HB3437eng 102ND GENERAL ASSEMBLY

HB3437 Engrossed LRB102 14622 CPF 19975 b

AN ACT concerning safety.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

ARTICLE 1. INVESTING IN ILLINOIS WORKS TAX CREDIT ACT

Section 1-1. Short title. This Article may be cited as the Investing in Illinois Works Tax Credit Act. References in this Article to "this Act" mean this Article.

Section 1-3. Legislative findings. The General Assembly finds that:

Economic research indicates that registered apprenticeship programs have positive economic impacts, and countries with more widespread usage of apprenticeship programs have shown to be more successful at transitioning young workers into stable jobs, resulting in lower youth unemployment rates.

The demographics of registered apprenticeship programs in our State do not mirror the diversity of Illinoisans. According to data from the U.S. Department of Labor's Office of Apprenticeship, from 2000 through 2016, only 8.8% of all construction apprentices were African-American, 17.6% were Hispanic or Latino/Latina, while 69.6% were white.

In order to work toward a level playing field for all who seek the training and economic stability apprenticeships provide, Illinois created the Illinois Works Preapprenticeship Program, which funds preapprenticeship skills training through community-based organizations serving populations that have, historically, been met with barriers to entry or advancement in the workforce.

By targeting historically underutilized communities whose members seek to access the upward mobility and career advancement apprenticeships bring, the Illinois Works Preapprenticeship Program is one part of many State initiatives to increase diversity in apprenticeship programs and careers in the construction and building trades.

The Investing in Illinois Works Tax Credit expands the goals of the Illinois Works Preapprenticeship Program to private construction projects and highly skilled training programs by incentivizing contractors to utilize graduates of the Illinois Works Preapprenticeship Program or graduates of the U.S. Department of Labor's Office of Apprenticeship as part of their skilled and trained workforces on projects at high-hazard facilities.

Section 1-5. Definitions. As used in this Act:

"Apprenticeship program" has the same meaning as provided in Section 10-5 of the Illinois Hazardous Materials Workforce Training Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Illinois Works Preapprenticeship Program" means a network of community-based, nonprofit organizations throughout Illinois that receive grant funding from the Illinois Department of Commerce and Economic Opportunity to recruit, pre-screen, and provide preapprenticeship skill training to create a qualified, diverse pipeline of workers who are prepared for careers in the construction and building trades as prescribed in Section 20-15 of the Illinois Works Jobs Program Act.

"Inflation adjustment" means for any calendar year the percentage, if any, by which the Consumer Price Index for All Urban Consumers, as issued by the United States Department of Labor, for the preceding calendar year exceeds the Consumer Price Index for All Urban Consumers for calendar year 2021.

"Owner or operator" has the meaning provided in Section 5 of the Illinois Hazardous Materials Workforce Training Act.

"Qualifying employee" means a qualifying graduate who was continuously employed by the owner or operator, or a contractor employed by the owner or operator, in Illinois during all 4 reporting periods occurring in the calendar year directly preceding the calendar year in which the credit is claimed.

"Qualifying graduate" means an individual from an underrepresented population who has successfully completed a preapprenticeship program through the Illinois Works Preapprenticeship Program in compliance with the requirements of Section 20-15 of the Illinois Works Jobs Programs Act and who is a registered apprentice as defined under Section 10-5 of the Illinois Hazardous Materials Workforce Training Act or has successfully completed an apprenticeship program approved by and registered with the United States Department of Labor's Office of Apprenticeship.

"Reporting period" means the quarter for which a return is required to be filed under subsection (b) of Section 704A of the Illinois Income Tax Act.

"Skilled and trained workforce" has the same meaning provided in Section 10-5 of the Illinois Hazardous Materials Workforce Training Act.

"Tax credit certificate" means the certificate awarded by the Department pursuant to Section 1-20 of this Act.

"Underrepresented population" has the meaning provided in Section 20-10 of the Illinois Works Job Program Act.

