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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 Economic Development for a Growing Economy
5Tax Credit Act is amended by changing Sections 5-5 and 5-15 as
6follows:
 
7    (35 ILCS 10/5-5)
8    Sec. 5-5. Definitions. As used in this Act:
9    "Agreement" means the Agreement between a Taxpayer and the
10Department under the provisions of Section 5-50 of this Act.
11    "Applicant" means a Taxpayer that is operating a business
12located or that the Taxpayer plans to locate within the State
13of Illinois and that is engaged in interstate or intrastate
14commerce for the purpose of manufacturing, processing,
15assembling, warehousing, or distributing products, conducting
16research and development, providing tourism services, or
17providing services in interstate commerce, office industries,
18or agricultural processing, but excluding retail, retail food,
19health, or professional services. "Applicant" does not include
20a Taxpayer who closes or substantially reduces an operation at
21one location in the State and relocates substantially the same
22operation to another location in the State. This does not
23prohibit a Taxpayer from expanding its operations at another

 

 

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1location in the State, provided that existing operations of a
2similar nature located within the State are not closed or
3substantially reduced. This also does not prohibit a Taxpayer
4from moving its operations from one location in the State to
5another location in the State for the purpose of expanding the
6operation provided that the Department determines that
7expansion cannot reasonably be accommodated within the
8municipality in which the business is located, or in the case
9of a business located in an incorporated area of the county,
10within the county in which the business is located, after
11conferring with the chief elected official of the municipality
12or county and taking into consideration any evidence offered
13by the municipality or county regarding the ability to
14accommodate expansion within the municipality or county.
15    "Credit" means the amount agreed to between the Department
16and Applicant under this Act, but not to exceed the lesser of:
17(1) the sum of (i) 50% of the Incremental Income Tax
18attributable to New Employees at the Applicant's project and
19(ii) 10% of the training costs of New Employees; or (2) 100% of
20the Incremental Income Tax attributable to New Employees at
21the Applicant's project. However, if the project is located in
22an underserved area, then the amount of the Credit may not
23exceed the lesser of: (1) the sum of (i) 75% of the Incremental
24Income Tax attributable to New Employees at the Applicant's
25project and (ii) 10% of the training costs of New Employees; or
26(2) 100% of the Incremental Income Tax attributable to New

 

 

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1Employees at the Applicant's project. If the project is not
2located in an underserved area and the Applicant agrees to
3hire the required number of New Employees, then the maximum
4amount of the Credit for that Applicant may be increased by an
5amount not to exceed 25% of the Incremental Income Tax
6attributable to retained employees at the Applicant's project.
7If the project is located in an underserved area and the
8Applicant agrees to hire the required number of New Employees,
9then the maximum amount of the credit for that Applicant may be
10increased by an amount not to exceed 50% of the Incremental
11Income Tax attributable to retained employees at the
12Applicant's project.
13    "Department" means the Department of Commerce and Economic
14Opportunity.
15    "Director" means the Director of Commerce and Economic
16Opportunity.
17    "Full-time Employee" means an individual who is employed
18for consideration for at least 35 hours each week or who
19renders any other standard of service generally accepted by
20industry custom or practice as full-time employment. An
21individual for whom a W-2 is issued by a Professional Employer
22Organization (PEO) is a full-time employee if employed in the
23service of the Applicant for consideration for at least 35
24hours each week or who renders any other standard of service
25generally accepted by industry custom or practice as full-time
26employment to Applicant.

 

 

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1    "Incremental Income Tax" means the total amount withheld
2during the taxable year from the compensation of New Employees
3and, if applicable, retained employees under Article 7 of the
4Illinois Income Tax Act arising from employment at a project
5that is the subject of an Agreement.
6    "New Construction EDGE Agreement" means the Agreement
7between a Taxpayer and the Department under the provisions of
8Section 5-51 of this Act.
9    "New Construction EDGE Credit" means an amount agreed to
10between the Department and the Applicant under this Act as
11part of a New Construction EDGE Agreement that does not exceed
1250% of the Incremental Income Tax attributable to New
13Construction EDGE Employees at the Applicant's project;
14however, if the New Construction EDGE Project is located in an
15underserved area, then the amount of the New Construction EDGE
16Credit may not exceed 75% of the Incremental Income Tax
17attributable to New Construction EDGE Employees at the
18Applicant's New Construction EDGE Project.
19    "New Construction EDGE Employee" means a laborer or worker
20who is employed by an Illinois contractor or subcontractor in
21the actual construction work on the site of a New Construction
22EDGE Project, pursuant to a New Construction EDGE Agreement.
23    "New Construction EDGE Incremental Income Tax" means the
24total amount withheld during the taxable year from the
25compensation of New Construction EDGE Employees.
26    "New Construction EDGE Project" means the building of a

