Sen. Julie A. Morrison

Filed: 3/24/2023

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 805

2    AMENDMENT NO. ______. Amend Senate Bill 805 by replacing
3everything after the enacting clause with the following:
 
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

 

 

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

 

 

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1the Incremental Income Tax attributable to New Employees at
2the Applicant's project. However, if the project is located in
3an underserved area, then the amount of the Credit may not
4exceed the lesser of: (1) the sum of (i) 75% of the Incremental
5Income Tax attributable to New Employees at the Applicant's
6project and (ii) 10% of the training costs of New Employees; or
7(2) 100% of the Incremental Income Tax attributable to New
8Employees at the Applicant's project. If the project is not
9located in an underserved area and the Applicant agrees to
10hire the required number of New Employees, then the maximum
11amount of the Credit for that Applicant may be increased by an
12amount not to exceed 25% of the Incremental Income Tax
13attributable to retained employees at the Applicant's project.
14If the project is located in an underserved area and the
15Applicant agrees to hire the required number of New Employees,
16then the maximum amount of the credit for that Applicant may be
17increased by an amount not to exceed 50% of the Incremental
18Income Tax attributable to retained employees at the
19Applicant's project.
20    "Department" means the Department of Commerce and Economic
21Opportunity.
22    "Director" means the Director of Commerce and Economic
23Opportunity.
24    "Full-time Employee" means an individual who is employed
25for consideration for at least 35 hours each week or who
26renders any other standard of service generally accepted by

 

 

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1industry custom or practice as full-time employment. An
2individual for whom a W-2 is issued by a Professional Employer
3Organization (PEO) is a full-time employee if employed in the
4service of the Applicant for consideration for at least 35
5hours each week or who renders any other standard of service
6generally accepted by industry custom or practice as full-time
7employment to Applicant.
8    "Incremental Income Tax" means the total amount withheld
9during the taxable year from the compensation of New Employees
10and, if applicable, retained employees under Article 7 of the
11Illinois Income Tax Act arising from employment at a project
12that is the subject of an Agreement.
13    "New Construction EDGE Agreement" means the Agreement
14between a Taxpayer and the Department under the provisions of
15Section 5-51 of this Act.
16    "New Construction EDGE Credit" means an amount agreed to
17between the Department and the Applicant under this Act as
18part of a New Construction EDGE Agreement that does not exceed
1950% of the Incremental Income Tax attributable to New
20Construction EDGE Employees at the Applicant's project;
21however, if the New Construction EDGE Project is located in an
22underserved area, then the amount of the New Construction EDGE
23Credit may not exceed 75% of the Incremental Income Tax
24attributable to New Construction EDGE Employees at the
25Applicant's New Construction EDGE Project.
26    "New Construction EDGE Employee" means a laborer or worker

 

 

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1who is employed by an Illinois contractor or subcontractor in
2the actual construction work on the site of a New Construction
3EDGE Project, pursuant to a New Construction EDGE Agreement.
4    "New Construction EDGE Incremental Income Tax" means the
5total amount withheld during the taxable year from the
6compensation of New Construction EDGE Employees.
7    "New Construction EDGE Project" means the building of a
8Taxpayer's structure or building, or making improvements of
9any kind to real property. "New Construction EDGE Project"
10does not include the routine operation, routine repair, or
11routine maintenance of existing structures, buildings, or real
12property.
13    "New Employee" means:
14        (a) A Full-time Employee first employed by a Taxpayer
15    in the project that is the subject of an Agreement and who
16    is hired after the Taxpayer enters into the tax credit
17    Agreement.
18        (b) The term "New Employee" does not include:
19            (1) an employee of the Taxpayer who performs a job
20        that was previously performed by another employee, if
21        that job existed for at least 6 months before hiring
22        the employee;
23            (2) an employee of the Taxpayer who was previously
24        employed in Illinois by a Related Member of the
25        Taxpayer and whose employment was shifted to the
26        Taxpayer after the Taxpayer entered into the tax

