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1 | AN ACT concerning revenue.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Corporate Accountability for Tax | ||||||||||||||||||||||||||||
5 | Expenditures Act is amended by changing Section 25 as follows:
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6 | (20 ILCS 715/25)
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7 | Sec. 25. Recapture.
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8 | (a) All development assistance agreements
shall contain, | ||||||||||||||||||||||||||||
9 | at a
minimum, the following recapture provisions:
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10 | (1) The recipient must (i) make the level of capital | ||||||||||||||||||||||||||||
11 | investment in the
economic
development project specified | ||||||||||||||||||||||||||||
12 | in the development assistance agreement; (ii)
create or
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13 | retain, or both, the requisite number of jobs, paying not | ||||||||||||||||||||||||||||
14 | less than specified
wages for the
created and retained | ||||||||||||||||||||||||||||
15 | jobs, within and for the duration of the time period
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16 | specified in the
legislation authorizing, or the | ||||||||||||||||||||||||||||
17 | administrative rules implementing, the
development
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18 | assistance programs and the development assistance | ||||||||||||||||||||||||||||
19 | agreement.
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20 | (2) If the recipient fails to create or retain the | ||||||||||||||||||||||||||||
21 | requisite number of
jobs within and
for the time period | ||||||||||||||||||||||||||||
22 | specified, in the legislation authorizing, or the
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23 | administrative rules
implementing, the development |
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1 | assistance programs and the development
assistance
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2 | agreement, the recipient shall be deemed to no longer | ||||||
3 | qualify for the State
economic
assistance and the | ||||||
4 | applicable recapture provisions shall take effect.
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5 | (3) If the recipient receives State economic | ||||||
6 | assistance in the form of a
High
Impact Business | ||||||
7 | designation pursuant to Section 5.5 of the Illinois | ||||||
8 | Enterprise
Zone Act
and the business receives the benefit | ||||||
9 | of the exemption authorized under Section
5l of the
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10 | Retailers' Occupation Tax Act (for the sale of building | ||||||
11 | materials incorporated
into a High
Impact Business | ||||||
12 | location) and the recipient fails to create or retain the
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13 | requisite number
of jobs, as determined by the legislation | ||||||
14 | authorizing the development
assistance
programs
or the | ||||||
15 | administrative rules implementing such legislation, or | ||||||
16 | both, within the
requisite
period of time, the recipient | ||||||
17 | shall be required to pay to the State the full
amount of | ||||||
18 | the
State tax exemption that it received as a result of the | ||||||
19 | High Impact Business
designation.
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20 | (4) If the recipient receives a grant or loan pursuant | ||||||
21 | to the Large
Business
Development Program, the Business | ||||||
22 | Development Public Infrastructure Program, or
the
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23 | Industrial Training Program and the recipient fails to | ||||||
24 | create or retain the
requisite number
of jobs for the | ||||||
25 | requisite time period, as provided in the legislation
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26 | authorizing the
development assistance programs or the |
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1 | administrative rules implementing such
legislation, or | ||||||
2 | both, or in the development assistance agreement, the | ||||||
3 | recipient
shall be
required to repay to the State a pro | ||||||
4 | rata amount of the grant; that amount
shall
reflect
the | ||||||
5 | percentage of the deficiency between the requisite number | ||||||
6 | of jobs to be
created or
retained by the recipient and the | ||||||
7 | actual number of such jobs in existence as of
the date the
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8 | Department determines the recipient is in breach of the job | ||||||
9 | creation or
retention
covenants contained in the | ||||||
10 | development assistance agreement. If the recipient
of
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11 | development assistance under the Large Business | ||||||
12 | Development Program, the
Business
Development Public | ||||||
13 | Infrastructure Program, or the Industrial Training Program
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14 | ceases
operations at the specific project site, during the | ||||||
15 | 5-year period commencing on
the date of
assistance, the | ||||||
16 | recipient shall be required to repay the entire amount of | ||||||
17 | the
grant or to
accelerate repayment of the loan back to | ||||||
18 | the State.
