HB3934 97TH GENERAL ASSEMBLY

LRB097 15154 HLH 60254 b

97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3934

Introduced 1/10/2012, by Rep. Jack D. Franks

SYNOPSIS AS INTRODUCED:

20 ILCS 2505/2505-503 new
35 ILCS 10/5-10
35 ILCS 10/5-20
35 ILCS 10/5-45
35 ILCS 10/5-50

Amends the Department of Revenue Law of the Civil Administrative Code of Illinois. Creates the Economic Incentive Committee within the Department for the purpose of approving Agreements entered into under the Economic Development for a Growing Economy Tax Credit Act. Sets forth the membership of the Committee. Provides that the Department of Revenue shall post the terms of each Agreement entered into under the Economic Development for a Growing Economy Tax Credit Act on its website. Amends the Economic Development for a Growing Economy Tax Credit Act to provide that each Agreement is subject to final approval by the Economic Incentive Committee. Effective July 1, 2012.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

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

Section 5. The Department of Revenue Law of the Civil Administrative Code of Illinois is amended by adding Section 2505-503 as follows:

(20 ILCS 2505/2505-503 new)

Sec. 2505-503. Economic Incentive Committee; creation; duties. An Economic Incentive Committee is created within the Department for the purpose of approving Agreements entered into under the Economic Development for a Growing Economy Tax Credit Act. The Committee shall consist of 5 members appointed as follows: one member shall be appointed by the Governor; one member shall be appointed by the Speaker of the House of Representatives; one member shall be appointed by the President of the Senate; one member shall be appointed by the House Minority Leader; and one member shall be appointed by the Senate Minority Leader. Each member of the Committee shall be a business owner or shall have expertise in economic development or academia.

The Committee shall approve or deny each Agreement within 60 days after the Agreement is submitted to the Committee. Members shall serve without compensation, but may be reimbursed for their necessary expenses. If a member has a conflict of interest with respect to any Agreement, he or she shall recuse himself or herself from consideration of that Agreement. The Committee shall consider each Agreement submitted on or before December 31, 2016 and shall be dissolved as soon after that date as possible.

The Department shall post the terms of each Agreement entered into under the Economic Development for a Growing Economy Tax Credit Act on its website.

Section 10. The Economic Development for a Growing Economy Tax Credit Act is amended by changing Sections 5-10, 5-20, 5-45, and 5-50 as follows:

(35 ILCS 10/5-10)

Sec. 5-10. Powers of the Department. The Department, in addition to those powers granted under the Civil Administrative Code of Illinois, is granted and shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this Act, including, but not limited to, power and authority to:

(a) Promulgate procedures, rules, or regulations deemed necessary and appropriate for the administration of the programs; establish forms for applications, notifications, contracts, or any other agreements; and accept applications at any time during the year.

(b) Provide and assist Taxpayers pursuant to the provisions of this Act, and cooperate with Taxpayers that are parties to Agreements to promote, foster, and support economic development, capital investment, and job creation or retention within the State.

(c) Enter into agreements and memoranda of understanding for participation of and engage in cooperation with agencies of the federal government, local units of government, universities, research foundations or institutions, regional economic development corporations, or other organizations for the purposes of this Act.

(d) Gather information and conduct inquiries, in the manner and by the methods as it deems desirable, including without limitation, gathering information with respect to Applicants for the purpose of making any designations or certifications necessary or desirable or to gather information to assist the Committee with any recommendation or guidance in the furtherance of the purposes of this Act.

(e) Establish, negotiate and effectuate any term, agreement or other document with any person, necessary or appropriate to accomplish the purposes of this Act; and to consent, subject to the provisions of any Agreement with another party, to the modification or restructuring of any Agreement to which the Department is a party, provided that all Agreements entered into on or after the effective date of this amendatory Act of the 97th General Assembly, and all modifications to or restructuring of Agreements occurring on or after the effective date of this amendatory Act of the 97th General Assembly, require the approval of the Economic Incentive Committee established under Section 2505-503 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(f) Fix, determine, charge, and collect any premiums, fees, charges, costs, and expenses from Applicants, including, without limitation, any application fees, commitment fees, program fees, financing charges, or publication fees as deemed appropriate to pay expenses necessary or incident to the administration, staffing, or operation in connection with the Department's or Committee's activities under this Act, or for preparation, implementation, and enforcement of the terms of the Agreement, or for consultation, advisory and legal fees, and other costs; however, all fees and expenses incident thereto shall be the responsibility of the Applicant.

(g) Provide for sufficient personnel to permit administration, staffing, operation, and related support required to adequately discharge its duties and responsibilities described in this Act from funds made available through charges to Applicants or from funds as may be appropriated by the General Assembly for the administration of this Act.

(h) Require Applicants, upon written request, to issue any necessary authorization to the appropriate federal, state, or local authority for the release of information concerning a project being considered under the provisions of this Act, with the information requested to include, but not be limited to, financial reports, returns, or records relating to the Taxpayers' or its project.

(i) Require that a Taxpayer shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the Agreement in the custody or control of the Taxpayer open for reasonable Department inspection and audits, and including, without limitation, the making of copies of the books, records, or papers, and the inspection or appraisal of any of the Taxpayer or project assets.

(j) Take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance or participation required under this Act, including the power to sell, dispose, lease, or rent, upon terms and conditions determined by the Director to be appropriate, real or personal property that the Department may receive as a result of these actions.

(Source: P.A. 91-476, eff. 8-11-99.)

(35 ILCS 10/5-20)

Sec. 5-20. Application for a project to create and retain new jobs.