Section 1-10. Credit amount. For reporting periods beginning on or after January 1, 2022, subject to the limitations provided in this Act, an owner or operator may claim as a credit against the tax imposed under Section 704A of the Illinois Income Tax Act an amount equal to $2,500 for each qualifying employee, plus any applicable inflation adjustment, as certified by the Department on a tax credit certificate awarded pursuant to this Act.

Section 1-15. Application process.

(a) An owner or operator may apply to the Department for a certificate to receive a credit under Section 1-10.

(b) The Department shall establish an application process to certify an owner or operator for the credit under Section 1-10 as necessary for implementation of this Act. As part of the application process, the Department shall require the owner or operator to provide:

(1) the name, year, and community-based organization or union through which each qualifying employee completed his or her Illinois Works Preapprenticeship Program or apprenticeship program;

(2) the certificate of completion from the Department of Labor that the qualifying employee has completed the minimum approved safety training required by the Illinois Hazardous Materials Workforce Training Act;

(3) the hours worked by the qualifying employee that go to meeting his or her apprenticeship requirements at the time of the application;

(4) a signed affidavit from the owner or operator attesting that: (i) the qualifying employee was employed by the owner and operator or a contractor reemployed by the owner or operator during all 4 reporting periods occurring during the calendar year preceding the calendar year in which the credit will be applied; (ii) the qualifying employee performed work in his or her prevailing wage classification for the duration of his or her employment in the calendar year preceding the calendar year in which the credit will be applied; (iii) the documents provided in the application are true; and (iv) the owner or operator will comply with all applicable laws; and

(5) any other material required by the Department.

Section 1-20. Credit awards.

(a) Upon satisfactory review, the Department shall issue a tax credit certificate stating the amount of the tax credit to which an owner or operator is entitled under this Act. Each certificate shall include a unique identifying number. The credit shall be claimed for the first reporting period beginning on or after the date on which the certificate is issued by the Department. The credit shall be equal to the amount shown on the certificate but may not reduce the taxpayer's obligation for any payment due under Section 704A of the Illinois Income Tax Act to less than zero. If the amount of the credit exceeds the total payments due under this Section with respect to amounts withheld during the reporting period, the excess may be carried forward and applied against the taxpayer's liability under Section 704A of the Illinois Income Tax Act in the 5 succeeding calendar years. The credit shall be applied to the earliest reporting period for which there is a tax liability. If there are credits from more than one reporting period that are available to offset a liability, the earlier credit shall be applied first. No credit awarded under this Act shall be sold or otherwise transferred.

(b) This Section is exempt from the provisions of Section 250 of the Illinois Income Tax Act.

(c) The Department shall award not more than an aggregate of $20,000,000 in total annual tax credits pursuant to this Act, increased annually by any applicable inflation adjustment. If applications for a greater amount are received, credits shall be allowed on a first-come, first-served basis based on the date on which each properly completed application for certification is received by the Department. If more than one properly completed application for certification is received on the same day, the credits shall be awarded based on the time of submission for that particular day.

Section 1-25. Penalties; recapture.

(a) False or fraudulent claims for credits under this Act may be subject to penalties as provided under Sections 3-5 or 3-6 of the Uniform Penalty and Interest Act, as applicable.

(b) If the Department determines that an owner or operator who has received a credit under this Act does not comply with the requirements of this Act or that a certification the owner or operator made in his or her application are false, the Department may initiate recapture procedures against the owner or operator and, after notice and an opportunity for hearing, recapture the entire credit amount awarded pursuant to any tax credit certificate under issued under this Act. The Department shall notify the Department of Revenue of any credits recaptured pursuant to this subsection.

(c) If a previously awarded credit is required to be recaptured under subsection (b), the owner or operator shall increase the next withholding payment required under Section 704A of the Illinois Income Tax Act by the amount of the recaptured credit.

Section 1-30. Rulemaking. The Department shall adopt rules for the implementation and administration of this Act. In order to provide for the expeditious and timely implementation of this Act, the Department, the Department of Labor, and the Department of Revenue may adopt emergency rules. The adoption of emergency rules authorized by this Section is deemed to be necessary for the public interest, safety, and welfare.