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19 | (5) If the recipient receives a tax credit under the | ||||||
20 | Economic
Development for a
Growing Economy tax credit | ||||||
21 | program, the development assistance agreement must
provide | ||||||
22 | that (i) if the number of new or retained employees falls | ||||||
23 | below the
requisite
number set forth in the development | ||||||
24 | assistance agreement, the allowance of the
credit
shall be | ||||||
25 | automatically suspended until the number of new and | ||||||
26 | retained employees
equals
or exceeds the requisite number |
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1 | in the development assistance agreement; (ii)
if
the
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2 | recipient discontinues operations at the specific project | ||||||
3 | site during the first
5 years of the
10-year term of the | ||||||
4 | development assistance agreement, the recipient shall
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5 | forfeit all
credits taken by the recipient during such | ||||||
6 | 5-year period; and (iii) in the
event
of a
revocation or | ||||||
7 | suspension of the credit, the Department shall contact the
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8 | Director
of Revenue to initiate proceedings against the | ||||||
9 | recipient to recover
wrongfully
exempted Illinois State | ||||||
10 | income taxes and the recipient shall promptly repay to
the
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11 | Department of Revenue any wrongfully exempted Illinois | ||||||
12 | State income taxes ; and (iv) if the recipient has sold the | ||||||
13 | credit in the secondary financial markets under subsection | ||||||
14 | (c) of Section 5-45 and the recipient defaults on its | ||||||
15 | obligations under the agreement, then the credit remains | ||||||
16 | valid in the hands of the purchaser, but the Department | ||||||
17 | shall contact the
Director
of Revenue to initiate | ||||||
18 | proceedings against the recipient to recover
the entire | ||||||
19 | amount of the credit, and the recipient must promptly pay | ||||||
20 | to
the
Department of Revenue the entire amount of the | ||||||
21 | credit .
The forfeited amount of credits shall be deemed | ||||||
22 | assessed on the date the
Department
contacts the Department | ||||||
23 | of Revenue and the recipient shall promptly repay to
the
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24 | Department of Revenue any wrongfully exempted Illinois | ||||||
25 | State income taxes.
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26 | (b) The Director may elect to waive enforcement of any |
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1 | contractual provision
arising out of
the development | ||||||
2 | assistance agreement required by this Act based on a finding
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3 | that the waiver is
necessary to avert an imminent and | ||||||
4 | demonstrable hardship to the
recipient that may
result in such | ||||||
5 | recipient's insolvency or discharge of workers.
If a waiver is
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6 | granted, the recipient must agree to a contractual | ||||||
7 | modification, including
recapture provisions,
to the
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8 | development assistance
agreement.
The existence of
any waiver
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9 | granted pursuant to this subsection (c), the date of the | ||||||
10 | granting of such
waiver, and a brief
summary of the reasons | ||||||
11 | supporting the granting of such waiver shall be
disclosed
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12 | consistent with
the provisions of Section 25 of this Act.
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13 | (c) Beginning June 1, 2004, the Department shall annually | ||||||
14 | compile a report
on the
outcomes and effectiveness of recapture | ||||||
15 | provisions by program, including but
not limited
to: (i) the | ||||||
16 | total number of companies that receive development assistance | ||||||
17 | as
defined in
this Act; (ii) the total number of recipients in | ||||||
18 | violation of development
agreements with
the Department; (iii) | ||||||
19 | the total number of completed recapture efforts; (iv) the
total
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20 | number of recapture efforts initiated; and (v) the number of | ||||||
21 | waivers granted.
This report
shall be disclosed consistent with | ||||||
22 | the provisions of Section 20 of this Act.
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23 | (d) For the purposes of this Act, recapture provisions do | ||||||
24 | not include the
Illinois
Department of Transportation Economic | ||||||
25 | Development Program, any grants under the
Industrial Training | ||||||
26 | Program that are not given as an incentive to a
recipient |
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1 | business organization,
or any successor programs as described | ||||||
2 | in the term "development assistance" in
Section 5
of this Act.