 

 

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1Taxpayer's structure or building, or making improvements of
2any kind to real property. "New Construction EDGE Project"
3does not include the routine operation, routine repair, or
4routine maintenance of existing structures, buildings, or real
5property.
6    "New Employee" means:
7        (a) A Full-time Employee first employed by a Taxpayer
8    in the project that is the subject of an Agreement and who
9    is hired after the Taxpayer enters into the tax credit
10    Agreement.
11        (b) The term "New Employee" does not include:
12            (1) an employee of the Taxpayer who performs a job
13        that was previously performed by another employee, if
14        that job existed for at least 6 months before hiring
15        the employee;
16            (2) an employee of the Taxpayer who was previously
17        employed in Illinois by a Related Member of the
18        Taxpayer and whose employment was shifted to the
19        Taxpayer after the Taxpayer entered into the tax
20        credit Agreement; or
21            (3) a child, grandchild, parent, or spouse, other
22        than a spouse who is legally separated from the
23        individual, of any individual who has a direct or an
24        indirect ownership interest of at least 5% in the
25        profits, capital, or value of the Taxpayer.
26        (c) Notwithstanding paragraph (1) of subsection (b),

 

 

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1    an employee may be considered a New Employee under the
2    Agreement if the employee performs a job that was
3    previously performed by an employee who was:
4            (1) treated under the Agreement as a New Employee;
5        and
6            (2) promoted by the Taxpayer to another job.
7        (d) Notwithstanding subsection (a), the Department may
8    award Credit to an Applicant with respect to an employee
9    hired prior to the date of the Agreement if:
10            (1) the Applicant is in receipt of a letter from
11        the Department stating an intent to enter into a
12        credit Agreement;
13            (2) the letter described in paragraph (1) is
14        issued by the Department not later than 15 days after
15        the effective date of this Act; and
16            (3) the employee was hired after the date the
17        letter described in paragraph (1) was issued.
18    "Noncompliance Date" means, in the case of a Taxpayer that
19is not complying with the requirements of the Agreement or the
20provisions of this Act, the day following the last date upon
21which the Taxpayer was in compliance with the requirements of
22the Agreement and the provisions of this Act, as determined by
23the Director, pursuant to Section 5-65.
24    "Pass Through Entity" means an entity that is exempt from
25the tax under subsection (b) or (c) of Section 205 of the
26Illinois Income Tax Act.

 

 

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1    "Professional Employer Organization" (PEO) means an
2employee leasing company, as defined in Section 206.1(A)(2) of
3the Illinois Unemployment Insurance Act.
4    "Related Member" means a person that, with respect to the
5Taxpayer during any portion of the taxable year, is any one of
6the following:
7        (1) An individual stockholder, if the stockholder and
8    the members of the stockholder's family (as defined in
9    Section 318 of the Internal Revenue Code) own directly,
10    indirectly, beneficially, or constructively, in the
11    aggregate, at least 50% of the value of the Taxpayer's
12    outstanding stock.
13        (2) A partnership, estate, or trust and any partner or
14    beneficiary, if the partnership, estate, or trust, and its
15    partners or beneficiaries own directly, indirectly,
16    beneficially, or constructively, in the aggregate, at
17    least 50% of the profits, capital, stock, or value of the
18    Taxpayer.
19        (3) A corporation, and any party related to the
20    corporation in a manner that would require an attribution
21    of stock from the corporation to the party or from the
22    party to the corporation under the attribution rules of
23    Section 318 of the Internal Revenue Code, if the Taxpayer
24    owns directly, indirectly, beneficially, or constructively
25    at least 50% of the value of the corporation's outstanding
26    stock.