ARTICLE 5. ACCESS TO APPRENTICESHIP ACT

Section 5-1. Short title. This Article may be cited as the Access to Apprenticeship Act. References in this Article to "this Act" mean this Article.

Section 5-5. Restrictions on application requirements. Notwithstanding any law to the contrary, in order to ensure fair and equal access to apprenticeship programs, no application for a preapprenticeship or apprenticeship program, whether run by the State, a community-based organization, a community college, a public university, a private employer, a union, or joint labor-management program, may require a recommendation from a union member or any other person as a condition of acceptance to the preapprenticeship or apprenticeship program. An intent to hire letter from a signatory contractor shall not be considered a recommendation for purposes of this Act.

Section 5-97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

ARTICLE 10. ILLINOIS HAZARDOUS MATERIALS WORKFORCE TRAINING

ACT

Section 10-1. Short title. This Article may be cited as the Illinois Hazardous Materials Workforce Training Act. References in this Article to "this Act" mean this Article.

Section 10-5. Definitions. As used in this Act:

"Apprenticeable occupation" means an occupation in the building and construction trades for which training and apprenticeship programs have been approved by and registered with the U.S. Department of Labor's Office of Apprenticeship.

"Apprenticeship program" means an applicable training and apprenticeship program approved by and registered with the U.S. Department of Labor's Office of Apprenticeship.

"Building and construction trades council" means any labor organization that represents multiple construction trades and monitors or is attentive to compliance with public or workers' safety laws, wage and hour requirements, or other statutory requirements and negotiates and maintains collective bargaining agreements.

"Construction" means all work at a stationary source involving laborers, workers, or mechanics, including any maintenance, repair, assembly, or disassembly work performed on equipment whether owned, leased, or rented.

"Department" means the Department of Labor.

"Director" means the Director of Labor.

"Labor agreement" means a form of prehire collective bargaining agreement covering all terms and conditions of employment.

"Labor organization" means an organization that is the exclusive representative of an employer's employees recognized or certified under the federal National Labor Relations Act of 1935.

"Minimum approved safety training for workers at high hazard facilities" means a minimum 30-hour OSHA Outreach Training Program for the Construction class consisting of a curriculum of OSHA-designated training topics with training performed by an authorized OSHA Outreach Training Program Trainer and that is intended to provide workers with information about their rights, employer responsibilities, safety and health hazards a worker may encounter on a work site, as well as how to identify, abate, avoid, and prevent job-related hazards by emphasizing hazard identification, avoidance, control, and prevention.

"OSHA" means the United States Department of Labor's Occupational Safety and Health Administration.

"Owner or operator" means an owner or operator of a stationary source that is engaged in activities described in Code 324110, 325110, 325193, or 325199 of the 2017 North American Industry Classification System (NAICS), and has one or more covered processes that are required to prepare and submit a Risk Management Plan. "Owner or operator" does not include oil and gas extraction operations.

"Prevailing hourly wage rate" has the same meaning as "general prevailing rate of hourly wages" as defined in Section 2 of the Prevailing Wage Act.

"Registered apprentice" means an apprentice registered in an applicable apprenticeship program for an apprenticeable occupation approved by and registered with the U.S. Department of Labor's Office of Apprenticeship.

"Shift" means a set standard period of time an employer requires its employees to perform his or her work-related duties on a daily basis. For purposes of this definition, there may be multiple shifts per day.

"Skilled journeyperson" means a worker who meets all of the following criteria:

(1) the worker either graduated from an approved apprenticeship and training program approved by and registered with the U.S. Department of Labor's Office of Apprenticeship for the applicable occupation, or has at least as many hours of on-the-job experience in the applicable occupation that would be required to graduate from an apprenticeship program approved by and registered with the U.S. Department of Labor's Office of Apprenticeship for the applicable occupation;

(2) the worker is being paid at least a rate equivalent to the prevailing hourly wage rate for a journeyperson in the applicable occupation and locality; and

(3) beginning on or after July 1, 2024, the worker has completed, within the prior 3 calendar years, minimum approved safety training for workers at high hazard facilities and has filed a certificate of completion with the Department.

