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| [ Introduced ] | [ Engrossed ] | [ Senate Amendment 002 ] |
90_HB1627ham001
LRB9003972KDmbam01
1 AMENDMENT TO HOUSE BILL 1627
2 AMENDMENT NO. . Amend House Bill 1627 by replacing
3 everything after the enacting clause with the following:
4 "Section 1. Short title. This Act may be cited as the
5 Economic Development for a Growing Economy Tax Credit Act.
6 Section 5. Definitions. As used in this Act:
7 "Applicant" means a taxpayer that is a business located
8 or which plans to locate within the State of Illinois that is
9 engaged in interstate or intrastate commerce for the purpose
10 of manufacturing, processing, or assembling products,
11 conducting research and development, providing tourism
12 services, or providing services in interstate commerce,
13 office industries, or agricultural processing, but excluding
14 retail, retail food, health, or professional services.
15 "Applicant" does not include a business that closes or
16 substantially reduces its operation at one location in the
17 State and relocates substantially the same operation to
18 another location in the State. This does not prohibit a
19 business from expanding its operations at another location in
20 the State provided that existing operations of a similar
21 nature located within the State are not closed or
22 substantially reduced. This also does not prohibit a business
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1 from moving its operations from one location in the State to
2 another location in the State for the purpose of expanding
3 the operation provided that the Department determines that
4 expansion cannot reasonably be accommodated within the
5 municipality in which the business is located, or in the case
6 of a business located in an incorporated area of the county,
7 within the county in which the business is located, after
8 conferring with the chief elected official of the
9 municipality or county and taking into consideration any
10 evidence offered by the municipality or county regarding the
11 ability to accommodate expansion within the municipality or
12 county.
13 "Department" means the Department of Commerce and
14 Community Affairs.
15 "Credit amount" means the amount agreed to between the
16 Department and applicant under this Act, but not to exceed
17 the new employees' income tax withholdings attributable to
18 the applicant's project.
19 "Director" means the Director of Commerce and Community
20 Affairs.
21 "Full-time employee" means an individual who is employed
22 for consideration for at least 35 hours each week or who
23 renders any other standard of service generally accepted by
24 custom or specified by contract as full-time employment.
25 "New employees' income tax withholdings" means the total
26 amount withheld under Section 701 of the Illinois Income Tax
27 Act by the taxpayer during the taxable year from the
28 compensation of new employees.
29 "New employee" means:
30 (a) A full-time employee first employed by a taxpayer in
31 the project that is the subject of a tax credit agreement and
32 who is employed after the taxpayer enters into the tax credit
33 agreement.
34 (b) The term "new employee" does not include:
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1 (1) an employee of the taxpayer who performs a job
2 that was previously performed by another employee, if
3 that job existed for at least 6 months before hiring the
4 new employee;
5 (2) an employee of the taxpayer who was previously
6 employed in Illinois by a related member of the taxpayer
7 and whose employment was shifted to the taxpayer after
8 the taxpayer entered into the tax credit agreement; or
9 (3) a child, grandchild, parent, or spouse, other
10 than a spouse who is legally separated from the
11 individual, of any individual who is an employee of the
12 taxpayer and who has a direct or an indirect ownership
13 interest of at least 5% in the profits, capital, or value
14 of the taxpayer (an ownership interest shall be
15 determined in accordance with Section 1563 of the
16 Internal Revenue Code and regulations prescribed under
17 that Section).
18 (c) Notwithstanding paragraph (1) of subsection (b), if
19 a new employee performs a job that was previously performed
20 by an employee who was:
21 (1) treated under the agreement as a new employee,
22 and
23 (2) promoted by the taxpayer to another job
24 the employee may be considered a new employee under the
25 agreement.
26 (d) Notwithstanding subsection (a), the Department may
27 credit awards to an applicant that met the conditions of this
28 Act at the time of the applicant's location or expansion
29 decision, if:
30 (1) the applicant is in receipt of a letter from
31 the Department stating an intent to enter into a credit
32 agreement; and
33 (2) the letter described in paragraph (1) is issued
34 by the Department not later than 15 days after the
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1 effective date of this Act.