 

 

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1        credit Agreement; or
2            (3) a child, grandchild, parent, or spouse, other
3        than a spouse who is legally separated from the
4        individual, of any individual who has a direct or an
5        indirect ownership interest of at least 5% in the
6        profits, capital, or value of the Taxpayer.
7        (c) Notwithstanding paragraph (1) of subsection (b),
8    an employee may be considered a New Employee under the
9    Agreement if the employee performs a job that was
10    previously performed by an employee who was:
11            (1) treated under the Agreement as a New Employee;
12        and
13            (2) promoted by the Taxpayer to another job.
14        (d) Notwithstanding subsection (a), the Department may
15    award Credit to an Applicant with respect to an employee
16    hired prior to the date of the Agreement if:
17            (1) the Applicant is in receipt of a letter from
18        the Department stating an intent to enter into a
19        credit Agreement;
20            (2) the letter described in paragraph (1) is
21        issued by the Department not later than 15 days after
22        the effective date of this Act; and
23            (3) the employee was hired after the date the
24        letter described in paragraph (1) was issued.
25    "Noncompliance Date" means, in the case of a Taxpayer that
26is not complying with the requirements of the Agreement or the

 

 

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1provisions of this Act, the day following the last date upon
2which the Taxpayer was in compliance with the requirements of
3the Agreement and the provisions of this Act, as determined by
4the Director, pursuant to Section 5-65.
5    "Pass Through Entity" means an entity that is exempt from
6the tax under subsection (b) or (c) of Section 205 of the
7Illinois Income Tax Act.
8    "Professional Employer Organization" (PEO) means an
9employee leasing company, as defined in Section 206.1(A)(2) of
10the Illinois Unemployment Insurance Act.
11    "Related Member" means a person that, with respect to the
12Taxpayer during any portion of the taxable year, is any one of
13the following:
14        (1) An individual stockholder, if the stockholder and
15    the members of the stockholder's family (as defined in
16    Section 318 of the Internal Revenue Code) own directly,
17    indirectly, beneficially, or constructively, in the
18    aggregate, at least 50% of the value of the Taxpayer's
19    outstanding stock.
20        (2) A partnership, estate, or trust and any partner or
21    beneficiary, if the partnership, estate, or trust, and its
22    partners or beneficiaries own directly, indirectly,
23    beneficially, or constructively, in the aggregate, at
24    least 50% of the profits, capital, stock, or value of the
25    Taxpayer.
26        (3) A corporation, and any party related to the

 

 

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1    corporation in a manner that would require an attribution
2    of stock from the corporation to the party or from the
3    party to the corporation under the attribution rules of
4    Section 318 of the Internal Revenue Code, if the Taxpayer
5    owns directly, indirectly, beneficially, or constructively
6    at least 50% of the value of the corporation's outstanding
7    stock.
8        (4) A corporation and any party related to that
9    corporation in a manner that would require an attribution
10    of stock from the corporation to the party or from the
11    party to the corporation under the attribution rules of
12    Section 318 of the Internal Revenue Code, if the
13    corporation and all such related parties own in the
14    aggregate at least 50% of the profits, capital, stock, or
15    value of the Taxpayer.
16        (5) A person to or from whom there is attribution of
17    stock ownership in accordance with Section 1563(e) of the
18    Internal Revenue Code, except, for purposes of determining
19    whether a person is a Related Member under this paragraph,
20    20% shall be substituted for 5% wherever 5% appears in
21    Section 1563(e) of the Internal Revenue Code.
22    "Startup taxpayer" means, for Agreements that are executed
23before the effective date of this amendatory Act of the 103rd
24General Assembly, a corporation, partnership, or other entity
25incorporated or organized no more than 5 years before the
26filing of an application for an Agreement that has never had

 

 

