SB3429 101ST GENERAL ASSEMBLY

LRB101 19733 HLH 69239 b

101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB3429

Introduced 2/14/2020, by Sen. Heather A. Steans

SYNOPSIS AS INTRODUCED:

35 ILCS 5/212
35 ILCS 5/703	from Ch. 120, par. 7-703
820 ILCS 170/5	from Ch. 48, par. 2755
820 ILCS 170/10	from Ch. 48, par. 2760
820 ILCS 170/15	from Ch. 48, par. 2765
820 ILCS 170/17 new
820 ILCS 170/20	from Ch. 48, par. 2770

Amends the Illinois Income Tax Act. Provides that the State earned income tax credit shall be: (i) 19% of the federal tax credit for each taxable year beginning on or after January 1, 2022 and beginning before January 1, 2023; and (ii) 20% of the federal credit for each taxable year beginning on or after January 1, 2023. Requires the Department of Revenue and certain institutions of higher education to provide certain notices concerning the federal and State earned income tax credits. Effective immediately.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

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 Sections 212 and 703 as follows:

(35 ILCS 5/212)

Sec. 212. Earned income tax credit.

(a) With respect to the federal earned income tax credit allowed for the taxable year under Section 32 of the federal Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer is entitled to a credit against the tax imposed by subsections (a) and (b) of Section 201 in an amount equal to (i) 5% of the federal tax credit for each taxable year beginning on or after January 1, 2000 and ending prior to December 31, 2012, (ii) 7.5% of the federal tax credit for each taxable year beginning on or after January 1, 2012 and ending prior to December 31, 2013, (iii) 10% of the federal tax credit for each taxable year beginning on or after January 1, 2013 and beginning prior to January 1, 2017, (iv) 14% of the federal tax credit for each taxable year beginning on or after January 1, 2017 and beginning prior to January 1, 2018, and (v) 18% of the federal tax credit for each taxable year beginning on or after January 1, 2018 and beginning before January 1, 2022, (vi) 19% of the federal tax credit for each taxable year beginning on or after January 1, 2022 and beginning before January 1, 2023, and (vii) 20% of the federal credit for each taxable year beginning on or after January 1, 2023.

For a non-resident or part-year resident, the amount of the credit under this Section shall be in proportion to the amount of income attributable to this State.

(b) For taxable years beginning before January 1, 2003, in no event shall a credit under this Section reduce the taxpayer's liability to less than zero. For each taxable year beginning on or after January 1, 2003, if the amount of the credit exceeds the income tax liability for the applicable tax year, then the excess credit shall be refunded to the taxpayer. The amount of a refund shall not be included in the taxpayer's income or resources for the purposes of determining eligibility or benefit level in any means-tested benefit program administered by a governmental entity unless required by federal law.

(d) For taxable years beginning on or after January 1, 2021, each individual taxpayer age 18 to 24 is entitled to the credit under paragraph (a) without regard to the requirement under Section 32(c)(1)(A)(ii) of the federal Internal Revenue Code that the individual taxpayer without a qualifying child have attained the age of 25.

(e) For taxable years beginning on or after January 1, 2022, each individual taxpayer filing a return using an individual tax identification number as prescribed under Section 6109 of the federal Internal Revenue Code, other than a Social Security number issued pursuant to Section 205(c)(2)(A) of the Social Security Act, is entitled to the credit under paragraph (a) without regard to the restrictions under Section 32(m) of the federal Internal Revenue Code.

(c) This Section is exempt from the provisions of Section 250.

(Source: P.A. 100-22, eff. 7-6-17.)

(35 ILCS 5/703) (from Ch. 120, par. 7-703)

Sec. 703. Information statement. Every employer required to deduct and withhold tax under this Act from compensation of an employee, or who would have been required so to deduct and withhold tax if the employee's withholding exemption were not in excess of the basic amount in Section 204(b), shall furnish in duplicate to each such employee in respect of the compensation paid by such employer to such employee during the calendar year on or before January 31 of the succeeding year, or, if his employment is terminated before the close of such calendar year, on the date on which the last payment of compensation is made, a written statement in such form as the Department may by regulation prescribe showing the amount of compensation paid by the employer to the employee, the amount deducted and withheld as tax, and such other information as the Department shall prescribe. A copy of such statement shall be filed by the employee with his return for his taxable year to which it relates (as determined under Section 601(b)(1)). Beginning January 1, 2021, every employer shall include with such statement information as the Department may specify regarding the earned income credit allowed under Section 212 of this Act.

(Source: P.A. 97-507, eff. 8-23-11.)

