103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4646

 

Introduced 2/6/2024, by Rep. Curtis J. Tarver, II

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 25/10
35 ILCS 25/25
35 ILCS 25/30
35 ILCS 25/35
35 ILCS 25/45

    Amends the Small Business Job Creation Tax Credit Act. Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2024 and ending on June 30, 2030. Provides that the basic wage for the second set of incentive periods is $15 per hour. Provides that the credit may not exceed $2,500 per new employee hired, except that, if the new employee is a returning citizen, then the credit for that employee may not exceed $3,500. Provides that the term "returning citizen" means an individual who (i) is a resident of Illinois, (ii) was formerly incarcerated in a federal, State, or local correctional institution, and (iii) is a new employee. Provides that the aggregate amount of credits that may be awarded under the Act is (i) $50,000,000 for new employees other than returning citizens and (ii) $5,000,000 for returning citizens. Adds provisions concerning recapture of the credit if the employee is terminated by the taxpayer within one year after the credit is awarded. Effective immediately.


LRB103 36516 HLH 66622 b

 

 

A BILL FOR

 

HB4646LRB103 36516 HLH 66622 b

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 Small Business Job Creation Tax Credit Act
5is amended by changing Sections 10, 25, 30, 35, and 45 as
6follows:
 
7    (35 ILCS 25/10)
8    Sec. 10. Definitions. In this Act:
9    "Applicant" means a person that is operating a business
10located within the State of Illinois that is engaged in
11interstate or intrastate commerce and either:
12        (1) has no more than 50 full-time employees, without
13    regard to the location of employment of such employees at
14    the beginning of the incentive period; or
15        (2) for incentive periods ending on or before June 30,
16    2016, hired within the incentive period an employee who
17    had participated as worker-trainee in the Put Illinois to
18    Work Program during 2010.
19    In the case of any person that is a member of a unitary
20business group within the meaning of subdivision (a)(27) of
21Section 1501 of the Illinois Income Tax Act, "applicant"
22refers to the unitary business group.
23    "Certificate" means the tax credit certificate issued by

 

 

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1the Department under Section 35 of this Act.
2    "Certificate of eligibility" means the certificate issued
3by the Department under Section 20 of this Act.
4    "Credit" means the amount awarded by the Department to an
5applicant by issuance of a certificate under Section 35 of
6this Act for each new full-time equivalent employee hired or
7job created.
8    "Department" means the Department of Commerce and Economic
9Opportunity.
10    "Director" means the Director of the Department.
11    "Full-time employee" means an individual who is employed
12for a basic wage for at least 35 hours each week or who renders
13any other standard of service generally accepted by industry
14custom or practice as full-time employment. An individual for
15whom a W-2 is issued by a Professional Employer Organization
16is a full-time employee if he or she is employed in the service
17of the applicant for a basic wage for at least 35 hours each
18week or renders any other standard of service generally
19accepted by industry custom or practice as full-time
20employment. For the purposes of this Act, such an individual
21shall be considered a full-time employee of the applicant.
22    "Professional Employer Organization" (PEO) shall have the
23same meaning as defined in Section 5-5 of the Economic
24Development for a Growing Economy Tax Credit Act. As used in
25this Section, "Professional Employer Organization" does not
26include a day and temporary labor service agency regulated

 

 

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1under the Day and Temporary Labor Services Act.
2    "Incentive period" means the period beginning on July 1
3and ending on June 30 of the following year. The first series
4of incentive periods period shall begin on July 1, 2010 and the
5last incentive period shall end on June 30, 2016. The second
6series of incentive periods shall begin on July 1, 2024 and end
7on June 30, 2030.
8    "Basic wage" means compensation for employment that is no
9less than (i) $10 per hour for the first set of incentive
10periods or (ii) $15 per hour for the second set of incentive
11periods, or the equivalent salary for a new employee.
12    "New employee" means a full-time employee who first became
13employed by an applicant with less than 50 full-time employees
14within the incentive period whose hire results in a net
15increase in the applicant's full-time Illinois employees and
16who is receiving a basic wage as compensation. :
17        (1) who first became employed by an applicant with
18    less than 50 full-time employees within the incentive
19    period whose hire results in a net increase in the
20    applicant's full-time Illinois employees and who is
21    receiving a basic wage as compensation; or
22        (2) who participated as a worker-trainee in the Put
23    Illinois to Work Program during 2010 and who is
24    subsequently hired during the incentive period by an
25    applicant and who is receiving a basic wage as
26    compensation.