"Skilled and trained workforce" means a workforce that meets all of the following criteria:

(1) all the workers are either registered apprentices or skilled journeypersons;

(2) beginning on July 1, 2022, at least 45% of the skilled journeypersons are graduates of an apprenticeship program for the applicable occupation;

(3) beginning on July 1, 2023, at least 60% of the skilled journeypersons are graduates of an apprenticeship program for the applicable occupation; and

(4) beginning on July 1, 2024, at least 80% of the skilled journeypersons are graduates of an apprenticeship program for the applicable occupation.

"Stationary source" means that term as it is defined under Section 39.5 of the Environmental Protection Act.

Section 10-10. Minimum approved safety training.

(a) A person who has completed minimum approved safety training for workers at high hazard facilities shall file his or her certificate of completion with the Department in a manner prescribed by the Department.

(b) The owner or operator, when contracting for the performance of construction work at the stationary source, shall require that its contractors and any subcontractors use a skilled and trained workforce to perform all onsite work within an apprenticeable occupation in the building and construction trades.

(c) The requirements of this Section shall not immediately apply to contracts awarded before July 1, 2022, unless the contract is extended or renewed after that date. Contracts awarded before July 1, 2022 shall meet the requirements of this Section no later than July 1, 2023.

(d) The requirements of this Section shall only apply to the skilled and trained workforce, contracted with an owner or operator to perform construction work at the stationary source site.

(e) The skilled and trained workforce requirements under this Section shall not apply to:

(1) Contractors that have requested qualified workers from the local hiring halls that dispatch workers in the apprenticeable occupation and, due to workforce shortages, the contractor is unable to obtain sufficient qualified workers within 48 hours of the request, Saturdays, Sundays, and holidays excepted. This Act shall not prevent contractors from obtaining workers from any source.

(2) An emergency where compliance is impracticable; namely, an emergency requires immediate action to prevent imminent harm to public health or safety or to the environment. Within 14 days of an emergency, the Illinois Department of Labor must certify that the emergency warranted noncompliance with this Act. The employer must provide necessary documentation of the emergency to the Illinois Department of Labor.

Section 10-15. Enforcement. Any interested party may file a complaint with the Department of Labor against an owner, operator, or construction contractor covered under this Act if there is reasonable belief that the owner, operator, or construction contractor is in violation of this Act. Upon receiving the complaint, the Department of Labor shall request a copy of any contract at issue that was entered into between the owner, operator, or construction contractor to ensure that training requirements under this Act were included in the contract's terms. The Department of Labor shall request from the construction contractor a copy of the construction contractor's payroll, broken down by any registered apprentice and skilled journeyperson on the job site. If the Department of Labor finds that an owner, operator, or construction contractor has not complied with this Act, the Department shall refer the matter to the Attorney General for enforcement.

Section 10-20. Exemptions. This Act does not apply to any owner or operator that has an executed national or local labor agreement in effect pertaining to the performance of construction work at a given facility or site under the terms of the agreement. The labor agreement must be negotiated with and approved by a local building and construction trades council that has geographic jurisdiction over the stationary source.

Section 10-21. Reporting.

(a) Any applicable apprenticeship and training program approved by and registered with the U.S. Department of Labor's Office of Apprenticeship providing minimum approved safety training for workers in high hazard facilities and any contractor who employs workers operating at high hazard facilities shall file an annual report with the Department and the Illinois Works Review Panel, in the form and manner required by the Department, within 6 months after the effective date of this Act and on January 31 of each year thereafter. The report shall contain the following information:

(1) A description of the applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, or the contractor's recruitment efforts, screening efforts, and a general description of training efforts.

(2) The applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, shall provide the number of individuals who apply to, participate in, and complete the minimum approved safety training for workers at high hazard facilities, broken down by race, gender, jurisdiction, age, and veteran status. A contractor under this paragraph shall provide the number of workers who the contractor employs to work at high hazard facilities, within the last calendar year, broken down by race, gender, jurisdiction, age, and veteran status.

