103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB4106

 

Introduced , by Rep. Kevin Schmidt

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/221

    Amends the Illinois Income Tax Act. Provides that a qualified taxpayer that has begun construction on a qualified restoration or preservation project prior to December 31, 2026, will be eligible to receive the tax credit until the taxable year that the project is completed or suspended.


LRB103 32956 MXP 62761 b

 

 

A BILL FOR

 

HB4106LRB103 32956 MXP 62761 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 Illinois Income Tax Act is amended by
5changing Section 221 as follows:
 
6    (35 ILCS 5/221)
7    Sec. 221. Rehabilitation costs; qualified historic
8properties; River Edge Redevelopment Zone.
9    (a) For taxable years that begin on or after January 1,
102012 and begin prior to January 1, 2018, there shall be allowed
11a tax credit against the tax imposed by subsections (a) and (b)
12of Section 201 of this Act in an amount equal to 25% of
13qualified expenditures incurred by a qualified taxpayer during
14the taxable year in the restoration and preservation of a
15qualified historic structure located in a River Edge
16Redevelopment Zone pursuant to a qualified rehabilitation
17plan, provided that the total amount of such expenditures (i)
18must equal $5,000 or more and (ii) must exceed 50% of the
19purchase price of the property.
20    (a-1) For taxable years that begin on or after January 1,
212018 and end prior to January 1, 2027, there shall be allowed a
22tax credit against the tax imposed by subsections (a) and (b)
23of Section 201 of this Act in an aggregate amount equal to 25%

 

 

HB4106- 2 -LRB103 32956 MXP 62761 b

1of qualified expenditures incurred by a qualified taxpayer in
2the restoration and preservation of a qualified historic
3structure located in a River Edge Redevelopment Zone pursuant
4to a qualified rehabilitation plan, provided that the total
5amount of such expenditures must (i) equal $5,000 or more and
6(ii) exceed the adjusted basis of the qualified historic
7structure on the first day the qualified rehabilitation plan
8begins. For any rehabilitation project, regardless of duration
9or number of phases, the project's compliance with the
10foregoing provisions (i) and (ii) shall be determined based on
11the aggregate amount of qualified expenditures for the entire
12project and may include expenditures incurred under subsection
13(a), this subsection, or both subsection (a) and this
14subsection. If the qualified rehabilitation plan spans
15multiple years, the aggregate credit for the entire project
16shall be allowed in the last taxable year, except for phased
17rehabilitation projects, which may receive credits upon
18completion of each phase. Before obtaining the first phased
19credit: (A) the total amount of such expenditures must meet
20the requirements of provisions (i) and (ii) of this
21subsection; (B) the rehabilitated portion of the qualified
22historic structure must be placed in service; and (C) the
23requirements of subsection (b) must be met.
24    (a-2) For taxable years beginning on or after January 1,
252021 and ending prior to January 1, 2027, there shall be
26allowed a tax credit against the tax imposed by subsections

 

 

HB4106- 3 -LRB103 32956 MXP 62761 b

1(a) and (b) of Section 201 as provided in Section 10-10.3 of
2the River Edge Redevelopment Zone Act. The credit allowed
3under this subsection (a-2) shall apply only to taxpayers that
4make a capital investment of at least $1,000,000 in a
5qualified rehabilitation plan.
6    The credit or credits may not reduce the taxpayer's
7liability to less than zero. If the amount of the credit or
8credits exceeds the taxpayer's liability, the excess may be
9carried forward and applied against the taxpayer's liability
10in succeeding calendar years in the manner provided under
11paragraph (4) of Section 211 of this Act. The credit or credits
12shall be applied to the earliest year for which there is a tax
13liability. If there are credits from more than one taxable
14year that are available to offset a liability, the earlier
15credit shall be applied first.
16    For partners, shareholders of Subchapter S corporations,
17and owners of limited liability companies, if the liability
18company is treated as a partnership for the purposes of
19federal and State income taxation, there shall be allowed a
20credit under this Section to be determined in accordance with
21the determination of income and distributive share of income
22under Sections 702 and 704 and Subchapter S of the Internal
23Revenue Code.
24    The total aggregate amount of credits awarded under the
25Blue Collar Jobs Act (Article 20 of this amendatory Act of the
26101st General Assembly) shall not exceed $20,000,000 in any

 

 

HB4106- 4 -LRB103 32956 MXP 62761 b

1State fiscal year.
2    (b) To obtain a tax credit pursuant to this Section, the
3taxpayer must apply with the Department of Natural Resources.
4The Department of Natural Resources shall determine the amount
5of eligible rehabilitation costs and expenses in addition to
6the amount of the River Edge construction jobs credit within
745 days of receipt of a complete application. The taxpayer
8must submit a certification of costs prepared by an
9independent certified public accountant that certifies (i) the
10project expenses, (ii) whether those expenses are qualified
11expenditures, and (iii) that the qualified expenditures exceed
12the adjusted basis of the qualified historic structure on the
13first day the qualified rehabilitation plan commenced. The
14Department of Natural Resources is authorized, but not
15required, to accept this certification of costs to determine
16the amount of qualified expenditures and the amount of the
17credit. The Department of Natural Resources shall provide
18guidance as to the minimum standards to be followed in the
19preparation of such certification. The Department of Natural
20Resources and the National Park Service shall determine
21whether the rehabilitation is consistent with the United
22States Secretary of the Interior's Standards for
23Rehabilitation.
24    (b-1) Upon completion of the project and approval of the
25complete application, the Department of Natural Resources
26shall issue a single certificate in the amount of the eligible

