SB1860 94TH GENERAL ASSEMBLY

LRB094 11424 BDD 42334 b

94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006
SB1860

Introduced 2/25/2005, by Sen. Kirk W. Dillard

SYNOPSIS AS INTRODUCED:

20 ILCS 3504/14.1 new
35 ILCS 5/216 new

Amends the Illinois Income Tax Act. Creates the rehabilitation of historic resource credit. Allows a credit against income taxes for 25% of the qualified expenditures for the rehabilitation of a historic resource. Provides that "historic resource" means certain publicly or privately owned historic buildings, structures, sites, objects, features, or open spaces located within a designated historic district or individually designated as historic. Provides that "qualified expenditures" means capital expenditures that qualify for a rehabilitation credit under Internal Revenue Code. Amends the Historic Preservation Agency Act to provide that the Historic Preservation Agency shall exercise all rights, powers, and duties set forth in the credit provisions. Effective immediately.

FISCAL NOTE ACT MAY APPLY

HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

A BILL FOR

AN ACT in relation to taxation.

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

Section 5. The Historic Preservation Agency Act is amended by adding Section 14.1 as follows:

(20 ILCS 3504/14.1 new)

Sec. 14.1. Exercise of rights, powers, and duties; rehabilitation of historic resource tax credit. The Agency shall exercise all rights, powers, and duties set forth in Section 216 of the Illinois Income Tax Act.

Section 10. The Illinois Income Tax Act is amended by adding Section 216 as follows:

(35 ILCS 5/216 new)

Sec. 216. Rehabilitation of historic resource tax credit.

(a) A qualified taxpayer with a rehabilitation plan certified after December 31, 2005 is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 in the amount determined pursuant to subsection (b) for the qualified expenditures for the rehabilitation of a historic resource pursuant to the rehabilitation plan in the year in which the certification of completed rehabilitation of the historic resource is issued, provided that the certification of completed rehabilitation was issued not more than 5 years after the rehabilitation plan was certified by the Historic Preservation Agency.

(b) The credit allowed under this Section shall be 25% of the qualified expenditures that are eligible for the credit under Section 47(a)(2) of the Internal Revenue Code if the taxpayer is eligible for the credit under Section 47(a)(2) of the Internal Revenue Code or, if the taxpayer is not eligible for the credit under Section 47(a)(2) of the Internal Revenue Code, 25% of the qualified expenditures that would qualify under Section 47(a)(2) of the Internal Revenue Code except that the expenditures are made to a historic resource that is not eligible for the credit under Section 47(a)(2) of the Internal Revenue Code, subject to both of the following:

(1) A taxpayer with qualified expenditures that are eligible for the credit under Section 47(a)(2) of the Internal Revenue Code may not claim a credit under this Section for those qualified expenditures unless the taxpayer has claimed and received a credit for those qualified expenditures under Section 47(a)(2) of the Internal Revenue Code.

(2) A credit under this Section shall be reduced by the amount of a credit received by the taxpayer for the same qualified expenditures under Section 47(a)(2) of the Internal Revenue Code.

(c) To be eligible for the credit under this Section, the taxpayer shall apply to and receive from the Historic Preservation Agency certification that the historic significance, the rehabilitation plan, and the completed rehabilitation of the historic resource meet the criteria under subsection (f) and either of the following:

(1) All of the following criteria:

(A) The historic resource contributes to the significance of the historic district in which it is located.

(B) Both the rehabilitation plan and completed rehabilitation of the historic resource meet the federal Secretary of the Interior's standards for rehabilitation and guidelines for rehabilitating historic buildings, 36 C.F.R. part 67.

(C) All rehabilitation work has been done to or within the walls, boundaries, or structures of the historic resource or to historic resources located within the property boundaries of the property.

(2) The taxpayer has received certification from the National Park Service that the historic resource's significance, the rehabilitation plan, and the completed rehabilitation qualify for the credit allowed under Section 47(a)(2) of the Internal Revenue Code.

(c-5) The Director of Historic Preservation may approve county or municipal ordinances that qualify historic resources for consideration under this Section. However, no ordinance shall be approved unless it:

(1) is designed to preserve and rehabilitate buildings of historic significance;

(2) contains criteria for the designation of landmarks consistent with those established by the U.S. Department of the Interior for the inclusion of places on the National Register of Historic Places; and

(3) contains criteria for review of demolition and major alterations.

(d) If a qualified taxpayer is eligible for the credit allowed under Section 47(a)(2) of the Internal Revenue Code, the qualified taxpayer shall file for certification with the Historic Preservation Agency to qualify for the credit allowed under Section 47(a)(2) of the Internal Revenue Code. If the qualified taxpayer has previously filed for certification with the center to qualify for the credit allowed under Section 47(a)(2) of the Internal Revenue Code, additional filing for the credit allowed under this Section is not required.