(3) The demographic data of the jurisdiction.

(4) For the applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, a statement of the minimum diversity goal that participation in the minimum approved safety training for workers in high hazard facilities is equal to the demographics of its jurisdiction. For a contractor under this paragraph, a statement of the minimum diversity goal that the workers employed by the contractor to work at high hazard facilities are equal to of the demographics of the contractor's jurisdiction.

(5) An action plan to increase diversity and meet or exceed the stated minimum diversity goal, inclusive of, but not limited to, the following actions if the diversity goal is not met:

(A) Providing information on this Act for all high schools and field offices of the Department of Employment Security in the jurisdiction.

(B) Entering into a joint agreement with the Department of Employment Security for outreach and employment.

(C) Entering into a joint agreement with educational institutions or approved Illinois Works Preapprenticeship Programs established under subsection (a) of Section 20-15 of the Illinois Works Jobs Program Act in the jurisdiction to enhance recruitment efforts.

(D) Eliminating experience requirements, when feasible, to permit increased participation by minorities.

(b) If the Department and the Illinois Works Review Panel conclude that the report submitted under this Section does not meet or is unlikely to meet the minimum diversity goal under paragraph (4) of subsection (a) within 12 months after filing its report, or that the action plan was not followed, the Department and the Illinois Works Review Panel shall recommend that the action plan be revised to provide additional steps and opportunities for minority participation.

(c) An applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, providing workers in a high hazard facility or a contractor operating at high hazard facility shall be deemed unfit to provide workers or operate at high hazard facilities and may be subject to a penalty of up to one year's prohibition from providing workers or operating at high hazard facilities. If the Department and the Illinois Works Review Panel conclude that the applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, providing workers in a high hazard facility or the contractor operating at a high hazard facility failed to follow its action plan under paragraph (5) of subsection (a) or the recommendations to its action plan provided by the Department and the Illinois Works Review Panel under subsection (b) within 12 months after filing the entity's report, then the applicable apprenticeship and training program or contractor shall be deemed unfit to provide workers or operate at high hazard facilities and may be subject to a penalty of up to one year's prohibition from providing workers or operating at high hazard facilities.

(d) For reporting purposes, the jurisdiction is the Illinois county where the applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, is located. For a contractor, the jurisdiction is the county where the contractor's workers perform the majority of work in a high hazard facility within the last calendar year.

Section 10-25. Penalties; noncompliant reporting; reinstatement.

(a) Except as provided in subsection (b), an owner or operator who violates the requirements of this Act shall be subject to a minimum civil penalty of $10,000 for each violation. Each shift a violation of this Act occurs shall be considered a separate violation. The penalty may be recovered in a civil action brought by the Director in any circuit court. In the civil action, the Director shall be represented by the Attorney General. All moneys received by the Department as fees and civil penalties under this Act shall be deposited into the Illinois Works Fund to be used to recruit, prescreen, and provide preapprenticeship skills training for which participants may attend free of charge and receive a stipend to create a qualified, diverse pipeline of workers who are prepared to work in high hazard facilities.

(b) Notwithstanding subsection (a), if the Department and the Illinois Works Review Panel determine that there is a violation of Section 10-21, the Department and the Illinois Works Review Panel shall provide reasonable notice of noncompliance to the violator within 90 days after the violation and inform the violator that the violator has 45 days to comply with Section 10-21 without penalty. If the noncompliance is not remedied, the violator may be deemed unfit to provide workers or operate at high hazard facilities for a period of up to one year. If the Department and the Illinois Works Review Panel determine that the violator has remedied the violation and is in compliance with Section 10-21, the Department shall have 45 days to reinstate the authorization for the violator to provide workers or operate at high hazard facilities. The Department and the Illinois Works Review Panel may not unreasonably withhold reinstatement under this subsection when the applicable apprenticeship and training program, approved by and registered with the U.S. Department of Labor's Office of Apprenticeship, providing workers in high hazard facilities or the contractor operating at high hazard facilities is found to be in compliance with Section 10-21.