 

 

HB4106- 5 -LRB103 32956 MXP 62761 b

1credits equal to 25% of qualified expenditures incurred during
2the eligible taxable years, as defined in subsections (a) and
3(a-1), excepting any credits awarded under subsection (a)
4prior to January 1, 2019 (the effective date of Public Act
5100-629) and any phased credits issued prior to the eligible
6taxable year under subsection (a-1). At the time the
7certificate is issued, an issuance fee up to the maximum
8amount of 2% of the amount of the credits issued by the
9certificate may be collected from the applicant to administer
10the provisions of this Section. If collected, this issuance
11fee shall be deposited into the Historic Property
12Administrative Fund, a special fund created in the State
13treasury. Subject to appropriation, moneys in the Historic
14Property Administrative Fund shall be provided to the
15Department of Natural Resources as reimbursement for the costs
16associated with administering this Section.
17    (c) The taxpayer must attach the certificate to the tax
18return on which the credits are to be claimed. The tax credit
19under this Section may not reduce the taxpayer's liability to
20less than zero. If the amount of the credit exceeds the tax
21liability for the year, the excess credit may be carried
22forward and applied to the tax liability of the 5 taxable years
23following the excess credit year.
24    (c-1) Subject to appropriation, moneys in the Historic
25Property Administrative Fund shall be used, on a biennial
26basis beginning at the end of the second fiscal year after

 

 

HB4106- 6 -LRB103 32956 MXP 62761 b

1January 1, 2019 (the effective date of Public Act 100-629), to
2hire a qualified third party to prepare a biennial report to
3assess the overall economic impact to the State from the
4qualified rehabilitation projects under this Section completed
5in that year and in previous years. The overall economic
6impact shall include at least: (1) the direct and indirect or
7induced economic impacts of completed projects; (2) temporary,
8permanent, and construction jobs created; (3) sales, income,
9and property tax generation before, during construction, and
10after completion; and (4) indirect neighborhood impact after
11completion. The report shall be submitted to the Governor and
12the General Assembly. The report to the General Assembly shall
13be filed with the Clerk of the House of Representatives and the
14Secretary of the Senate in electronic form only, in the manner
15that the Clerk and the Secretary shall direct.
16    (c-2) The Department of Natural Resources may adopt rules
17to implement this Section in addition to the rules expressly
18authorized in this Section.
19    (c-3) A qualified taxpayer that has begun construction on
20a qualified restoration or preservation project under this
21Section prior to December 31, 2026, will be eligible to
22receive the tax credit until the taxable year that the project
23is completed or suspended.
24    (d) As used in this Section, the following terms have the
25following meanings.
26    "Phased rehabilitation" means a project that is completed

 

 

HB4106- 7 -LRB103 32956 MXP 62761 b

1in phases, as defined under Section 47 of the federal Internal
2Revenue Code and pursuant to National Park Service regulations
3at 36 C.F.R. 67.
4    "Placed in service" means the date when the property is
5placed in a condition or state of readiness and availability
6for a specifically assigned function as defined under Section
747 of the federal Internal Revenue Code and federal Treasury
8Regulation Sections 1.46 and 1.48.
9    "Qualified expenditure" means all the costs and expenses
10defined as qualified rehabilitation expenditures under Section
1147 of the federal Internal Revenue Code that were incurred in
12connection with a qualified historic structure.
13    "Qualified historic structure" means a certified historic
14structure as defined under Section 47(c)(3) of the federal
15Internal Revenue Code.
16    "Qualified rehabilitation plan" means a project that is
17approved by the Department of Natural Resources and the
18National Park Service as being consistent with the United
19States Secretary of the Interior's Standards for
20Rehabilitation.
21    "Qualified taxpayer" means the owner of the qualified
22historic structure or any other person who qualifies for the
23federal rehabilitation credit allowed by Section 47 of the
24federal Internal Revenue Code with respect to that qualified
25historic structure. Partners, shareholders of subchapter S
26corporations, and owners of limited liability companies (if

 

 

HB4106- 8 -LRB103 32956 MXP 62761 b

1the limited liability company is treated as a partnership for
2purposes of federal and State income taxation) are entitled to
3a credit under this Section to be determined in accordance
4with the determination of income and distributive share of
5income under Sections 702 and 703 and subchapter S of the
6Internal Revenue Code, provided that credits granted to a
7partnership, a limited liability company taxed as a
8partnership, or other multiple owners of property shall be
9passed through to the partners, members, or owners
10respectively on a pro rata basis or pursuant to an executed
11agreement among the partners, members, or owners documenting
12any alternate distribution method.
13(Source: P.A. 101-9, eff. 6-5-19; 101-81, eff. 7-12-19;
14102-16, eff. 6-17-21.)