 

 

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1    The term "new employee" does not include:
2        (1) a person who was previously employed in Illinois
3    by the applicant or a related member prior to the onset of
4    the incentive period; or
5        (2) any individual who has a direct or indirect
6    ownership interest of at least 5% in the profits, capital,
7    or value of the applicant or a related member.
8    "Noncompliance date" means, in the case of an applicant
9that is not complying with the requirements of the provisions
10of this Act, the day following the last date upon which the
11taxpayer was in compliance with the requirements of the
12provisions of this Act, as determined by the Director,
13pursuant to Section 45 of this Act.
14    "Put Illinois to Work Program" means a worker training and
15employment program that was established by the State of
16Illinois with funding from the United States Department of
17Health and Human Services of Emergency Temporary Assistance
18for Needy Families funds authorized by the American Recovery
19and Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA
20TANF funds were in turn used by the State of Illinois to fund
21the Put Illinois to Work Program.
22    "Related member" means a person that, with respect to the
23applicant during any portion of the incentive period, is any
24one of the following,
25        (1) An individual, if the individual and the members
26    of the individual's family (as defined in Section 318 of

 

 

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1    the Internal Revenue Code) own directly, indirectly,
2    beneficially, or constructively, in the aggregate, at
3    least 50% of the value of the outstanding profits,
4    capital, stock, or other ownership interest in the
5    applicant.
6        (2) A partnership, estate, or trust and any partner or
7    beneficiary, if the partnership, estate, or trust and its
8    partners or beneficiaries own directly, indirectly,
9    beneficially, or constructively, in the aggregate, at
10    least 50% of the profits, capital, stock, or other
11    ownership interest in the applicant.
12        (3) A corporation, and any party related to the
13    corporation in a manner that would require an attribution
14    of stock from the corporation under the attribution rules
15    of Section 318 of the Internal Revenue Code, if the
16    applicant and any other related member own, in the
17    aggregate, directly, indirectly, beneficially, or
18    constructively, at least 50% of the value of the
19    corporation's outstanding stock.
20        (4) A corporation and any party related to that
21    corporation in a manner that would require an attribution
22    of stock from the corporation to the party or from the
23    party to the corporation under the attribution rules of
24    Section 318 of the Internal Revenue Code, if the
25    corporation and all such related parties own, in the
26    aggregate, at least 50% of the profits, capital, stock, or

 

 

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1    other ownership interest in the applicant.
2        (5) A person to or from whom there is attribution of
3    stock ownership in accordance with Section 1563(e) of the
4    Internal Revenue Code, except that for purposes of
5    determining whether a person is a related member under
6    this paragraph, "20%" shall be substituted for "5%"
7    whenever "5%" appears in Section 1563(e) of the Internal
8    Revenue Code.
9    "Returning citizen" means an individual who (i) is a
10resident of Illinois, (ii) was formerly incarcerated in a
11federal, State, or local correctional institution, and (iii)
12is a new employee.
13(Source: P.A. 100-863, eff. 8-14-18.)
 
14    (35 ILCS 25/25)
15    Sec. 25. Tax credit.
16    (a) Subject to the conditions set forth in this Act, an
17applicant is entitled to a credit against payment of taxes
18withheld under Section 704A of the Illinois Income Tax Act:
19        (1) for new employees who participated as
20    worker-trainees in the Put Illinois to Work Program during
21    2010, for incentive periods ending on or before June 30,
22    2016:
23            (A) in the first calendar year ending on or after
24        the date that is 6 months after December 31, 2010, or
25        the date of hire, whichever is later. Under this

 

 

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1        subparagraph, the applicant is entitled to one-half of
2        the credit allowable for each new employee who is
3        employed for at least 6 months after the date of hire;
4        and
5            (B) in the first calendar year ending on or after
6        the date that is 12 months after December 31, 2010, or
7        the date of hire, whichever is later. Under this
8        subparagraph, the applicant is entitled to one-half of
9        the credit allowable for each new employee who is
10        employed for at least 12 months after the date of hire;
11         (2) for all other new employees, in the first
12    calendar year ending on or after the date that is 12 months
13    after the date of hire of a new employee. The credit shall
14    be allowed as a credit to an applicant for each full-time
15    employee hired during the incentive period that results in
16    a net increase in full-time Illinois employees, where the
17    net increase in the employer's full-time Illinois
18    employees is maintained for at least 12 months.
19    (b) The Department shall make credit awards under this Act
20to further job creation.
21    (c) The credit shall be claimed for the first calendar
22year ending on or after the date on which the certificate is
23issued by the Department.
24    (d) The credit shall not exceed $2,500 per new employee
25hired, except that, for the second set of incentive periods,
26if the new employee is a returning citizen, then the credit for

 

 

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1that employee may not exceed $3,500.
2    (e) The net increase in full-time Illinois employees,
3measured on an annual full-time equivalent basis, shall be the
4total number of full-time Illinois employees of the applicant
5on the final day of the incentive period, minus the number of
6full-time Illinois employees employed by the employer on the
7first day of that same incentive period. For purposes of the
8calculation, an employer that begins doing business in this
9State during the incentive period, as determined by the
10Director, shall be treated as having zero Illinois employees
11on the first day of the incentive period.
12    (f) The net increase in the number of full-time Illinois
13employees of the applicant under subsection (e) must be
14sustained continuously for at least 12 months, starting with
15the date of hire of a new employee during the incentive period.
16Eligibility for the credit does not depend on the continuous
17employment of any particular individual. For purposes of this
18subsection (f), if a new employee ceases to be employed before
19the completion of the 12-month period for any reason, the net
20increase in the number of full-time Illinois employees shall
21be treated as continuous if a different new employee is hired
22as a replacement within a reasonable time for the same
23position within 8 weeks after the position becomes vacant.
24    (g) The Department shall promulgate rules to enable an
25applicant for which a PEO has been contracted to issue W-2s and
26make payment of taxes withheld under Section 704A of the