Section 10-97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

ARTICLE 15. AMENDATORY PROVISIONS

Section 15-5. The Illinois Administrative Procedure Act is amended by adding Section 5-45.8 as follows:

(5 ILCS 100/5-45.8 new)

Sec. 5-45.8. Emergency rulemaking. To provide for the expeditious and timely implementation of this amendatory Act of the 102nd General Assembly, the Department of Commerce and Economic Opportunity shall, and the Department of Labor and the Department of Revenue may, adopt emergency rules. The adoption of emergency rules authorized by this Section is deemed to be necessary for the public interest, safety, and welfare.

This Section is repealed on January 1, 2026.

Section 15-10. The Illinois Income Tax Act is amended by changing Section 704A as follows:

(35 ILCS 5/704A)

Sec. 704A. Employer's return and payment of tax withheld.

(a) In general, every employer who deducts and withholds or is required to deduct and withhold tax under this Act on or after January 1, 2008 shall make those payments and returns as provided in this Section.

(b) Returns. Every employer shall, in the form and manner required by the Department, make returns with respect to taxes withheld or required to be withheld under this Article 7 for each quarter beginning on or after January 1, 2008, on or before the last day of the first month following the close of that quarter.

(c) Payments. With respect to amounts withheld or required to be withheld on or after January 1, 2008:

(1) Semi-weekly payments. For each calendar year, each employer who withheld or was required to withhold more than $12,000 during the one-year period ending on June 30 of the immediately preceding calendar year, payment must be made:

(A) on or before each Friday of the calendar year, for taxes withheld or required to be withheld on the immediately preceding Saturday, Sunday, Monday, or Tuesday;

(B) on or before each Wednesday of the calendar year, for taxes withheld or required to be withheld on the immediately preceding Wednesday, Thursday, or Friday.

Beginning with calendar year 2011, payments made under this paragraph (1) of subsection (c) must be made by electronic funds transfer.

(2) Semi-weekly payments. Any employer who withholds or is required to withhold more than $12,000 in any quarter of a calendar year is required to make payments on the dates set forth under item (1) of this subsection (c) for each remaining quarter of that calendar year and for the subsequent calendar year.

(3) Monthly payments. Each employer, other than an employer described in items (1) or (2) of this subsection, shall pay to the Department, on or before the 15th day of each month the taxes withheld or required to be withheld during the immediately preceding month.

(4) Payments with returns. Each employer shall pay to the Department, on or before the due date for each return required to be filed under this Section, any tax withheld or required to be withheld during the period for which the return is due and not previously paid to the Department.

(d) Regulatory authority. The Department may, by rule:

(1) Permit employers, in lieu of the requirements of subsections (b) and (c), to file annual returns due on or before January 31 of the year for taxes withheld or required to be withheld during the previous calendar year and, if the aggregate amounts required to be withheld by the employer under this Article 7 (other than amounts required to be withheld under Section 709.5) do not exceed $1,000 for the previous calendar year, to pay the taxes required to be shown on each such return no later than the due date for such return.

(2) Provide that any payment required to be made under subsection (c)(1) or (c)(2) is deemed to be timely to the extent paid by electronic funds transfer on or before the due date for deposit of federal income taxes withheld from, or federal employment taxes due with respect to, the wages from which the Illinois taxes were withheld.

(3) Designate one or more depositories to which payment of taxes required to be withheld under this Article 7 must be paid by some or all employers.

(4) Increase the threshold dollar amounts at which employers are required to make semi-weekly payments under subsection (c)(1) or (c)(2).

(e) Annual return and payment. Every employer who deducts and withholds or is required to deduct and withhold tax from a person engaged in domestic service employment, as that term is defined in Section 3510 of the Internal Revenue Code, may comply with the requirements of this Section with respect to such employees by filing an annual return and paying the taxes required to be deducted and withheld on or before the 15th day of the fourth month following the close of the employer's taxable year. The Department may allow the employer's return to be submitted with the employer's individual income tax return or to be submitted with a return due from the employer under Section 1400.2 of the Unemployment Insurance Act.

