forth in this Act, for | ||||||
25 | the second set of incentive periods, an applicant is entitled | ||||||
26 | to a credit against payment of taxes withheld under Section |
| |||||||
| |||||||
1 | 704A of the Illinois Income Tax Act in the first calendar year | ||||||
2 | ending on or after the date that is 12 months after the date of | ||||||
3 | hire of a new employee. The credit shall be allowed as a credit | ||||||
4 | to an applicant for each full-time employee hired during the | ||||||
5 | incentive period that results in a net increase in full-time | ||||||
6 | Illinois employees, where the net increase in the employer's | ||||||
7 | full-time Illinois employees is maintained for at least 12 | ||||||
8 | months. | ||||||
9 | (b) The Department shall make credit awards under this Act | ||||||
10 | to further job creation. | ||||||
11 | (c) The credit shall be claimed for the first calendar year | ||||||
12 | ending on or after the date on which the certificate is issued | ||||||
13 | by the Department. | ||||||
14 | (d) The credit shall not exceed $5,000 $2,500 per new | ||||||
15 | employee hired. | ||||||
16 | (e) The net increase in full-time Illinois employees, | ||||||
17 | measured on an annual full-time equivalent basis, shall be the | ||||||
18 | total number of full-time Illinois employees of the applicant | ||||||
19 | on the final day of the incentive period, minus the number of | ||||||
20 | full-time Illinois employees employed by the employer on the | ||||||
21 | first day of that same incentive period. For purposes of the | ||||||
22 | calculation, an employer that begins doing business in this | ||||||
23 | State during the incentive period, as determined by the | ||||||
24 | Director, shall be treated as having zero Illinois employees on | ||||||
25 | the first day of the incentive period. | ||||||
26 | (f) The net increase in the number of full-time Illinois |
| |||||||
| |||||||
1 | employees of the applicant under subsection (e) must be | ||||||
2 | sustained continuously for at least 12 months, starting with | ||||||
3 | the date of hire of a new employee during the incentive period. | ||||||
4 | Eligibility for the credit does not depend on the continuous | ||||||
5 | employment of any particular individual. For purposes of this | ||||||
6 | subsection (f), if a new employee ceases to be employed before | ||||||
7 | the completion of the 12-month period for any reason, the net | ||||||
8 | increase in the number of full-time Illinois employees shall be | ||||||
9 | treated as continuous if a different new employee is hired as a | ||||||
10 | replacement within a reasonable time for the same position.
| ||||||
11 | (g) The Department shall promulgate rules to enable an | ||||||
12 | applicant for which a PEO has been contracted to issue W-2s and | ||||||
13 | make payment of taxes withheld under Section 704A of the | ||||||
14 | Illinois Income Tax Act for new employees to retain the benefit | ||||||
15 | of tax credits to which the applicant is otherwise entitled | ||||||
16 | under this Act. | ||||||
17 | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11; | ||||||
18 | 97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)
| ||||||
19 | (35 ILCS 25/30)
| ||||||
20 | Sec. 30. Maximum amount of credits allowed. The Department | ||||||
21 | shall limit the monetary amount of credits awarded under this | ||||||
22 | Act to no more than $75,000,000 $50,000,000 . If applications | ||||||
23 | for a greater amount are received, credits shall be allowed on | ||||||
24 | a first-come-first-served basis, based on the date on which | ||||||
25 | each properly completed application for a certificate of |
| |||||||
| |||||||
1 | eligibility is received by the Department. If more than one | ||||||
2 | certificate of eligibility is received on the same day, the | ||||||
3 | credits will be awarded based on the time of submission for | ||||||
4 | that particular day.
| ||||||
5 | (Source: P.A. 96-888, eff. 4-13-10.)
| ||||||
6 | (35 ILCS 25/35)
| ||||||
7 | Sec. 35. Application for award of tax credit; tax credit | ||||||
8 | certificate. | ||||||
9 | (a) On or after the conclusion of the 12-month period (or | ||||||
10 | 6-month period, for purposes of subparagraph (A) of item (1) of | ||||||
11 | subsection (a) of Section 25) after a new employee has been | ||||||
12 | hired, an applicant shall file with the Department an | ||||||
13 | application for award of a credit. The application shall | ||||||
14 | include the following: | ||||||
15 | (1) The names, Social Security numbers, job | ||||||
16 | descriptions, salary or wage rates, and dates of hire of | ||||||
17 | the new employees with respect to whom the credit is being | ||||||
18 | requested, and an indication of whether each new employee | ||||||
19 | listed participated as a worker-trainee in the Put Illinois | ||||||
20 | to Work Program. | ||||||
21 | (2) A certification that each new employee listed has | ||||||
22 | been retained on the job for one year (or 6 months, for | ||||||
23 | purposes of subparagraph (A) of item (1) of subsection (a) | ||||||
24 | of Section 25) from the date of hire. | ||||||
25 | (3) The number of new employees hired by the applicant |
| |||||||
| |||||||
1 | during the incentive period. | ||||||
2 | (4) The net increase in the number of full-time | ||||||
3 | Illinois employees of the applicant (including the new | ||||||
4 | employees listed in the request) between the beginning of | ||||||
5 | the incentive period and the dates on which the new | ||||||
6 | employees listed in the request were hired. This | ||||||
7 | requirement does not apply for tax credits the applicant is | ||||||
8 | seeking because the new employee had participated as a | ||||||
9 | worker-trainee in the Put Illinois to Work Program. | ||||||
10 | (5) An agreement that the Director is authorized to | ||||||
11 | verify with the appropriate State agencies the information | ||||||
12 | contained in the request before issuing a certificate to | ||||||
13 | the applicant. | ||||||
14 | (6) Any other information the Department determines to | ||||||
15 | be appropriate. | ||||||
16 | (b) Although an application may be filed at any time after | ||||||
17 | the conclusion of the 12-month period (or 6-month period, for | ||||||
18 | purposes of subparagraph (A) of item (1) of subsection (a) of | ||||||
19 | Section 25) after a new employee was hired, an application | ||||||
20 | filed more than 90 days after the earliest date on which it | ||||||
21 | could have been filed shall not be awarded any credit if, prior | ||||||
22 | to the date it is filed, the Department has received | ||||||
23 | applications under this Section for credits totaling more than | ||||||
24 | $75,000,000 $50,000,000 . | ||||||
25 | (c) The Department shall issue a certificate to each | ||||||
26 | applicant awarded a credit under this Act. The certificate |
| |||||||
| |||||||
1 | shall include the following: | ||||||
2 | (1) The name and taxpayer identification number of the | ||||||
3 | applicant. | ||||||
4 | (2) The date on which the certificate is issued. | ||||||
5 | (3) The credit amount that will be allowed. | ||||||
6 | (4) Any other information the Department determines to | ||||||
7 | be appropriate.
| ||||||
8 | (Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
| ||||||
9 | Section 99. Effective date. This Act takes effect upon | ||||||
10 | becoming law.
|