 

 

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1        (4) A corporation and any party related to that
2    corporation in a manner that would require an attribution
3    of stock from the corporation to the party or from the
4    party to the corporation under the attribution rules of
5    Section 318 of the Internal Revenue Code, if the
6    corporation and all such related parties own in the
7    aggregate at least 50% of the profits, capital, stock, or
8    value of the Taxpayer.
9        (5) A person to or from whom there is attribution of
10    stock ownership in accordance with Section 1563(e) of the
11    Internal Revenue Code, except, for purposes of determining
12    whether a person is a Related Member under this paragraph,
13    20% shall be substituted for 5% wherever 5% appears in
14    Section 1563(e) of the Internal Revenue Code.
15    "Startup taxpayer" means, for Agreements that are executed
16before the effective date of this amendatory Act of the 103rd
17General Assembly, a corporation, partnership, or other entity
18incorporated or organized no more than 5 years before the
19filing of an application for an Agreement that has never had
20any Illinois income tax liability, excluding any Illinois
21income tax liability of a Related Member which shall not be
22attributed to the startup taxpayer. "Startup taxpayer" means,
23for Agreements that are executed on or after the effective
24date of this amendatory Act of the 103rd General Assembly, a
25corporation, partnership, or other entity incorporated or
26organized no more than 10 years before the filing of an

 

 

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1application for an Agreement that has never had any Illinois
2income tax liability, excluding any Illinois income tax
3liability of a Related Member which shall not be attributed to
4the startup taxpayer.
5    "Taxpayer" means an individual, corporation, partnership,
6or other entity that has any Illinois Income Tax liability.
7    Until July 1, 2022, "underserved area" means a geographic
8area that meets one or more of the following conditions:
9        (1) the area has a poverty rate of at least 20%
10    according to the latest federal decennial census;
11        (2) 75% or more of the children in the area
12    participate in the federal free lunch program according to
13    reported statistics from the State Board of Education;
14        (3) at least 20% of the households in the area receive
15    assistance under the Supplemental Nutrition Assistance
16    Program (SNAP); or
17        (4) the area has an average unemployment rate, as
18    determined by the Illinois Department of Employment
19    Security, that is more than 120% of the national
20    unemployment average, as determined by the U.S. Department
21    of Labor, for a period of at least 2 consecutive calendar
22    years preceding the date of the application.
23    On and after July 1, 2022, "underserved area" means a
24geographic area that meets one or more of the following
25conditions:
26        (1) the area has a poverty rate of at least 20%

 

 

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1    according to the latest American Community Survey;
2        (2) 35% or more of the families with children in the
3    area are living below 130% of the poverty line, according
4    to the latest American Community Survey;
5        (3) at least 20% of the households in the area receive
6    assistance under the Supplemental Nutrition Assistance
7    Program (SNAP); or
8        (4) the area has an average unemployment rate, as
9    determined by the Illinois Department of Employment
10    Security, that is more than 120% of the national
11    unemployment average, as determined by the U.S. Department
12    of Labor, for a period of at least 2 consecutive calendar
13    years preceding the date of the application.
14(Source: P.A. 101-9, eff. 6-5-19; 102-330, eff. 1-1-22;
15102-700, eff. 4-19-22; 102-1125, eff. 2-3-23.)
 
16    (35 ILCS 10/5-15)
17    Sec. 5-15. Tax Credit Awards. Subject to the conditions
18set forth in this Act, a Taxpayer is entitled to a Credit
19against or, as described in subsection (g) of this Section, a
20payment towards taxes imposed pursuant to subsections (a) and
21(b) of Section 201 of the Illinois Income Tax Act that may be
22imposed on the Taxpayer for a taxable year beginning on or
23after January 1, 1999, if the Taxpayer is awarded a Credit by
24the Department under this Act for that taxable year.
25    (a) The Department shall make Credit awards under this Act

 

 

