100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
HB5038

 

Introduced , by Rep. Bill Mitchell

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 10/5-5
35 ILCS 10/5-35

    Amends the Economic Development for a Growing Economy Tax Credit Act. Repeals provisions allowing an applicant to move its operations from one location in the State to another location in the State for the purpose of expanding the operation. Provides that an employee of the Taxpayer who was previously employed in Illinois by the Taxpayer and whose employment was shifted to the project after the Taxpayer entered into the Agreement is not considered a new employee for purposes of the Act. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Economic Development for a Growing Economy
5Tax Credit Act is amended by changing Sections 5-5 and 5-35 as
6follows:
 
7    (35 ILCS 10/5-5)
8    Sec. 5-5. Definitions. As used in this Act:
9    "Agreement" means the Agreement between a Taxpayer and the
10Department under the provisions of Section 5-50 of this Act.
11    "Applicant" means a Taxpayer that is operating a business
12located or that the Taxpayer plans to locate within the State
13of Illinois and that is engaged in interstate or intrastate
14commerce for the purpose of manufacturing, processing,
15assembling, warehousing, or distributing products, conducting
16research and development, providing tourism services, or
17providing services in interstate commerce, office industries,
18or agricultural processing, but excluding retail, retail food,
19health, or professional services. "Applicant" does not include
20a Taxpayer who closes or substantially reduces an operation at
21one location in the State and relocates substantially the same
22operation to another location in the State. This does not
23prohibit a Taxpayer from expanding its operations at another

 

 

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1location in the State, provided that existing operations of a
2similar nature located within the State are not closed or
3substantially reduced. This also does not prohibit a Taxpayer
4from moving its operations from one location in the State to
5another location in the State for the purpose of expanding the
6operation provided that the Department determines that
7expansion cannot reasonably be accommodated within the
8municipality in which the business is located, or in the case
9of a business located in an incorporated area of the county,
10within the county in which the business is located, after
11conferring with the chief elected official of the municipality
12or county and taking into consideration any evidence offered by
13the municipality or county regarding the ability to accommodate
14expansion within the municipality or county.
15    "Committee" means the Illinois Business Investment
16Committee created under Section 5-25 of this Act within the
17Illinois Economic Development Board.
18    "Credit" means the amount agreed to between the Department
19and Applicant under this Act, but not to exceed the lesser of:
20(1) the sum of (i) 50% of the Incremental Income Tax
21attributable to New Employees at the Applicant's project and
22(ii) 10% of the training costs of New Employees; or (2) 100% of
23the Incremental Income Tax attributable to New Employees at the
24Applicant's project. However, if the project is located in an
25underserved area, then the amount of the Credit may not exceed
26the lesser of: (1) the sum of (i) 75% of the Incremental Income

 

 

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1Tax attributable to New Employees at the Applicant's project
2and (ii) 10% of the training costs of New Employees; or (2)
3100% of the Incremental Income Tax attributable to New
4Employees at the Applicant's project. If an Applicant agrees to
5hire the required number of New Employees, then the maximum
6amount of the Credit for that Applicant may be increased by an
7amount not to exceed 25% of the Incremental Income Tax
8attributable to retained employees at the Applicant's project;
9provided that, in order to receive the increase for retained
10employees, the Applicant must provide the additional evidence
11required under paragraph (3) of subsection (b) of Section 5-25.
12    "Department" means the Department of Commerce and Economic
13Opportunity.
14    "Director" means the Director of Commerce and Economic
15Opportunity.
16    "Full-time Employee" means an individual who is employed
17for consideration for at least 35 hours each week or who
18renders any other standard of service generally accepted by
19industry custom or practice as full-time employment. An
20individual for whom a W-2 is issued by a Professional Employer
21Organization (PEO) is a full-time employee if employed in the
22service of the Applicant for consideration for at least 35
23hours each week or who renders any other standard of service
24generally accepted by industry custom or practice as full-time
25employment to Applicant.
26    "Incremental Income Tax" means the total amount withheld

 

 

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1during the taxable year from the compensation of New Employees
2and, if applicable, retained employees under Article 7 of the
3Illinois Income Tax Act arising from employment at a project
4that is the subject of an Agreement.
5    "New Employee" means:
6        (a) A Full-time Employee first employed by a Taxpayer
7    in the project that is the subject of an Agreement and who
8    is hired after the Taxpayer enters into the tax credit
9    Agreement.
10        (b) The term "New Employee" does not include:
11            (1) an employee of the Taxpayer who performs a job
12        that was previously performed by another employee, if
13        that job existed for at least 6 months before hiring
14        the employee;
15            (2) an employee of the Taxpayer who was previously
16        employed in Illinois by a Related Member of the
17        Taxpayer and whose employment was shifted to the
18        Taxpayer after the Taxpayer entered into the tax credit
19        Agreement; or
20            (3) a child, grandchild, parent, or spouse, other
21        than a spouse who is legally separated from the
22        individual, of any individual who has a direct or an
23        indirect ownership interest of at least 5% in the
24        profits, capital, or value of the Taxpayer; or .
25            (4) an employee of the Taxpayer who was previously
26        employed in Illinois by the Taxpayer and whose

