Illinois General Assembly - Full Text of SB1427
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Full Text of SB1427  99th General Assembly


Sen. Melinda Bush

Filed: 3/20/2015





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2    AMENDMENT NO. ______. Amend Senate Bill 1427 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, 5-20, 5-25,
6and 5-50 as follows:
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 by
20the municipality or county regarding the ability to accommodate
21expansion within the municipality or county.
22    "Committee" means the Illinois Business Investment
23Committee created under Section 5-25 of this Act within the
24Illinois Economic Development Board.
25    "Credit" means the amount agreed to between the Department
26and Applicant under this Act, but not to exceed the Incremental



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1Income Tax attributable to the Applicant's project.
2    "Department" means the Department of Commerce and Economic
4    "Director" means the Director of Commerce and Economic
6    "Full-time Employee" means an individual who is employed
7for consideration for at least 35 hours each week or who
8renders any other standard of service generally accepted by
9industry custom or practice as full-time employment. An
10individual for whom a W-2 is issued by a Professional Employer
11Organization (PEO) is a full-time employee if employed in the
12service of the Applicant for consideration for at least 35
13hours each week or who renders any other standard of service
14generally accepted by industry custom or practice as full-time
15employment to Applicant.
16    "Incremental Income Tax" means the total amount withheld
17during the taxable year from the compensation of New Employees
18under Article 7 of the Illinois Income Tax Act arising from
19employment at a project that is the subject of an Agreement.
20    "New Employee" means:
21        (a) A Full-time Employee first employed by a Taxpayer
22    in the project that is the subject of an Agreement and who
23    is hired after the Taxpayer enters into the tax credit
24    Agreement.
25        (b) The term "New Employee" does not include:
26            (1) an employee of the Taxpayer who performs a job



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1        that was previously performed by another employee, if
2        that job existed for at least 6 months before hiring
3        the employee;
4            (2) an employee of the Taxpayer who was previously
5        employed in Illinois by a Related Member of the
6        Taxpayer and whose employment was shifted to the
7        Taxpayer after the Taxpayer entered into the tax credit
8        Agreement; or
9            (3) a child, grandchild, parent, or spouse, other
10        than a spouse who is legally separated from the
11        individual, of any individual who has a direct or an
12        indirect ownership interest of at least 5% in the
13        profits, capital, or value of the Taxpayer; or .
14            (4) an employee of the Taxpayer who was previously
15        employed in Illinois by the Taxpayer and whose
16        employment was shifted to the project after the
17        Taxpayer entered into the Agreement.
18        (c) Notwithstanding paragraph (1) of subsection (b),
19    an employee may be considered a New Employee under the
20    Agreement if the employee performs a job that was
21    previously performed by an employee who was:
22            (1) treated under the Agreement as a New Employee;
23        and
24            (2) promoted by the Taxpayer to another job.
25        (d) Notwithstanding subsection (a), the Department may
26    award Credit to an Applicant with respect to an employee



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1    hired prior to the date of the Agreement if:
2            (1) the Applicant is in receipt of a letter from
3        the Department stating an intent to enter into a credit
4        Agreement;
5            (2) the letter described in paragraph (1) is issued
6        by the Department not later than 15 days after the
7        effective date of this Act; and
8            (3) the employee was hired after the date the
9        letter described in paragraph (1) was issued.
10    "Noncompliance Date" means, in the case of a Taxpayer that
11is not complying with the requirements of the Agreement or the
12provisions of this Act, the day following the last date upon
13which the Taxpayer was in compliance with the requirements of
14the Agreement and the provisions of this Act, as determined by
15the Director, pursuant to Section 5-65.
16    "Pass Through Entity" means an entity that is exempt from
17the tax under subsection (b) or (c) of Section 205 of the
18Illinois Income Tax Act.
19    "Project" means a for-profit economic development activity
20or activities at a single site, or of one or more taxpayers at
21multiple sites if the economic activities are vertically
23    "Professional Employer Organization" (PEO) means an
24employee leasing company, as defined in Section 206.1(A)(2) of
25the Illinois Unemployment Insurance Act.
26    "Related Member" means a person that, with respect to the