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1any Illinois income tax liability, excluding any Illinois
2income tax liability of a Related Member which shall not be
3attributed to the startup taxpayer. "Startup taxpayer" means,
4for Agreements that are executed on or after the effective
5date of this amendatory Act of the 103rd General Assembly, a
6corporation, partnership, or other entity incorporated or
7organized no more than 10 years before the filing of an
8application for an Agreement that has never had any Illinois
9income tax liability, excluding any Illinois income tax
10liability of a Related Member which shall not be attributed to
11the startup taxpayer.
12    "Taxpayer" means an individual, corporation, partnership,
13or other entity that has any Illinois Income Tax liability.
14    Until July 1, 2022, "underserved area" means a geographic
15area that meets one or more of the following conditions:
16        (1) the area has a poverty rate of at least 20%
17    according to the latest federal decennial census;
18        (2) 75% or more of the children in the area
19    participate in the federal free lunch program according to
20    reported statistics from the State Board of Education;
21        (3) at least 20% of the households in the area receive
22    assistance under the Supplemental Nutrition Assistance
23    Program (SNAP); or
24        (4) the area has an average unemployment rate, as
25    determined by the Illinois Department of Employment
26    Security, that is more than 120% of the national

 

 

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1    unemployment average, as determined by the U.S. Department
2    of Labor, for a period of at least 2 consecutive calendar
3    years preceding the date of the application.
4    On and after July 1, 2022, "underserved area" means a
5geographic area that meets one or more of the following
6conditions:
7        (1) the area has a poverty rate of at least 20%
8    according to the latest American Community Survey;
9        (2) 35% or more of the families with children in the
10    area are living below 130% of the poverty line, according
11    to the latest American Community Survey;
12        (3) at least 20% of the households in the area receive
13    assistance under the Supplemental Nutrition Assistance
14    Program (SNAP); or
15        (4) the area has an average unemployment rate, as
16    determined by the Illinois Department of Employment
17    Security, that is more than 120% of the national
18    unemployment average, as determined by the U.S. Department
19    of Labor, for a period of at least 2 consecutive calendar
20    years preceding the date of the application.
21(Source: P.A. 101-9, eff. 6-5-19; 102-330, eff. 1-1-22;
22102-700, eff. 4-19-22; 102-1125, eff. 2-3-23.)
 
23    (35 ILCS 10/5-15)
24    Sec. 5-15. Tax Credit Awards. Subject to the conditions
25set forth in this Act, a Taxpayer is entitled to a Credit

 

 

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1against or, as described in subsection (g) of this Section, a
2payment towards taxes imposed pursuant to subsections (a) and
3(b) of Section 201 of the Illinois Income Tax Act that may be
4imposed on the Taxpayer for a taxable year beginning on or
5after January 1, 1999, if the Taxpayer is awarded a Credit by
6the Department under this Act for that taxable year.
7    (a) The Department shall make Credit awards under this Act
8to foster job creation and retention in Illinois.
9    (b) A person that proposes a project to create new jobs in
10Illinois must enter into an Agreement with the Department for
11the Credit under this Act.
12    (c) The Credit shall be claimed for the taxable years
13specified in the Agreement.
14    (d) The Credit shall not exceed the Incremental Income Tax
15attributable to the project that is the subject of the
16Agreement.
17    (e) Nothing herein shall prohibit a Tax Credit Award to an
18Applicant that uses a PEO if all other award criteria are
19satisfied.
20    (f) In lieu of the Credit allowed under this Act against
21the taxes imposed pursuant to subsections (a) and (b) of
22Section 201 of the Illinois Income Tax Act for any taxable year
23ending on or after December 31, 2009, for Taxpayers that
24entered into Agreements prior to January 1, 2015 and otherwise
25meet the criteria set forth in this subsection (f), the
26Taxpayer may elect to claim the Credit against its obligation

 

 