 

 

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1        employment was shifted to the project after the
2        Taxpayer entered into the Agreement.
3        (c) Notwithstanding paragraph (1) of subsection (b),
4    an employee may be considered a New Employee under the
5    Agreement if the employee performs a job that was
6    previously performed by an employee who was:
7            (1) treated under the Agreement as a New Employee;
8        and
9            (2) promoted by the Taxpayer to another job.
10        (d) Notwithstanding subsection (a), the Department may
11    award Credit to an Applicant with respect to an employee
12    hired prior to the date of the Agreement if:
13            (1) the Applicant is in receipt of a letter from
14        the Department stating an intent to enter into a credit
15        Agreement;
16            (2) the letter described in paragraph (1) is issued
17        by the Department not later than 15 days after the
18        effective date of this Act; and
19            (3) the employee was hired after the date the
20        letter described in paragraph (1) was issued.
21    "Noncompliance Date" means, in the case of a Taxpayer that
22is not complying with the requirements of the Agreement or the
23provisions of this Act, the day following the last date upon
24which the Taxpayer was in compliance with the requirements of
25the Agreement and the provisions of this Act, as determined by
26the Director, pursuant to Section 5-65.

 

 

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1    "Pass Through Entity" means an entity that is exempt from
2the tax under subsection (b) or (c) of Section 205 of the
3Illinois Income Tax Act.
4    "Professional Employer Organization" (PEO) means an
5employee leasing company, as defined in Section 206.1(A)(2) of
6the Illinois Unemployment Insurance Act.
7    "Related Member" means a person that, with respect to the
8Taxpayer during any portion of the taxable year, is any one of
9the following:
10        (1) An individual stockholder, if the stockholder and
11    the members of the stockholder's family (as defined in
12    Section 318 of the Internal Revenue Code) own directly,
13    indirectly, beneficially, or constructively, in the
14    aggregate, at least 50% of the value of the Taxpayer's
15    outstanding stock.
16        (2) A partnership, estate, or trust and any partner or
17    beneficiary, if the partnership, estate, or trust, and its
18    partners or beneficiaries own directly, indirectly,
19    beneficially, or constructively, in the aggregate, at
20    least 50% of the profits, capital, stock, or value of the
21    Taxpayer.
22        (3) A corporation, and any party related to the
23    corporation in a manner that would require an attribution
24    of stock from the corporation to the party or from the
25    party to the corporation under the attribution rules of
26    Section 318 of the Internal Revenue Code, if the Taxpayer

 

 

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1    owns directly, indirectly, beneficially, or constructively
2    at least 50% of the value of the corporation's outstanding
3    stock.
4        (4) A corporation and any party related to that
5    corporation in a manner that would require an attribution
6    of stock from the corporation to the party or from the
7    party to the corporation under the attribution rules of
8    Section 318 of the Internal Revenue Code, if the
9    corporation and all such related parties own in the
10    aggregate at least 50% of the profits, capital, stock, or
11    value of the Taxpayer.
12        (5) A person to or from whom there is attribution of
13    stock ownership in accordance with Section 1563(e) of the
14    Internal Revenue Code, except, for purposes of determining
15    whether a person is a Related Member under this paragraph,
16    20% shall be substituted for 5% wherever 5% appears in
17    Section 1563(e) of the Internal Revenue Code.
18    "Taxpayer" means an individual, corporation, partnership,
19or other entity that has any Illinois Income Tax liability.
20    "Underserved area" means a geographic area that meets one
21or more of the following conditions:
22        (1) the area has a poverty rate of at least 20%
23    according to the latest federal decennial census;
24        (2) 75% or more of the children in the area participate
25    in the federal free lunch program according to reported
26    statistics from the State Board of Education;

 

 

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1        (3) at least 20% of the households in the area receive
2    assistance under the Supplemental Nutrition Assistance
3    Program (SNAP); or
4        (4) the area has an average unemployment rate, as
5    determined by the Illinois Department of Employment
6    Security, that is more than 120% of the national
7    unemployment average, as determined by the U.S. Department
8    of Labor, for a period of at least 2 consecutive calendar
9    years preceding the date of the application.
10(Source: P.A. 100-511, eff. 9-18-17.)
 
11    (35 ILCS 10/5-35)
12    Sec. 5-35. Relocation of jobs in Illinois. A taxpayer is
13not entitled to claim the credit provided by this Act with
14respect to any jobs that the taxpayer relocates from one site
15in Illinois to another site in Illinois. A taxpayer with
16respect to a qualifying project certified under the Corporate
17Headquarters Relocation Act, however, is not subject to the
18requirements of this Section but is nevertheless considered an
19applicant for purposes of this Act. Moreover, any full-time
20employee of an eligible business relocated to Illinois in
21connection with that qualifying project is deemed to be a new
22employee for purposes of this Act. Determinations under this
23Section shall be made by the Department.
24(Source: P.A. 91-476, eff. 8-11-99; 92-207, eff. 8-1-01.)
 
25    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.