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



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1    Section 318 of the Internal Revenue Code, if the
2    corporation and all such related parties own in the
3    aggregate at least 50% of the profits, capital, stock, or
4    value of the Taxpayer.
5        (5) A person to or from whom there is attribution of
6    stock ownership in accordance with Section 1563(e) of the
7    Internal Revenue Code, except, for purposes of determining
8    whether a person is a Related Member under this paragraph,
9    20% shall be substituted for 5% wherever 5% appears in
10    Section 1563(e) of the Internal Revenue Code.
11    "Retained Employee" means a full-time employee employed by
12a taxpayer during the term of the Agreement whose job duties
13are directly and substantially related to the project. The term
14"Retained Employee" does not include a child, grandchild,
15parent, or spouse, other than a spouse who is legally separated
16from the individual, of any individual who has direct or
17indirect ownership interest of at least 5% in the profits,
18capital, or value of the taxpayer. For purposes of this
19definition, "directly and substantially related to the
20project" means at least two-thirds of the employee's job duties
21must be directly related to the project and the employee must
22devote at least two-thirds of his or her time to the project.
23    "Taxpayer" means an individual, corporation, partnership,
24or other entity that has any Illinois Income Tax liability.
25(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)



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1    (35 ILCS 10/5-20)
2    Sec. 5-20. Application for a project to create and retain
3new jobs.
4    (a) Any Taxpayer proposing a project located or planned to
5be located in Illinois may request consideration for
6designation of its project, by formal written letter of request
7or by formal application to the Department, in which the
8Applicant states its intent to make at least a specified level
9of investment and intends to hire or retain a specified number
10of full-time employees at a designated location in Illinois. As
11circumstances require, the Department may require a formal
12application from an Applicant and a formal letter of request
13for assistance.
14    (b) In order to qualify for Credits under this Act, an
15Applicant's project must:
16        (1) involve an investment of at least $5,000,000 in
17    capital improvements to be placed in service and to employ
18    at least 25 New Employees within the State as a direct
19    result of the project;
20        (2) involve an investment in capital improvements to be
21    placed in service in the State at a level of at least an
22    amount (to be expressly specified by the Department and the
23    Committee) in capital improvements to be placed in service
24    and will employ at least an amount (to be expressly
25    specified by the Department and the Committee) of New
26    Employees or Retained Employees within the State as



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1    specified by the Department, provided that the Department
2    has and the Committee have determined that the project will
3    provide a substantial economic benefit to the State; or
4        (3) if the applicant has 100 or fewer employees,
5    involve an investment of at least $1,000,000 in capital
6    improvements to be placed in service and to employ at least
7    5 New Employees within the State as a direct result of the
8    project.
9    The Director may approve projects that do not meet the
10specified minimum job creation and investment thresholds set
11forth in this subsection (b) for an applicant meeting all other
12requirements of this Act provided that one or more of the
13following conditions are met:
14        (A) approval would support a business with potential to
15    generate additional growth by attracting companion
16    businesses; or
17        (B) approval would avert loss of one of the area's
18    major sources of employment.
19    (c) After receipt of an application, the Department may
20enter into an Agreement with the Applicant if the application
21is accepted in accordance with Section 5-25.
22(Source: P.A. 93-882, eff. 1-1-05.)
23    (35 ILCS 10/5-25)
24    Sec. 5-25. Review of Application.
25    (a) In addition to those duties granted under the Illinois



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1Economic Development Board Act, the Illinois Economic
2Development Board shall form a Business Investment Committee
3for the purpose of making recommendations for applications. At
4the request of the Board, the Director of Commerce and Economic
5Opportunity or his or her designee, the Director of the
6Governor's Office of Management and Budget or his or her
7designee, the Director of Revenue or his or her designee, the
8Director of Employment Security or his or her designee, and an
9elected official of the affected locality, such as the chair of
10the county board or the mayor, may serve as members of the
11Committee to assist with its analysis and deliberations.
12    (b) At the Department's request, the Committee shall
13convene, make inquiries, and conduct studies in the manner and
14by the methods as it deems desirable, review information with
15respect to Applicants, and make recommendations for projects to
16benefit the State. In making its recommendation that an
17Applicant's application for Credit should or should not be
18accepted, which shall occur within a reasonable time frame as
19determined by the nature of the application, the Committee
20shall determine that all the following conditions exist:
21        (1) The Applicant's project intends, as required by
22    subsection (b) of Section 5-20 to make the required
23    investment in the State and intends to hire or retain the
24    required number of New Employees or Retained Employees in
25    Illinois as a result of that project.
26        (2) The Applicant's project is economically sound and