(f) Magnetic media and electronic filing. With respect to taxes withheld in calendar years prior to 2017, any W-2 Form that, under the Internal Revenue Code and regulations promulgated thereunder, is required to be submitted to the Internal Revenue Service on magnetic media or electronically must also be submitted to the Department on magnetic media or electronically for Illinois purposes, if required by the Department.

With respect to taxes withheld in 2017 and subsequent calendar years, the Department may, by rule, require that any return (including any amended return) under this Section and any W-2 Form that is required to be submitted to the Department must be submitted on magnetic media or electronically.

The due date for submitting W-2 Forms shall be as prescribed by the Department by rule.

(g) For amounts deducted or withheld after December 31, 2009, a taxpayer who makes an election under subsection (f) of Section 5-15 of the Economic Development for a Growing Economy Tax Credit Act for a taxable year shall be allowed a credit against payments due under this Section for amounts withheld during the first calendar year beginning after the end of that taxable year equal to the amount of the credit for the incremental income tax attributable to full-time employees of the taxpayer awarded to the taxpayer by the Department of Commerce and Economic Opportunity under the Economic Development for a Growing Economy Tax Credit Act for the taxable year and credits not previously claimed and allowed to be carried forward under Section 211(4) of this Act as provided in subsection (f) of Section 5-15 of the Economic Development for a Growing Economy Tax Credit Act. The credit or credits may not reduce the taxpayer's obligation for any payment due under this Section to less than zero. If the amount of the credit or credits exceeds the total payments due under this Section with respect to amounts withheld during the calendar year, the excess may be carried forward and applied against the taxpayer's liability under this Section in the succeeding calendar years as allowed to be carried forward under paragraph (4) of Section 211 of this Act. The credit or credits shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one taxable year that are available to offset a liability, the earlier credit shall be applied first. Each employer who deducts and withholds or is required to deduct and withhold tax under this Act and who retains income tax withholdings under subsection (f) of Section 5-15 of the Economic Development for a Growing Economy Tax Credit Act must make a return with respect to such taxes and retained amounts in the form and manner that the Department, by rule, requires and pay to the Department or to a depositary designated by the Department those withheld taxes not retained by the taxpayer. For purposes of this subsection (g), the term taxpayer shall include taxpayer and members of the taxpayer's unitary business group as defined under paragraph (27) of subsection (a) of Section 1501 of this Act. This Section is exempt from the provisions of Section 250 of this Act. No credit awarded under the Economic Development for a Growing Economy Tax Credit Act for agreements entered into on or after January 1, 2015 may be credited against payments due under this Section.

(h) An employer may claim a credit against payments due under this Section for amounts withheld during the first calendar year ending after the date on which a tax credit certificate was issued under Section 35 of the Small Business Job Creation Tax Credit Act. The credit shall be equal to the amount shown on the certificate, but may not reduce the taxpayer's obligation for any payment due under this Section to less than zero. If the amount of the credit exceeds the total payments due under this Section with respect to amounts withheld during the calendar year, the excess may be carried forward and applied against the taxpayer's liability under this Section in the 5 succeeding calendar years. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one calendar year that are available to offset a liability, the earlier credit shall be applied first. This Section is exempt from the provisions of Section 250 of this Act.

(i) Each employer with 50 or fewer full-time equivalent employees during the reporting period may claim a credit against the payments due under this Section for each qualified employee in an amount equal to the maximum credit allowable. The credit may be taken against payments due for reporting periods that begin on or after January 1, 2020, and end on or before December 31, 2027. An employer may not claim a credit for an employee who has worked fewer than 90 consecutive days immediately preceding the reporting period; however, such credits may accrue during that 90-day period and be claimed against payments under this Section for future reporting periods after the employee has worked for the employer at least 90 consecutive days. In no event may the credit exceed the employer's liability for the reporting period. Each employer who deducts and withholds or is required to deduct and withhold tax under this Act and who retains income tax withholdings under this subsection must make a return with respect to such taxes and retained amounts in the form and manner that the Department, by rule, requires and pay to the Department or to a depositary designated by the Department those withheld taxes not retained by the employer.