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1to foster job creation and retention in Illinois.
2    (b) A person that proposes a project to create new jobs in
3Illinois must enter into an Agreement with the Department for
4the Credit under this Act.
5    (c) The Credit shall be claimed for the taxable years
6specified in the Agreement.
7    (d) The Credit shall not exceed the Incremental Income Tax
8attributable to the project that is the subject of the
9Agreement.
10    (e) Nothing herein shall prohibit a Tax Credit Award to an
11Applicant that uses a PEO if all other award criteria are
12satisfied.
13    (f) In lieu of the Credit allowed under this Act against
14the taxes imposed pursuant to subsections (a) and (b) of
15Section 201 of the Illinois Income Tax Act for any taxable year
16ending on or after December 31, 2009, for Taxpayers that
17entered into Agreements prior to January 1, 2015 and otherwise
18meet the criteria set forth in this subsection (f), the
19Taxpayer may elect to claim the Credit against its obligation
20to pay over withholding under Section 704A of the Illinois
21Income Tax Act.
22        (1) The election under this subsection (f) may be made
23    only by a Taxpayer that (i) is primarily engaged in one of
24    the following business activities: water purification and
25    treatment, motor vehicle metal stamping, automobile
26    manufacturing, automobile and light duty motor vehicle

 

 

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1    manufacturing, motor vehicle manufacturing, light truck
2    and utility vehicle manufacturing, heavy duty truck
3    manufacturing, motor vehicle body manufacturing, cable
4    television infrastructure design or manufacturing, or
5    wireless telecommunication or computing terminal device
6    design or manufacturing for use on public networks and
7    (ii) meets the following criteria:
8            (A) the Taxpayer (i) had an Illinois net loss or an
9        Illinois net loss deduction under Section 207 of the
10        Illinois Income Tax Act for the taxable year in which
11        the Credit is awarded, (ii) employed a minimum of
12        1,000 full-time employees in this State during the
13        taxable year in which the Credit is awarded, (iii) has
14        an Agreement under this Act on December 14, 2009 (the
15        effective date of Public Act 96-834), and (iv) is in
16        compliance with all provisions of that Agreement;
17            (B) the Taxpayer (i) had an Illinois net loss or an
18        Illinois net loss deduction under Section 207 of the
19        Illinois Income Tax Act for the taxable year in which
20        the Credit is awarded, (ii) employed a minimum of
21        1,000 full-time employees in this State during the
22        taxable year in which the Credit is awarded, and (iii)
23        has applied for an Agreement within 365 days after
24        December 14, 2009 (the effective date of Public Act
25        96-834);
26            (C) the Taxpayer (i) had an Illinois net operating

 

 

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1        loss carryforward under Section 207 of the Illinois
2        Income Tax Act in a taxable year ending during
3        calendar year 2008, (ii) has applied for an Agreement
4        within 150 days after the effective date of this
5        amendatory Act of the 96th General Assembly, (iii)
6        creates at least 400 new jobs in Illinois, (iv)
7        retains at least 2,000 jobs in Illinois that would
8        have been at risk of relocation out of Illinois over a
9        10-year period, and (v) makes a capital investment of
10        at least $75,000,000;
11            (D) the Taxpayer (i) had an Illinois net operating
12        loss carryforward under Section 207 of the Illinois
13        Income Tax Act in a taxable year ending during
14        calendar year 2009, (ii) has applied for an Agreement
15        within 150 days after the effective date of this
16        amendatory Act of the 96th General Assembly, (iii)
17        creates at least 150 new jobs, (iv) retains at least
18        1,000 jobs in Illinois that would have been at risk of
19        relocation out of Illinois over a 10-year period, and
20        (v) makes a capital investment of at least
21        $57,000,000; or
22            (E) the Taxpayer (i) employed at least 2,500
23        full-time employees in the State during the year in
24        which the Credit is awarded, (ii) commits to make at
25        least $500,000,000 in combined capital improvements
26        and project costs under the Agreement, (iii) applies

 

 

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1        for an Agreement between January 1, 2011 and June 30,
2        2011, (iv) executes an Agreement for the Credit during
3        calendar year 2011, and (v) was incorporated no more
4        than 5 years before the filing of an application for an
5        Agreement.
6        (1.5) The election under this subsection (f) may also
7    be made by a Taxpayer for any Credit awarded pursuant to an
8    agreement that was executed between January 1, 2011 and
9    June 30, 2011, if the Taxpayer (i) is primarily engaged in
10    the manufacture of inner tubes or tires, or both, from
11    natural and synthetic rubber, (ii) employs a minimum of
12    2,400 full-time employees in Illinois at the time of
13    application, (iii) creates at least 350 full-time jobs and
14    retains at least 250 full-time jobs in Illinois that would
15    have been at risk of being created or retained outside of
16    Illinois, and (iv) makes a capital investment of at least
17    $200,000,000 at the project location.
18        (1.6) The election under this subsection (f) may also
19    be made by a Taxpayer for any Credit awarded pursuant to an
20    agreement that was executed within 150 days after the
21    effective date of this amendatory Act of the 97th General
22    Assembly, if the Taxpayer (i) is primarily engaged in the
23    operation of a discount department store, (ii) maintains
24    its corporate headquarters in Illinois, (iii) employs a
25    minimum of 4,250 full-time employees at its corporate
26    headquarters in Illinois at the time of application, (iv)