(e) The Historic Preservation Agency may inspect a historic resource at any time during the rehabilitation process and may revoke certification of completed rehabilitation if the rehabilitation was not undertaken as represented in the rehabilitation plan or if unapproved alterations to the completed rehabilitation are made during the 5 years after the tax year in which the credit was claimed. The Historic Preservation Agency shall promptly notify the Department of a revocation.

(f) Qualified expenditures for the rehabilitation of a historic resource may be used to calculate the credit under this Section if the historic resource meets one of the criteria listed in subdivision (f)(1) and one of the criteria listed in subdivision (f)(2):

(1) The resource is one of the following during the tax year in which a credit under this Section is claimed for those qualified expenditures:

(A) Individually listed on the National Register of Historic Places or the Illinois Register of Historic Places.

(B) A contributing resource located within a historic district listed on the National Register of Historic Places or the Illinois Register of Historic Places.

(C) A contributing resource located within a historic district designated by a county or municipal ordinance approved by the Historic Preservation Agency under subsection (c-5).

(2) The resource meets one of the following criteria during the tax year in which a credit under this Section is claimed for those qualified expenditures:

(A) The historic resource is located in a designated historic district in a county or municipality with an existing ordinance approved by the Historic Preservation Agency under subsection (c-5).

(B) The historic resource is located in a county or municipality that does not have an ordinance approved by the Historic Preservation Agency under subsection (c-5) and has a population of less than 5,000.

(C) The historic resource is located in the unincorporated area of a county.

(g) If a qualified taxpayer is a partnership, limited liability company, or subchapter S corporation, the qualified taxpayer may assign all or any portion of a credit allowed under this Section to its partners, members, or shareholders, based on the partner's, member's, or shareholder's proportionate share of ownership or based on an alternative method approved by the Department. A credit assignment under this subsection is irrevocable and shall be made in the tax year in which a certificate of completed rehabilitation is issued. A qualified taxpayer may claim a portion of a credit and assign the remaining credit amount. A partner, member, or shareholder that is an assignee shall not subsequently assign a credit or any portion of a credit assigned to the partner, member, or shareholder under this subsection. A credit amount assigned under this subsection may be claimed against the partner's, member's, or shareholder's tax liability under this Act. A credit assignment under this subsection shall be made on a form prescribed by the Department. The qualified taxpayer and assignees shall send a copy of the completed assignment form to the Department in the tax year in which the assignment is made and attach a copy of the completed assignment form to the annual return required to be filed under this Act for that tax year.

(h) If the credit allowed under this Section for the tax year and any unused carryforward of the credit allowed by this Section exceed the taxpayer's tax liability for the tax year, that portion that exceeds the tax liability for the tax year shall not be refunded but may be carried forward to offset tax liability in subsequent tax years for 10 years or until used up, whichever occurs first.

(i) If the taxpayer sells a historic resource for which a credit under this Section was claimed less than 5 years after the year in which the credit was claimed, the following percentage of the credit amount previously claimed relative to that historic resource shall be added back to the tax liability of the taxpayer in the year of the sale:

(1) If the sale is less than one year after the year in which the credit was claimed, 100%.

(2) If the sale is at least one year but less than 2 years after the year in which the credit was claimed, 80%.

(3) If the sale is at least 2 years but less than 3 years after the year in which the credit was claimed, 60%.

(4) If the sale is at least 3 years but less than 4 years after the year in which the credit was claimed, 40%.

(5) If the sale is at least 4 years but less than 5 years after the year in which the credit was claimed, 20%.

(6) If the sale is 5 years or more after the year in which the credit was claimed, an addback to the taxpayer's tax liability shall not be made.

(j) If a certification of completed rehabilitation is revoked under subsection (e) less than 5 years after the year in which a credit was claimed, the following percentage of the credit amount previously claimed relative to that historic resource shall be added back to the tax liability of the taxpayer in the year of the revocation:

(1) If the revocation is less than one year after the year in which the credit was claimed, 100%.

(2) If the revocation is at least one year but less than 2 years after the year in which the credit was claimed, 80%.

(3) If the revocation is at least 2 years but less than 3 years after the year in which the credit was claimed, 60%.

(4) If the revocation is at least 3 years but less than 4 years after the year in which the credit was claimed, 40%.

(5) If the revocation is at least 4 years but less than 5 years after the year in which the credit was claimed, 20%.

(6) If the revocation is 5 years or more after the year in which the credit was claimed, an addback to the taxpayer's tax liability shall not be made.

(k) The Historic Preservation Agency may impose a fee to cover the administrative cost of implementing the program under this Section.

(l) The qualified taxpayer shall attach all of the following to the qualified taxpayer's annual return required under this Act, on which the credit is claimed:

(1) Certification of completed rehabilitation.