(a) Any Taxpayer proposing a project located or planned to be located in Illinois may request consideration for designation of its project, by formal written letter of request or by formal application to the Department, in which the Applicant states its intent to make at least a specified level of investment and intends to hire or retain a specified number of full-time employees at a designated location in Illinois. As circumstances require, the Department may require a formal application from an Applicant and a formal letter of request for assistance.

(b) In order to qualify for Credits under this Act, an Applicant's project must:

(1) involve an investment of at least $5,000,000 in capital improvements to be placed in service and to employ at least 25 New Employees within the State as a direct result of the project;

(2) involve an investment of at least an amount (to be expressly specified by the Department and the Committee) in capital improvements to be placed in service and will employ at least an amount (to be expressly specified by the Department and the Committee) of New Employees within the State, provided that the Department and the Committee have determined that the project will provide a substantial economic benefit to the State; or

(3) if the applicant has 100 or fewer employees, involve an investment of at least $1,000,000 in capital improvements to be placed in service and to employ at least 5 New Employees within the State as a direct result of the project.

(c) After receipt of an application, the Department may enter into an Agreement with the Applicant if the application is accepted in accordance with Section 5-25 and the Agreement is approved by the Economic Incentive Committee established under Section 2505-503 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(Source: P.A. 93-882, eff. 1-1-05.)

(35 ILCS 10/5-45)

Sec. 5-45. Amount and duration of the credit.

(a) The Department shall determine the amount and duration of the credit awarded under this Act. The duration of the credit may not exceed 10 taxable years. The credit may be stated as a percentage of the Incremental Income Tax attributable to the applicant's project and may include a fixed dollar limitation. With respect to Agreements entered into or modified on or after the effective date of this amendatory Act of the 97th General Assembly, the amount and duration of the credit is subject to final approval by the Economic Incentive Committee established under Section 2505-503 of the Department of Revenue Law of the Civil Administrative Code of Illinois.

(b) Notwithstanding subsection (a), and except as the credit may be applied in a carryover year pursuant to Section 211(4) of the Illinois Income Tax Act, the credit may be applied against the State income tax liability in more than 10 taxable years but not in more than 15 taxable years for an eligible business that (i) qualifies under this Act and the Corporate Headquarters Relocation Act and has in fact undertaken a qualifying project within the time frame specified by the Department of Commerce and Economic Opportunity under that Act, and (ii) applies against its State income tax liability, during the entire 15-year period, no more than 60% of the maximum credit per year that would otherwise be available under this Act.

(Source: P.A. 94-793, eff. 5-19-06.)

(35 ILCS 10/5-50)

Sec. 5-50. Contents of Agreements with Applicants. The Department shall enter into an Agreement with an Applicant that is awarded a Credit under this Act. The Agreement must include all of the following:

(1) A detailed description of the project that is the subject of the Agreement, including the location and amount of the investment and jobs created or retained.

(2) The duration of the Credit and the first taxable year for which the Credit may be claimed.

(3) The Credit amount that will be allowed for each taxable year.

(4) A requirement that the Taxpayer shall maintain operations at the project location that shall be stated as a minimum number of years not to exceed 10.

(5) A specific method for determining the number of New Employees employed during a taxable year.

(6) A requirement that the Taxpayer shall annually report to the Department the number of New Employees, the Incremental Income Tax withheld in connection with the New Employees, and any other information the Director needs to perform the Director's duties under this Act.

(7) A requirement that the Director is authorized to verify with the appropriate State agencies the amounts reported under paragraph (6), and after doing so shall issue a certificate to the Taxpayer stating that the amounts have been verified.

(8) A requirement that the Taxpayer shall provide written notification to the Director not more than 30 days after the Taxpayer makes or receives a proposal that would transfer the Taxpayer's State tax liability obligations to a successor Taxpayer.

(9) A detailed description of the number of New Employees to be hired, and the occupation and payroll of the full-time jobs to be created or retained as a result of the project.

(10) The minimum investment the business enterprise will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.

(11) A requirement that the Taxpayer shall provide written notification to the Director and the Committee not more than 30 days after the Taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is being or will be achieved or maintained as set forth in the terms and conditions of the Agreement.

(12) A provision that, if the total number of New Employees falls below a specified level, the allowance of Credit shall be suspended until the number of New Employees equals or exceeds the Agreement amount.

(13) A detailed description of the items for which the costs incurred by the Taxpayer will be included in the limitation on the Credit provided in Section 5-30.

(13.5) A provision that, if the Taxpayer never meets either the investment or job creation and retention requirements specified in the Agreement during the entire 5-year period beginning on the first day of the first taxable year in which the Agreement is executed and ending on the last day of the fifth taxable year after the Agreement is executed, then the Agreement is automatically terminated on the last day of the fifth taxable year after the Agreement is executed and the Taxpayer is not entitled to the award of any credits for any of that 5-year period.

(14) Any other performance conditions or contract provisions as the Department determines are appropriate.

Any Agreement entered into on or after the effective date of this amendatory Act of the 97th General Assembly is subject to the approval of the Economic Incentive Committee established under Section 2505-503 of the Department of Revenue Law of the Civil Administrative Code of Illinois. Any modifications to an existing Agreement that take effect on or after the effective date of this amendatory Act of the 97th General Assembly are subject to the approval of the Economic Incentive Committee established under Section 2505-503 of the Department of Revenue Law of the Civil Administrative Code of Illinois. The Department must forward any proposed Agreements or modifications to the Economic Incentive Committee within 15 days after the terms of the Agreement or modification are finalized.

(Source: P.A. 97-2, eff. 5-6-11.)

Section 99. Effective date. This Act takes effect July 1, 2012.