Section 10. The Earned Income Tax Credit Information Act is amended by changing Sections 5, 10, 15, and 20 and by adding Section 17 as follows:

(820 ILCS 170/5) (from Ch. 48, par. 2755)

Sec. 5. Declaration of public policy. In order to alleviate the tax burden of low-income persons in Illinois who have earned income and support one or more dependent children, the State should facilitate the furnishing of information to such persons about the availability of the federal and State earned income tax credit so that eligible taxpayers may claim that credit on their federal and State income tax returns. It is the intent of this Act to offer the most cost-effective assistance to eligible taxpayers through notices provided by their employers and by State government.

(Source: P.A. 100-201, eff. 8-18-17.)

(820 ILCS 170/10) (from Ch. 48, par. 2760)

Sec. 10. Definitions. In this Act:

(a) "Employer" means any Illinois employer who is subject to and is required to provide unemployment insurance to his or her employees, under the Unemployment Insurance Act.

(b) "Employee" means any person who is covered by unemployment insurance by his or her employer, pursuant to the Unemployment Insurance Act.

(c) "Institution of higher learning" has the same meaning as defined in Section 10 of the Higher Education Student Assistance Act.

(Source: P.A. 87-598.)

(820 ILCS 170/15) (from Ch. 48, par. 2765)

Sec. 15. Notification by employer.

(a) An employer shall be required to notify all employees that they may be eligible for the federal and State earned income tax credits credit and may either apply for the credit on their tax returns or receive the credit in advance payments during the year. The employer shall not be required to notify any employee who receives gross wages from that employer that exceed the maximum amount that may qualify for the federal or State earned income tax credit.

(b) The employer shall provide the notification required by subsection (a) of this Section by giving or mailing to the employee:

(1) for the federal earned income tax credit, any notice available from the Internal Revenue Service for this purpose, including, but not limited to, the Notice of a Possible Federal Tax Refund Due to the Earned Income Credit (EIC); or

(2) for the State earned income tax credit any notice available from the Department of Revenue for this purpose; or

(2) any notice created by the employer, as long as it contains substantially the same language as either or both of the following: (1) the either or both notices described in paragraphs paragraph (1) and (2) of this subsection; or (2) the notices described in in subsections subsection (a) and (c) of Section 20.

(c) The notice prescribed in this Section shall be furnished within one week before or after, or at the same time, that the employer provides a Form W-2 to any employee covered by this Act.

(Source: P.A. 87-598.)

(820 ILCS 170/17 new)

Sec. 17. Notification by institution of higher learning.

(a) An institution of higher learning shall be required to notify all students that they or their parent or guardian may be eligible for the federal and State earned income tax credits and may apply for the credits on their tax returns.

(b) The employer shall provide the notification required by subsection (a) of this Section by giving, mailing, or providing by electronic communication to the student:

(1) for the federal earned income tax credits, any notice available from the Internal Revenue Service for this purpose, including, but not limited to, the Notice of a Possible Federal Tax Refund Due to the Earned Income Credit (EIC); and

(2) for the State earned income tax credit any notice available from the Illinois Department of Revenue for this purpose; or

(3) any notice created by the institution of higher learning, as long as it contains substantially the same language as the notices described in paragraphs (1) and (2) of this subsection or in subsections (a) and (c) of Section 20.

(c) The notice prescribed in this Section shall be furnished after January 1 and no later than February 15 of each year.

(820 ILCS 170/20) (from Ch. 48, par. 2770)

Sec. 20. Language of notice.

(a) The notice furnished to employers or created by employers to notify their employees about the availability of the federal earned income tax credit shall state as follows:

IF YOU EARNED LESS THAN $....... LAST YEAR AND HAVE AT LEAST ONE CHILD, YOU MAY BE ELIGIBLE TO RECEIVE A TAX CREDIT FROM THE FEDERAL GOVERNMENT. THE TAX CREDIT MAY BE A REFUND FROM THE FEDERAL GOVERNMENT FOR AS MUCH AS $..... EVEN IF YOU DO NOT OWE FEDERAL TAXES, YOU MUST FILE A TAX RETURN TO RECEIVE THE EARNED INCOME TAX CREDIT. BE SURE TO FILL OUT THE EARNED INCOME TAX CREDIT FORM IN THE TAX RETURN BOOKLET.

(b) The notice furnished by employers shall be updated annually in the appropriate blanks to reflect the maximum earned income tax credit and the maximum earnings to which such tax credit shall apply, as determined by the federal government.

(c) The notice furnished to employers or created by employers to notify their employees about the availability of the State earned income tax credit shall include language provided annually by the Department of Revenue.

(d) The Department of Revenue shall annually, prior to December 31, publish the language required to be provided by employers and institutions of higher learning in this Section and Section 17.

(Source: P.A. 87-598.)

Section 99. Effective date. This Act takes effect upon becoming law.