(2) Certification of historic significance related to the historic resource and the qualified expenditures used to claim a credit under this Section.

(3) A completed assignment form if the qualified taxpayer has assigned any portion of a credit allowed under this Section to a partner, member, or shareholder, or if the taxpayer is an assignee of any portion of a credit allowed under this Section.

(m) The Historic Preservation Agency shall adopt rules to implement this Section pursuant to the Illinois Administrative Procedure Act.

(n) The total of the credits claimed under this Section for a rehabilitation project shall not exceed 25% of the total qualified expenditures eligible for the credit under this Section for that rehabilitation project.

(o) The Historic Preservation Agency shall report all of the following to the General Assembly annually for the immediately preceding State fiscal year:

(1) The fee schedule used by the Historic Preservation Agency and the total amount of fees collected.

(2) A description of each rehabilitation project certified.

(3) The location of each new and ongoing rehabilitation project.

(p) As used in this Section:

(1) "Contributing resource" means a historic resource that contributes to the significance of the historic district in which it is located.

(2) "Historic district" means an area or group of areas not necessarily having contiguous boundaries that contains one resource or a group of resources that are related by history, architecture, archaeology, engineering, or culture.

(3) "Historic resource" means a publicly or privately owned historic building, structure, site, object, feature, or open space located within a historic district designated by the National Register of Historic Places, the Illinois Register of Historic Places, or a county or municipal ordinance approved by the Historic Preservation Agency under subsection (c-5); or that is individually listed on the Illinois Register of Historic Places or National Register of Historic Places and includes all of the following:

(A) An owner-occupied personal residence or a historic resource located within the property boundaries of that personal residence.

(B) An income-producing commercial, industrial, or residential resource or a historic resource located within the property boundaries of that resource.

(C) A resource owned by a governmental body, nonprofit organization, or tax-exempt entity that is used primarily by a taxpayer lessee in a trade or business unrelated to the governmental body, nonprofit organization, or tax-exempt entity and that is subject to tax under this Act.

(D) A resource that is occupied or used by a governmental body, nonprofit organization, or tax-exempt entity pursuant to a long-term lease or lease with option to buy agreement.

(E) Any other resource that could benefit from rehabilitation.

(4) "Long-term lease" means a lease term of at least 27.5 years for a residential resource or at least 31.5 years for a nonresidential resource.

(5) "Historic Preservation Agency" means the Illinois Historic Preservation Agency.

(6) "Open space" means undeveloped land, a naturally landscaped area, or a formal or man-made landscaped area that provides a connective link or a buffer between other resources.

(7) "Person" means an individual, partnership, corporation, association, governmental entity, or other legal entity.

(8) "Qualified expenditures" means capital expenditures that qualify for a rehabilitation credit under Section 47(a)(2) of the Internal Revenue Code if the taxpayer is eligible for the credit under Section 47(a)(2) of the Internal Revenue Code or, if the taxpayer is not eligible for the credit under Section 47(a)(2) of the Internal Revenue Code, the qualified expenditures that would qualify under Section 47(a)(2) of the Internal Revenue Code except that the expenditures are made to a historic resource that is not eligible for the credit under Section 47(a)(2) of the Internal Revenue Code that were paid not more than 5 years after the certification of the rehabilitation plan that included those expenditures was approved by the Historic Preservation Agency, and that were paid after December 31, 2005 for the rehabilitation of a historic resource. Qualified expenditures do not include capital expenditures for nonhistoric additions to a historic resource except an addition that is required by State or federal regulations that relate to historic preservation, safety, or accessibility.

(9) "Qualified taxpayer" means a person that is an assignee under subsection (g) or either owns the resource to be rehabilitated or has a long-term lease agreement with the owner of the historic resource and that has qualified expenditures for the rehabilitation of the historic resource equal to or greater than 10% of the equalized assessed valuation of the property. If the historic resource to be rehabilitated is a portion of a historic or nonhistoric resource, the equalized assessed valuation of only that portion of the property shall be used for purposes of this subdivision. If the chief county assessment officer for the county in which the historic resource is located determines the equalized assessed valuation of that portion, that chief county assessment officer's determination shall be used for purposes of this subdivision. If the chief county assessment officer does not determine the equalized assessed valuation of that portion, "qualified expenditures", for purposes of this subdivision, shall be equal to or greater than 5% of the appraised value as determined by a certified appraiser. If the historic resource to be rehabilitated does not have an equalized assessed valuation, qualified expenditures for purposes of this subdivision shall be equal to or greater than 5% of the appraised value of the resource as determined by a certified appraiser.

(10) "Rehabilitation plan" means a plan for the rehabilitation of a historic resource that meets the federal Secretary of the Interior's standards for rehabilitation and guidelines for rehabilitation of historic buildings under 36 C.F.R. part 67.

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