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1    will benefit the people of the State of Illinois by
2    increasing opportunities for employment and strengthen the
3    economy of Illinois.
4        (3) That, if not for the Credit, the project would not
5    occur in Illinois, which may be demonstrated by any means
6    including, but not limited to, evidence the Applicant has
7    multi-state location options and could reasonably and
8    efficiently locate outside of the State, or demonstration
9    that at least one other state is being considered for the
10    project, or evidence the receipt of the Credit is a major
11    factor in the Applicant's decision and that without the
12    Credit, the Applicant likely would not create new jobs in
13    Illinois, or demonstration that receiving the Credit is
14    essential to the Applicant's decision to create or retain
15    new jobs in the State.
16        (4) A cost differential is identified, using best
17    available data, in the projected costs for the Applicant's
18    project compared to the costs in the competing state,
19    including the impact of the competing state's incentive
20    programs. The competing state's incentive programs shall
21    include state, local, private, and federal funds
22    available.
23        (5) The political subdivisions affected by the project
24    have committed local incentives with respect to the
25    project, considering local ability to assist.
26        (6) Awarding the Credit will result in an overall



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1    positive fiscal impact to the State, as certified by the
2    Committee using the best available data.
3        (7) The Credit is not prohibited by Section 5-35 of
4    this Act.
5(Source: P.A. 94-793, eff. 5-19-06.)
6    (35 ILCS 10/5-50)
7    Sec. 5-50. Contents of Agreements with Applicants. The
8Department shall enter into an Agreement with an Applicant that
9is awarded a Credit under this Act. The Agreement must include
10all of the following:
11        (1) A detailed description of the project that is the
12    subject of the Agreement, including the location and amount
13    of the investment and jobs created or retained.
14        (2) The duration of the Credit and the first taxable
15    year for which the Credit may be claimed.
16        (3) The Credit amount that will be allowed for each
17    taxable year.
18        (4) A requirement that the Taxpayer shall maintain
19    operations at the project location that shall be stated as
20    a minimum number of years not to exceed 10.
21        (5) A specific method for determining the number of New
22    Employees employed during a taxable year.
23        (6) A requirement that the Taxpayer shall annually
24    report to the Department the number of New Employees and
25    Retained Employees, the Incremental Income Tax withheld in



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1    connection with the New Employees and Retained Employees,
2    and any other information the Director needs to perform the
3    Director's duties under this Act.
4        (7) A requirement that the Director is authorized to
5    verify with the appropriate State agencies the amounts
6    reported under paragraph (6), and after doing so shall
7    issue a certificate to the Taxpayer stating that the
8    amounts have been verified.
9        (8) A requirement that the Taxpayer shall provide
10    written notification to the Director not more than 30 days
11    after the Taxpayer makes or receives a proposal that would
12    transfer the Taxpayer's State tax liability obligations to
13    a successor Taxpayer.
14        (9) A detailed description of the number of New
15    Employees to be hired, Retained Employees to be retained,
16    and the occupation and payroll of the full-time jobs to be
17    created or retained as a result of the project.
18        (10) The minimum investment the business enterprise
19    will make in capital improvements, the time period for
20    placing the property in service, and the designated
21    location in Illinois for the investment.
22        (11) A requirement that the Taxpayer shall provide
23    written notification to the Director and the Committee not
24    more than 30 days after the Taxpayer determines that the
25    minimum job creation or retention, employment payroll, or
26    investment no longer is being or will be achieved or



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1    maintained as set forth in the terms and conditions of the
2    Agreement.
3        (12) A provision that, if the total number of New
4    Employees or Retained Employees falls below a specified
5    level, the allowance of Credit shall be suspended until the
6    number of New Employees and Retained Employees equals or
7    exceeds the Agreement amount.
8        (13) A detailed description of the items for which the
9    costs incurred by the Taxpayer will be included in the
10    limitation on the Credit provided in Section 5-30.
11        (13.5) A provision that, if the Taxpayer never meets
12    either the investment or job creation and retention
13    requirements specified in the Agreement during the entire
14    5-year period beginning on the first day of the first
15    taxable year in which the Agreement is executed and ending
16    on the last day of the fifth taxable year after the
17    Agreement is executed, then the Agreement is automatically
18    terminated on the last day of the fifth taxable year after
19    the Agreement is executed and the Taxpayer is not entitled
20    to the award of any credits for any of that 5-year period.
21        (14) Any other performance conditions or contract
22    provisions as the Department determines are appropriate.
23    The Department shall post on its website the terms of each
24Agreement entered into under this Act on or after the effective
25date of this amendatory Act of the 97th General Assembly.
26(Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)



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1    Section 99. Effective date. This Act takes effect upon
2becoming law.".