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1to pay over withholding under Section 704A of the Illinois
2Income Tax Act.
3        (1) The election under this subsection (f) may be made
4    only by a Taxpayer that (i) is primarily engaged in one of
5    the following business activities: water purification and
6    treatment, motor vehicle metal stamping, automobile
7    manufacturing, automobile and light duty motor vehicle
8    manufacturing, motor vehicle manufacturing, light truck
9    and utility vehicle manufacturing, heavy duty truck
10    manufacturing, motor vehicle body manufacturing, cable
11    television infrastructure design or manufacturing, or
12    wireless telecommunication or computing terminal device
13    design or manufacturing for use on public networks and
14    (ii) meets the following criteria:
15            (A) the Taxpayer (i) had an Illinois net loss or an
16        Illinois net loss deduction under Section 207 of the
17        Illinois Income Tax Act for the taxable year in which
18        the Credit is awarded, (ii) employed a minimum of
19        1,000 full-time employees in this State during the
20        taxable year in which the Credit is awarded, (iii) has
21        an Agreement under this Act on December 14, 2009 (the
22        effective date of Public Act 96-834), and (iv) is in
23        compliance with all provisions of that Agreement;
24            (B) the Taxpayer (i) had an Illinois net loss or an
25        Illinois net loss deduction under Section 207 of the
26        Illinois Income Tax Act for the taxable year in which

 

 

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1        the Credit is awarded, (ii) employed a minimum of
2        1,000 full-time employees in this State during the
3        taxable year in which the Credit is awarded, and (iii)
4        has applied for an Agreement within 365 days after
5        December 14, 2009 (the effective date of Public Act
6        96-834);
7            (C) the Taxpayer (i) had an Illinois net operating
8        loss carryforward under Section 207 of the Illinois
9        Income Tax Act in a taxable year ending during
10        calendar year 2008, (ii) has applied for an Agreement
11        within 150 days after the effective date of this
12        amendatory Act of the 96th General Assembly, (iii)
13        creates at least 400 new jobs in Illinois, (iv)
14        retains at least 2,000 jobs in Illinois that would
15        have been at risk of relocation out of Illinois over a
16        10-year period, and (v) makes a capital investment of
17        at least $75,000,000;
18            (D) the Taxpayer (i) had an Illinois net operating
19        loss carryforward under Section 207 of the Illinois
20        Income Tax Act in a taxable year ending during
21        calendar year 2009, (ii) has applied for an Agreement
22        within 150 days after the effective date of this
23        amendatory Act of the 96th General Assembly, (iii)
24        creates at least 150 new jobs, (iv) retains at least
25        1,000 jobs in Illinois that would have been at risk of
26        relocation out of Illinois over a 10-year period, and

 

 

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1        (v) makes a capital investment of at least
2        $57,000,000; or
3            (E) the Taxpayer (i) employed at least 2,500
4        full-time employees in the State during the year in
5        which the Credit is awarded, (ii) commits to make at
6        least $500,000,000 in combined capital improvements
7        and project costs under the Agreement, (iii) applies
8        for an Agreement between January 1, 2011 and June 30,
9        2011, (iv) executes an Agreement for the Credit during
10        calendar year 2011, and (v) was incorporated no more
11        than 5 years before the filing of an application for an
12        Agreement.
13        (1.5) The election under this subsection (f) may also
14    be made by a Taxpayer for any Credit awarded pursuant to an
15    agreement that was executed between January 1, 2011 and
16    June 30, 2011, if the Taxpayer (i) is primarily engaged in
17    the manufacture of inner tubes or tires, or both, from
18    natural and synthetic rubber, (ii) employs a minimum of
19    2,400 full-time employees in Illinois at the time of
20    application, (iii) creates at least 350 full-time jobs and
21    retains at least 250 full-time jobs in Illinois that would
22    have been at risk of being created or retained outside of
23    Illinois, and (iv) makes a capital investment of at least
24    $200,000,000 at the project location.
25        (1.6) The election under this subsection (f) may also
26    be made by a Taxpayer for any Credit awarded pursuant to an

 

 