2 "Pass through entity" means an entity that is exempt from
3 the tax under subsection (b) or (c) of Section 205 of the
4 Illinois Income Tax Act.
5 "Related member" means a person that, with respect to the
6 taxpayer during all or any portion of the taxable year, is
7 any one of the following:
8 (1) An individual stockholder, or a member of the
9 stockholder's family enumerated in Section 318 of the
10 Internal Revenue Code, if the stockholder and the member
11 of the stockholder's family own directly, indirectly,
12 beneficially, or constructively, in the aggregate, at
13 least 50% of the value of the taxpayer's outstanding
14 stock.
15 (2) A stockholder, or a stockholder's partnership,
16 estate, trust, or corporation, if the stockholder and the
17 stockholder's partnership, estate, trust, or corporation
18 owns directly, indirectly, beneficially, or
19 constructively, in the aggregate, at least 50% of the
20 value of the taxpayer's outstanding stock.
21 (3) A corporation, or a party related to the
22 corporation in a manner that would require an attribution
23 of stock from the corporation to the party or from the
24 party to the corporation under the attribution rules of
25 Section 318 of the Internal Revenue Code, if the taxpayer
26 owns directly, indirectly, beneficially, or
27 constructively at least 50% of the value of the
28 corporation's outstanding stock.
29 (4) A component member (as defined in Section
30 1563(b) of the Internal Revenue Code).
31 (5) A person to or from whom there is attribution
32 of stock ownership in accordance with Section 1563(e) of
33 the Internal Revenue Code except, for purposes of
34 determining whether a person is a related member under
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1 this paragraph, 20% shall be substituted for 5% wherever
2 5% appears in Section 1563(e) of the Internal Revenue
3 Code.
4 "State tax liability" means a taxpayer's total tax
5 liability that is incurred under the Illinois Income Tax Act.
6 "Taxpayer" means a person, corporation, partnership, or
7 other entity that has any State tax liability.
8 Section 10. Tax credit. Subject to the conditions set
9 forth in this Act, a taxpayer is entitled to a credit against
10 any State tax liability that may be imposed on the taxpayer
11 for a taxable year after December 31, 1996, if the taxpayer
12 is awarded a credit by the Department under this Act for that
13 taxable year.
14 Section 15. Credit awards.
15 (a) The Department may make credit awards under this Act
16 to foster job creation in Illinois.
17 (b) The credit shall be claimed for the taxable years
18 specified in the taxpayer's tax credit agreement.
19 Section 20. Proposal of project to create new jobs;
20 application. A person that proposes a project to create new
21 jobs in Illinois may apply to the Department to enter into an
22 agreement for a tax credit under this Act. The Director shall
23 prescribe the form of the application.
24 Section 25. Agreement with applicant for credit. After
25 receipt of an application, the Department may enter into an
26 agreement with the applicant for a credit under this Act if
27 the Department determines that all of the following
28 conditions exist:
29 (1) The applicant's project will create a minimum of 100
30 jobs for full-time employees that were not jobs previously
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1 performed by employees of the applicant in Illinois.
2 (2) The applicant's project is economically sound and
3 will benefit the people of Illinois by increasing
4 opportunities for employment and strengthening the economy of
5 Illinois.
6 (3) There is at least one other state that the
7 applicant verifies is being considered for the project.
8 (4) A significant disparity is identified, using best
9 available data, in the projected costs for the applicant's
10 project compared to the costs in the competing state,
11 including the impact of the competing state's incentive
12 programs. The competing state's incentive programs shall
13 include state, local, private, and federal funds available.
14 (5) The political subdivisions affected by the project
15 have committed local incentives with respect to the project.
16 (6) Receiving the tax credit is a major factor in the
17 applicant's decision to go forward with the project and not
18 receiving the tax credit will result in the applicant not
19 creating new jobs in Illinois.