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3 | (Source: P.A. 93-552, eff. 8-20-03.)
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4 | Section 10. The Illinois Income Tax Act is amended by | ||||||
5 | changing Section 211 as follows:
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6 | (35 ILCS 5/211)
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7 | Sec. 211. Economic Development for a Growing Economy Tax | ||||||
8 | Credit.
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9 | (a) For tax years beginning on or after January 1, 1999, a | ||||||
10 | Taxpayer
who has entered into an Agreement under the Economic | ||||||
11 | Development for a Growing
Economy Tax Credit Act is entitled to | ||||||
12 | a credit against the taxes imposed
under subsections (a) and | ||||||
13 | (b) of Section 201 of this Act in an amount to be
determined in | ||||||
14 | the Agreement. If the Taxpayer is a partnership or Subchapter
S | ||||||
15 | corporation, the credit shall be allowed to the partners or | ||||||
16 | shareholders in
accordance with the determination of income and | ||||||
17 | distributive share of income
under Sections 702 and 704 and | ||||||
18 | subchapter S of the Internal Revenue Code.
The Department, in | ||||||
19 | cooperation with the Department
of Commerce and Economic | ||||||
20 | Opportunity, shall prescribe rules to enforce and
administer | ||||||
21 | the provisions of this Section. This Section is
exempt from the | ||||||
22 | provisions of Section 250 of this Act.
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23 | (b) The credit shall be subject to the conditions set forth | ||||||
24 | in
the Agreement and the following limitations:
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1 | (1) The tax credit shall not exceed the Incremental | ||||||
2 | Income Tax
(as defined in Section 5-5 of the Economic | ||||||
3 | Development for a Growing Economy
Tax Credit Act) with | ||||||
4 | respect to the project.
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5 | (2) The amount of the credit allowed during the tax | ||||||
6 | year plus the sum of
all amounts allowed in prior years | ||||||
7 | shall not exceed 100% of the aggregate
amount expended by | ||||||
8 | the Taxpayer during all prior tax years on approved costs
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9 | defined by Agreement.
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10 | (3) The amount of the credit shall be determined on an | ||||||
11 | annual
basis. Except as applied in a carryover year | ||||||
12 | pursuant to Section 211(4) of
this Act, the credit may not | ||||||
13 | be applied against any State
income tax liability in more | ||||||
14 | than 10 taxable
years; provided, however, that (i) an | ||||||
15 | eligible business certified by the
Department of Commerce | ||||||
16 | and Economic Opportunity under the Corporate Headquarters
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17 | Relocation Act may not
apply the credit against any of its | ||||||
18 | State income tax liability in more than 15
taxable years
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19 | and (ii) credits allowed to that eligible business are | ||||||
20 | subject to the
conditions
and requirements set forth in | ||||||
21 | Sections 5-35 and 5-45 of the Economic
Development for a | ||||||
22 | Growing Economy Tax Credit Act.
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23 | (4) The credit may not exceed the amount of taxes | ||||||
24 | imposed pursuant to
subsections (a) and (b) of Section 201 | ||||||
25 | of this Act. Any credit
that is unused in the year the | ||||||
26 | credit is computed may be carried forward and
applied to |
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1 | the tax liability of the 5 taxable years following the | ||||||
2 | excess credit
year. The credit shall be applied to the | ||||||
3 | earliest year for which there is a
tax liability. If there | ||||||
4 | are credits from more than one tax year that are
available | ||||||
5 | to offset a liability, the earlier credit shall be applied | ||||||
6 | first.