For each reporting period, the employer may not claim a credit or credits for more employees than the number of employees making less than the minimum or reduced wage for the current calendar year during the last reporting period of the preceding calendar year. Notwithstanding any other provision of this subsection, an employer shall not be eligible for credits for a reporting period unless the average wage paid by the employer per employee for all employees making less than $55,000 during the reporting period is greater than the average wage paid by the employer per employee for all employees making less than $55,000 during the same reporting period of the prior calendar year.

For purposes of this subsection (i):

"Compensation paid in Illinois" has the meaning ascribed to that term under Section 304(a)(2)(B) of this Act.

"Employer" and "employee" have the meaning ascribed to those terms in the Minimum Wage Law, except that "employee" also includes employees who work for an employer with fewer than 4 employees. Employers that operate more than one establishment pursuant to a franchise agreement or that constitute members of a unitary business group shall aggregate their employees for purposes of determining eligibility for the credit.

"Full-time equivalent employees" means the ratio of the number of paid hours during the reporting period and the number of working hours in that period.

"Maximum credit" means the percentage listed below of the difference between the amount of compensation paid in Illinois to employees who are paid not more than the required minimum wage reduced by the amount of compensation paid in Illinois to employees who were paid less than the current required minimum wage during the reporting period prior to each increase in the required minimum wage on January 1. If an employer pays an employee more than the required minimum wage and that employee previously earned less than the required minimum wage, the employer may include the portion that does not exceed the required minimum wage as compensation paid in Illinois to employees who are paid not more than the required minimum wage.

(1) 25% for reporting periods beginning on or after January 1, 2020 and ending on or before December 31, 2020;

(2) 21% for reporting periods beginning on or after January 1, 2021 and ending on or before December 31, 2021;

(3) 17% for reporting periods beginning on or after January 1, 2022 and ending on or before December 31, 2022;

(4) 13% for reporting periods beginning on or after January 1, 2023 and ending on or before December 31, 2023;

(5) 9% for reporting periods beginning on or after January 1, 2024 and ending on or before December 31, 2024;

(6) 5% for reporting periods beginning on or after January 1, 2025 and ending on or before December 31, 2025.

The amount computed under this subsection may continue to be claimed for reporting periods beginning on or after January 1, 2026 and:

(A) ending on or before December 31, 2026 for employers with more than 5 employees; or

(B) ending on or before December 31, 2027 for employers with no more than 5 employees.

"Qualified employee" means an employee who is paid not more than the required minimum wage and has an average wage paid per hour by the employer during the reporting period equal to or greater than his or her average wage paid per hour by the employer during each reporting period for the immediately preceding 12 months. A new qualified employee is deemed to have earned the required minimum wage in the preceding reporting period.

"Reporting period" means the quarter for which a return is required to be filed under subsection (b) of this Section.

(j) An employer may claim a credit against payments due under this Section for amounts withheld during the first reporting period beginning after the date on which a tax credit certificate was issued under the Investing in Illinois Works Tax Credit Act. The credit shall be equal to the amount shown on the certificate but may not reduce the taxpayer's obligation for any payment due under this Section to less than zero. If the amount of the credit exceeds the total payments due under this Section with respect to amounts withheld during the reporting period, the excess may be carried forward and applied against the taxpayer's liability under this Section in the 5 succeeding calendar years. The credit shall be applied to the earliest reporting period for which there is a tax liability. If there are credits from more than one reporting period that are available to offset a liability, the earlier credit shall be applied first. This Section is exempt from the provisions of Section 250 of this Act.

(Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17; 100-863, eff. 8-14-18; 101-1, eff. 2-19-19.)

ARTICLE 99. EFFECTIVE DATE

Section 99-99. Effective date. This Act takes effect January 1, 2022.