20 (7) Awarding the tax credit will result in an overall
21 positive fiscal impact to the State, as certified by the
22 Bureau of the Budget using the best available data.
23 (8) The credit is not prohibited by Section 35 of this
24 Act.
25 Section 30. Use of the credits. An applicant must use
26 the credit awards provided under this Act for one or more of
27 the following purposes:
28 (1) capital investment, including, but not limited to,
29 equipment, buildings, or land;
30 (2) infrastructure development;
31 (3) debt service;
32 (4) research and development;
33 (5) job training and education;
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1 (6) lease costs; or
2 (7) relocation costs.
3 Section 35. Relocation of jobs in Illinois. A person is
4 not entitled to claim the credit provided by this Act for any
5 jobs that the person relocates from one site in Illinois to
6 another site in Illinois. Determinations under this Section
7 shall be made by the Department.
8 Section 40. Determination of credit amount. In
9 determining the credit amount that should be awarded, the
10 Department shall take into consideration the following
11 factors:
12 (1) The economy of the county where the projected
13 investment is to occur.
14 (2) The potential impact on the economy of Illinois.
15 (3) The magnitude of the cost differential between
16 Illinois and the competing state.
17 (4) The incremental payroll attributable to the project.
18 (5) The capital investment attributable to the project.
19 (6) The amount of the average wage paid by the
20 applicant.
21 (7) The costs to Illinois and the affected political
22 subdivisions with respect to the project.
23 (8) The financial assistance that is otherwise provided
24 by Illinois and the affected political subdivisions.
25 Section 45. Amount and duration of tax credit. The
26 Department shall determine the amount and duration of a tax
27 credit awarded under this Act. The duration of the credit may
28 not exceed 15 taxable years. The credit may be stated as a
29 percentage of the new employees' income tax withholdings
30 attributable to the applicant's project and may include a
31 fixed dollar limitation. The credit amount may not exceed the
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1 new employees' income tax withholdings. However, the credit
2 amount claimed for a taxable year may exceed the taxpayer's
3 State tax liability for the taxable year, in which case the
4 excess shall be refunded to the taxpayer.
5 Section 50. Contents of agreement with applicant. The
6 Department shall enter into an agreement with an applicant
7 that is awarded a credit under this Act. The agreement must
8 include all of the following:
9 (1) A detailed description of the project that is the
10 subject of the agreement.
11 (2) The duration of the tax credit and the first taxable
12 year for which the credit may be claimed.
13 (3) The credit amount that will be allowed for each
14 taxable year.
15 (4) A requirement that the taxpayer shall maintain
16 operations at the project location for at least the number of
17 years of the term of the tax credit.
18 (5) A specific method for determining the number of new
19 employees employed during a taxable year who are performing
20 jobs not previously performed by an employee.
21 (6) A requirement that the taxpayer shall annually
22 report to the Department the number of new employees who are
23 performing jobs not previously performed by an employee, the
24 new income tax revenue withheld in connection with the new
25 employees, and any other information the Director needs to
26 perform the Director's duties under this Act.
27 (7) A requirement that the Director is authorized to
28 verify with the appropriate State agencies the amounts
29 reported under paragraph (6), and after doing so shall issue
30 a certificate to the taxpayer stating that the amounts have
31 been verified.
32 (8) A requirement that the taxpayer shall provide
33 written notification to the Director not more than 30 days
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1 after the taxpayer makes or receives a proposal that would
2 transfer the taxpayer's State tax liability obligations to a
3 successor taxpayer.
4 (9) Any other performance conditions that the Director
5 determines are appropriate.
6 Section 55. Certificate of verification; submission to
7 the Department of Revenue. A taxpayer claiming a credit
8 under this Act shall submit to the Department of Revenue a
9 copy of the Director's certificate of verification under this
10 Act for the taxable year. However, failure to submit a copy
11 of the certificate does not invalidate a claim for a credit.
12 Section 60. Pass through entity with no State tax
13 liability.
14 (a) If a pass through entity does not have State income
15 tax liability against which the tax credit may be applied, a
16 shareholder or partner of the pass through entity is entitled
17 to a tax credit equal to:
18 (1) the tax credit determined for the pass through
19 entity for the taxable year; multiplied by
20 (2) the percentage of the pass through entity's
21 distributive income to which the shareholder or partner
22 is entitled.