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7 | (5) Unless the credit has been sold under subsection | ||||||
8 | (c) of Section 5-45 of the Economic Development for a | ||||||
9 | Growing Economy Tax Credit Act, no
No credit shall be | ||||||
10 | allowed with respect to any Agreement for any
taxable year | ||||||
11 | ending after the Noncompliance Date. Upon receiving | ||||||
12 | notification
by the Department of Commerce and Economic | ||||||
13 | Opportunity of the noncompliance of a
Taxpayer with an | ||||||
14 | Agreement, the Department shall notify the Taxpayer that no
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15 | credit is allowed with respect to that Agreement for any | ||||||
16 | taxable year ending
after the Noncompliance Date, as stated | ||||||
17 | in such notification. If any credit
has been allowed with | ||||||
18 | respect to an Agreement for a taxable year ending after
the | ||||||
19 | Noncompliance Date for that Agreement, any refund paid to | ||||||
20 | the
Taxpayer for that taxable year shall, to the extent of | ||||||
21 | that credit allowed, be
an erroneous refund within the | ||||||
22 | meaning of Section 912 of this Act.
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23 | (6) For purposes of this Section, the terms | ||||||
24 | "Agreement", "Incremental
Income Tax", and "Noncompliance | ||||||
25 | Date" have the same meaning as when used
in the Economic | ||||||
26 | Development for a Growing Economy Tax Credit Act.
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1 | (c) The Department, in cooperation with the Department of | ||||||
2 | Commerce and Economic Opportunity, shall prescribe rules to | ||||||
3 | enforce and administer the provisions of this Section. The | ||||||
4 | rules must include, without limitation, procedures to allow a | ||||||
5 | taxpayer who has been awarded the credit to sell the credit in | ||||||
6 | the secondary financial markets with 100% of the proceeds of | ||||||
7 | the sale by the applicant to be used to offset the costs of the | ||||||
8 | project under the agreement. | ||||||
9 | (Source: P.A. 94-793, eff. 5-19-06.)
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10 | Section 15. The Economic Development for a Growing Economy | ||||||
11 | Tax Credit Act is amended by changing Section 5-45 as follows:
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12 | (35 ILCS 10/5-45)
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13 | Sec. 5-45. Amount and duration of the credit.
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14 | (a) The Department shall
determine the amount and
duration | ||||||
15 | of the credit awarded under this Act. The duration of the
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16 | credit may not exceed 10 taxable years.
The credit may be | ||||||
17 | stated as
a percentage of the Incremental Income Tax | ||||||
18 | attributable
to the applicant's project and may include a fixed | ||||||
19 | dollar limitation.
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20 | (b) Notwithstanding subsection (a),
and except as the | ||||||
21 | credit may be applied in a carryover year pursuant to Section
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22 | 211(4) of the Illinois Income Tax Act, the credit may be | ||||||
23 | applied against the
State income tax liability in more than 10 | ||||||
24 | taxable years but not in more than
15 taxable years for an |
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1 | eligible business
that (i) qualifies under this Act
and the | ||||||
2 | Corporate Headquarters Relocation Act and has in fact | ||||||
3 | undertaken a
qualifying project within the time frame specified | ||||||
4 | by the Department of
Commerce and Economic Opportunity under | ||||||
5 | that Act, and (ii) applies against its
State income tax | ||||||
6 | liability, during the entire 15-year
period, no more than 60% | ||||||
7 | of the maximum
credit per year that would otherwise be | ||||||
8 | available under this Act.
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9 | (c) The Department, in cooperation with the Department of | ||||||
10 | Revenue, must adopt rules to allow a taxpayer who has been | ||||||
11 | awarded a credit under this Section to sell the credit in the | ||||||
12 | secondary financial markets with 100% of the proceeds of the | ||||||
13 | sale by the applicant to be used to offset the costs of the | ||||||
14 | project. The rulemaking for any rule required under this | ||||||
15 | subsection (c) must be initiated under Section 5-40 of the | ||||||
16 | Illinois Administrative Procedures Act within 120 days after | ||||||
17 | the effective date of this amendatory Act of the 95th General | ||||||
18 | Assembly.
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19 | (Source: P.A. 94-793, eff. 5-19-06.)
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20 | Section 99. Effective date. This Act takes effect upon | ||||||
21 | becoming law.
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