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1    agreement that was executed within 150 days after the
2    effective date of this amendatory Act of the 97th General
3    Assembly, if the Taxpayer (i) is primarily engaged in the
4    operation of a discount department store, (ii) maintains
5    its corporate headquarters in Illinois, (iii) employs a
6    minimum of 4,250 full-time employees at its corporate
7    headquarters in Illinois at the time of application, (iv)
8    retains at least 4,250 full-time jobs in Illinois that
9    would have been at risk of being relocated outside of
10    Illinois, (v) had a minimum of $40,000,000,000 in total
11    revenue in 2010, and (vi) makes a capital investment of at
12    least $300,000,000 at the project location.
13        (1.7) Notwithstanding any other provision of law, the
14    election under this subsection (f) may also be made by a
15    Taxpayer for any Credit awarded pursuant to an agreement
16    that was executed or applied for on or after July 1, 2011
17    and on or before March 31, 2012, if the Taxpayer is
18    primarily engaged in the manufacture of original and
19    aftermarket filtration parts and products for automobiles,
20    motor vehicles, light duty motor vehicles, light trucks
21    and utility vehicles, and heavy duty trucks, (ii) employs
22    a minimum of 1,000 full-time employees in Illinois at the
23    time of application, (iii) creates at least 250 full-time
24    jobs in Illinois, (iv) relocates its corporate
25    headquarters to Illinois from another state, and (v) makes
26    a capital investment of at least $4,000,000 at the project

 

 

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1    location.
2        (1.8) Notwithstanding any other provision of law, the
3    election under this subsection (f) may also be made by a
4    startup taxpayer for any Credit awarded pursuant to an
5    Agreement that was executed or applied for on or after the
6    effective date of this amendatory Act of the 102nd General
7    Assembly, if the startup taxpayer, without considering any
8    Related Member or other investor, (i) has never had any
9    Illinois income tax liability and (ii) was incorporated no
10    more than 5 years before the filing of an application for
11    an Agreement. Any such election under this paragraph (1.8)
12    shall be effective unless and until such startup taxpayer
13    has any Illinois income tax liability. This election under
14    this paragraph (1.8) shall automatically terminate when
15    the startup taxpayer has any Illinois income tax liability
16    at the end of any taxable year during the term of the
17    Agreement. Thereafter, the startup taxpayer may receive a
18    Credit, taking into account any benefits previously
19    enjoyed or received by way of the election under this
20    paragraph (1.8), so long as the startup taxpayer remains
21    in compliance with the terms and conditions of the
22    Agreement.
23        (2) An election under this subsection shall allow the
24    credit to be taken against payments otherwise due under
25    Section 704A of the Illinois Income Tax Act during the
26    first calendar quarter year beginning after the end of the

 

 

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1    taxable quarter year in which the credit is awarded under
2    this Act.
3        (3) The election shall be made in the form and manner
4    required by the Illinois Department of Revenue and, once
5    made, shall be irrevocable.
6        (4) If a Taxpayer who meets the requirements of
7    subparagraph (A) of paragraph (1) of this subsection (f)
8    elects to claim the Credit against its withholdings as
9    provided in this subsection (f), then, on and after the
10    date of the election, the terms of the Agreement between
11    the Taxpayer and the Department may not be further amended
12    during the term of the Agreement.
13    (g) A pass-through entity that has been awarded a credit
14under this Act, its shareholders, or its partners may treat
15some or all of the credit awarded pursuant to this Act as a tax
16payment for purposes of the Illinois Income Tax Act. The term
17"tax payment" means a payment as described in Article 6 or
18Article 8 of the Illinois Income Tax Act or a composite payment
19made by a pass-through entity on behalf of any of its
20shareholders or partners to satisfy such shareholders' or
21partners' taxes imposed pursuant to subsections (a) and (b) of
22Section 201 of the Illinois Income Tax Act. In no event shall
23the amount of the award credited pursuant to this Act exceed
24the Illinois income tax liability of the pass-through entity
25or its shareholders or partners for the taxable year.
26(Source: P.A. 102-700, eff. 4-19-22.)".