23 (b) The credit provided under subsection (a) is in
24 addition to a tax credit to which a shareholder or partner of
25 a pass through entity is otherwise entitled under a separate
26 agreement under this Act. A pass through entity and a
27 shareholder or partner of the pass through entity may not
28 claim more than one credit under the same agreement.
29 Section 65. Noncompliance; notice; assessment. If the
30 Director determines that a taxpayer who has received a credit
31 under this Act is not complying with the requirements of the
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1 tax credit agreement or all of the provisions of this Act,
2 the director shall provide notice to the taxpayer of the
3 alleged noncompliance, and allow the taxpayer a reasonable
4 opportunity to provide an explanation. If, after affording
5 the taxpayer an opportunity to provide an explanation, the
6 Director still determines that a noncompliance exists, the
7 Director shall instruct the Department of Revenue to issue a
8 notice of deficiency under Section 904 of the Illinois Income
9 Tax Act to the taxpayer for an amount not greater than that
10 stated in the Director's notice. The amount of the
11 assessment may not exceed the amount of any previously
12 allowed credits under this Act.
13 Section 70. Annual report. On or before March 31 each
14 year, the Director shall submit a report to the Department on
15 the tax credit program under this Act to the Governor and the
16 General Assembly. The report shall include information on the
17 number of agreements that were entered into under this Act
18 during the preceding calendar year, a description of the
19 project that is the subject of each agreement, an update on
20 the status of projects under agreements entered into before
21 the preceding calendar year, and the sum of the credits
22 awarded under this Act. A copy of the report shall be
23 delivered to the Governor and to each member of the General
24 Assembly.
25 Section 75. Evaluation of tax credit program. On a
26 biennial basis, the Department shall evaluate the tax credit
27 program. The evaluation shall include an assessment of the
28 effectiveness of the program in creating new jobs in Illinois
29 and of the revenue impact of the program, and may include a
30 review of the practices and experiences of other states with
31 similar programs. The Director shall submit a report on the
32 evaluation to the Governor and the General Assembly after
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1 June 30 and before November 1 in each odd-numbered year.
2 Section 80. Adoption of rules. The Department may
3 adopt rules necessary to implement this Act. The rules may
4 provide for recipients of tax credits under this Act to be
5 charged fees to cover administrative costs of the tax credit
6 program. Fees collected shall be deposited into the Economic
7 Development for a Growing Economy Fund.
8 Section 85. The Economic Development for a Growing
9 Economy Fund.
10 (a) The Economic Development for a Growing Economy Fund
11 is established to be used exclusively for the purposes of
12 this Act, including paying for the costs of administering
13 this Act. The Fund shall be administered by the Department.
14 (b) The Fund consists of collected fees, appropriations
15 from the General Assembly, and gifts and grants to the Fund.
16 (c) The State Treasurer shall invest the money in the
17 Fund not currently needed to meet the obligations of the Fund
18 in the same manner as other public funds may be invested.
19 Interest that accrues from these investments shall be
20 deposited into the Fund.
21 (d) The money in the Fund at the end of a State fiscal
22 year remains in the Fund to be used exclusively for the
23 purposes of this Act. Expenditures from the Fund are subject
24 to appropriation by the General Assembly.
25 Section 100. The State Finance Act is amended by adding
26 Section 5.449 as follows:
27 (30 ILCS 105/5.449 new)
28 Sec. 5.449. The Economic Development for a Growing
29 Economy Fund.
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1 Section 105. The Illinois Income Tax Act is amended by
2 adding Section 211 as follows:
3 (35 ILCS 5/211 new)
4 Sec. 211. Economic Development for a Growing Economy Tax
5 Credit. For tax years beginning on or after January 1, 1997,
6 a taxpayer participating in an economic development project
7 under the Economic Development for a Growing Economy Act is
8 entitled to a tax credit against the taxes imposed under this
9 Act in an amount to be determined in the agreement required
10 under the Economic Development for Growing Economy Act. The
11 Department, in cooperation with the Department of Commerce
12 and Community Affairs, shall prescribe rules to enforce and
13 administer the provisions of this Section. This Section is
14 exempt from the provisions of Section 250 of this Act.".