 

 

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1    retains at least 4,250 full-time jobs in Illinois that
2    would have been at risk of being relocated outside of
3    Illinois, (v) had a minimum of $40,000,000,000 in total
4    revenue in 2010, and (vi) makes a capital investment of at
5    least $300,000,000 at the project location.
6        (1.7) Notwithstanding any other provision of law, the
7    election under this subsection (f) may also be made by a
8    Taxpayer for any Credit awarded pursuant to an agreement
9    that was executed or applied for on or after July 1, 2011
10    and on or before March 31, 2012, if the Taxpayer is
11    primarily engaged in the manufacture of original and
12    aftermarket filtration parts and products for automobiles,
13    motor vehicles, light duty motor vehicles, light trucks
14    and utility vehicles, and heavy duty trucks, (ii) employs
15    a minimum of 1,000 full-time employees in Illinois at the
16    time of application, (iii) creates at least 250 full-time
17    jobs in Illinois, (iv) relocates its corporate
18    headquarters to Illinois from another state, and (v) makes
19    a capital investment of at least $4,000,000 at the project
20    location.
21        (1.8) Notwithstanding any other provision of law, the
22    election under this subsection (f) may also be made by a
23    startup taxpayer for any Credit awarded pursuant to an
24    Agreement that was executed or applied for on or after the
25    effective date of this amendatory Act of the 102nd General
26    Assembly, if the startup taxpayer, without considering any

 

 

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1    Related Member or other investor, (i) has never had any
2    Illinois income tax liability and (ii) was incorporated no
3    more than 5 years before the filing of an application for
4    an Agreement. Any such election under this paragraph (1.8)
5    shall be effective unless and until such startup taxpayer
6    has any Illinois income tax liability. This election under
7    this paragraph (1.8) shall automatically terminate when
8    the startup taxpayer has any Illinois income tax liability
9    at the end of any taxable year during the term of the
10    Agreement. Thereafter, the startup taxpayer may receive a
11    Credit, taking into account any benefits previously
12    enjoyed or received by way of the election under this
13    paragraph (1.8), so long as the startup taxpayer remains
14    in compliance with the terms and conditions of the
15    Agreement.
16        (2) An election under this subsection shall allow the
17    credit to be taken against payments otherwise due under
18    Section 704A of the Illinois Income Tax Act during the
19    first calendar quarter year beginning after the end of the
20    taxable quarter year in which the credit is awarded under
21    this Act.
22        (3) The election shall be made in the form and manner
23    required by the Illinois Department of Revenue and, once
24    made, shall be irrevocable.
25        (4) If a Taxpayer who meets the requirements of
26    subparagraph (A) of paragraph (1) of this subsection (f)

 

 

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1    elects to claim the Credit against its withholdings as
2    provided in this subsection (f), then, on and after the
3    date of the election, the terms of the Agreement between
4    the Taxpayer and the Department may not be further amended
5    during the term of the Agreement.
6    (g) A pass-through entity that has been awarded a credit
7under this Act, its shareholders, or its partners may treat
8some or all of the credit awarded pursuant to this Act as a tax
9payment for purposes of the Illinois Income Tax Act. The term
10"tax payment" means a payment as described in Article 6 or
11Article 8 of the Illinois Income Tax Act or a composite payment
12made by a pass-through entity on behalf of any of its
13shareholders or partners to satisfy such shareholders' or
14partners' taxes imposed pursuant to subsections (a) and (b) of
15Section 201 of the Illinois Income Tax Act. In no event shall
16the amount of the award credited pursuant to this Act exceed
17the Illinois income tax liability of the pass-through entity
18or its shareholders or partners for the taxable year.
19(Source: P.A. 102-700, eff. 4-19-22.)