 

 

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1Illinois Income Tax Act for new employees to retain the
2benefit of tax credits to which the applicant is otherwise
3entitled under this Act.
4(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
597-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)
 
6    (35 ILCS 25/30)
7    Sec. 30. Maximum amount of credits allowed. The Department
8shall limit the monetary amount of credits awarded under this
9Act to no more than (i) $50,000,000 for new employees other
10than returning citizens and (ii) $5,000,000 for returning
11citizens. If a new employee is a returning citizen, but the
12$5,000,000 limit under this Section has been reached, then the
13applicant may request a credit for that employee under the
14$50,000,000 limit; however, the credit awarded for that new
15employee may not exceed $2,500. If applications for a greater
16amount are received, credits shall be allowed on a
17first-come-first-served basis, based on the date on which each
18properly completed application for a certificate of
19eligibility is received by the Department. If more than one
20certificate of eligibility is received on the same day, the
21credits will be awarded based on the time of submission for
22that particular day.
23(Source: P.A. 96-888, eff. 4-13-10.)
 
24    (35 ILCS 25/35)

 

 

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1    Sec. 35. Application for award of tax credit; tax credit
2certificate.
3    (a) On or after the conclusion of the 12-month period (or
46-month period, for purposes of subparagraph (A) of item (1)
5of subsection (a) of Section 25) after a new employee has been
6hired, an applicant shall file with the Department an
7application for award of a credit. The application shall
8include the following:
9        (1) The names, Social Security numbers, job
10    descriptions, salary or wage rates, and dates of hire of
11    the new employees with respect to whom the credit is being
12    requested, and an indication of whether each new employee
13    listed participated as a worker-trainee in the Put
14    Illinois to Work Program.
15        (2) A certification that each new employee listed has
16    been retained on the job for one year (or 6 months, for
17    purposes of subparagraph (A) of item (1) of subsection (a)
18    of Section 25) from the date of hire.
19        (3) The number of new employees hired by the applicant
20    during the incentive period.
21        (4) The net increase in the number of full-time
22    Illinois employees of the applicant (including the new
23    employees listed in the request) between the beginning of
24    the incentive period and the dates on which the new
25    employees listed in the request were hired. This
26    requirement does not apply for tax credits the applicant

 

 

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1    is seeking because the new employee had participated as a
2    worker-trainee in the Put Illinois to Work Program.
3        (5) An agreement that the Director is authorized to
4    verify with the appropriate State agencies the information
5    contained in the request before issuing a certificate to
6    the applicant.
7        (6) Any other information the Department determines to
8    be appropriate.
9    (b) Although an application may be filed at any time after
10the conclusion of the 12-month period (or 6-month period, for
11purposes of subparagraph (A) of item (1) of subsection (a) of
12Section 25) after a new employee was hired, an application
13filed more than 90 days after the earliest date on which it
14could have been filed shall not be awarded any credit if, prior
15to the date it is filed, the Department has received
16applications under this Section for credits totaling more than
17$50,000,000.
18    (c) The Department shall issue a certificate to each
19applicant awarded a credit under this Act. The certificate
20shall include the following:
21        (1) The name and taxpayer identification number of the
22    applicant.
23        (2) The date on which the certificate is issued.
24        (3) The credit amount that will be allowed.
25        (4) Any other information the Department determines to
26    be appropriate.

 

 

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1(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
2    (35 ILCS 25/45)
3    Sec. 45. Noncompliance with Act; recapture.
4    (a) If the Director determines that an applicant who has
5received a credit under this Act is not complying with the
6requirements of the provisions of this Act, the Director shall
7provide notice to the applicant of the alleged noncompliance,
8and allow the taxpayer a hearing under the provisions of the
9Illinois Administrative Procedure Act. If, after such notice
10and any hearing, the Director determines that a noncompliance
11exists, the Director shall issue to the Department of Revenue
12notice to that effect, stating the noncompliance date.
13    (b) For tax credits awarded during the second set of
14incentive periods, if an employee for whom a tax credit was
15awarded under this Act is terminated by the taxpayer within
16one year after the credit is awarded, then the Department
17shall recapture the amount of the credit awarded for that
18employee. This subsection (b) does not apply if the person is
19terminated for cause or if the person voluntarily resigns.
20(Source: P.A. 96-888, eff. 4-13-10.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.