State of Illinois
2017 and 2018


Introduced 2/15/2018, by Sen. Paul Schimpf


35 ILCS 5/227 new

    Amends the Illinois Income Tax Act. Creates the Hire Illinois Tax Credit. Provides that a business is eligible for a $500 tax credit against its withholding tax liability for each recent graduate of a public university in the State who is hired by the taxpayer within the incentive period and retained by the taxpayer for 12 consecutive months. Provides that the $500 tax credit may be taken in both the year the qualified employee is hired and for each year of the next 4 years the qualified employee is retained by the taxpayer for 12 consecutive months. Provides 2 ways the taxpayer may take the $500 tax credit. Provides that the Department of Commerce and Economic Opportunity shall limit the monetary amount of these tax credits to $25,000,000. Provides for procedures for a business to apply for a certificate of eligibility for the credit and for procedures to apply for a tax credit certificate. Grants the Department of Commerce and Economic Opportunity the powers necessary or convenient to administer the tax credit. Effective immediately.

LRB100 18917 HLH 34163 b






SB3194LRB100 18917 HLH 34163 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 adding
5Section 227 as follows:
6    (35 ILCS 5/227 new)
7    Sec. 227. Hire Illinois Tax Credit.
8    (a) As used in this Section:
9    "Applicant" means a corporation, partnership, limited
10liability company, or natural person that hires a qualified
12    "Basic wage" means compensation for employment that is no
13less than $10 per hour or the equivalent salary for a new
15    "Certificate of eligibility" means the certificate issued
16by the Department under subsection (c).
17    "Credit" means the amount awarded by the Department to an
18applicant by issuance of a tax credit certificate.
19    "Date of hire" means the first day on which the employee
20begins providing services for basic wage compensation.
21    "Department" means the Department of Commerce and Economic
23    "Director" means the Director of Commerce and Economic



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2    "Full-time employee" means an individual who is employed
3for a basic wage for at least 35 hours each week or who renders
4any other standard of service generally accepted by industry
5custom or practice as full-time employment.
6    "Incentive period" means the period beginning January 1,
72017 and ending December 31, 2018.
8    "Noncompliance date" means, in the case of an applicant
9that is not complying with the requirements of the provisions
10of this Section, the day following the last date upon which the
11taxpayer was in compliance with the requirements of the
12provisions of this Section, as determined by the Director.
13    "Qualified employee" means a full-time employee who (i) is
14hired by the applicant during the incentive period and (ii)
15graduated from a public university in the State within a year
16prior to being hired by the applicant. "Qualified employee"
17does not include:
18        (1) a person who was previously employed by the
19    applicant or a related member prior to the onset of the
20    incentive period; or
21        (2) any individual who has a direct or indirect
22    ownership interest of at least 5% in the profits, capital,
23    or value of the applicant or a related member.
24    "Related member" means a person that, with respect to the
25applicant during any portion of the incentive period, is any
26one of the following:



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



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1    aggregate, at least 50% of the profits, capital, stock, or
2    other ownership interest in the applicant.
3        (5) A person to or from whom there is attribution of
4    stock ownership in accordance with Section 1563(e) of the
5    Internal Revenue Code, except that for purposes of
6    determining whether a person is a related member under this
7    paragraph, "20%" shall be substituted for "5%" whenever
8    "5%" appears in Section 1563(e) of the Internal Revenue
9    Code.
10    "Tax credit certificate" means the tax credit certificate
11issued by the Department under subsection (d).
12    (b) The Department, in addition to those powers granted
13under the Civil Administrative Code of Illinois, is granted and
14shall have all the powers necessary or convenient to carry out
15and effectuate the purposes and provisions of this Section,
16including, but not limited to, the power and authority to do
17all of the following:
18        (1) Adopt rules deemed necessary and appropriate for
19    the administration of this Section; establish forms for
20    applications, notifications, contracts, or any other
21    agreements; and accept applications at any time during the
22    year and require that all applications be submitted via the
23    Internet. The Department shall require that applications
24    be submitted in electronic form.
25        (2) Provide guidance and assistance to applicants
26    pursuant to the provisions of this Section, and cooperate



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1    with applicants to promote, foster, and support job
2    creation within the State.
3        (3) Enter into agreements and memoranda of
4    understanding for participation of and engage in
5    cooperation with agencies of the federal government, units
6    of local government, universities, research foundations or
7    institutions, regional economic development corporations,
8    or other organizations for the purposes of this Section.
9        (4) Gather information and conduct inquiries, in the
10    manner and by the methods it deems desirable, including,
11    without limitation, gathering information with respect to
12    applicants for the purpose of making any designations or
13    certifications necessary or desirable or to gather
14    information in furtherance of the purposes of this Section.
15        (5) Establish, negotiate, and effectuate any term,
16    agreement, or other document with any person necessary or
17    appropriate to accomplish the purposes of this Section and
18    consent, subject to the provisions of any agreement with
19    another party, to the modification or restructuring of any
20    agreement to which the Department is a party.
21        (6) Provide for sufficient personnel to permit
22    administration, staffing, operation, and related support
23    required to adequately discharge its duties and
24    responsibilities described in this Section from funds made
25    available through charges to applicants or from funds as
26    may be appropriated by the General Assembly for the



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1    administration of this Section.
2        (7) Require applicants, upon written request, to issue
3    any necessary authorization to the appropriate federal,
4    State, or local authority or any other person for the
5    release to the Department of information requested by the
6    Department, with the information requested to include, but
7    not be limited to, financial reports, returns, or records
8    relating to the applicant or to the amount of credit
9    allowable under this Section.
10        (8) Require that an applicant shall at all times keep
11    proper books of record and account in accordance with
12    generally accepted accounting principles consistently
13    applied, with the books, records, or papers related to the
14    agreement in the custody or control of the applicant open
15    for reasonable Department inspection and audits, and
16    including, without limitation, the making of copies of the
17    books, records, or papers.
18        (9) Take whatever actions are necessary or appropriate
19    to protect the State's interest in the event of bankruptcy,
20    default, foreclosure, or noncompliance with the terms and
21    conditions of financial assistance or participation
22    required under this Section, including the power to sell,
23    dispose of, lease, or rent, upon terms and conditions
24    determined by the Director to be appropriate, real or
25    personal property that the Department may recover as a
26    result of these actions.



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1    (c) Subject to the conditions set forth in this Section, an
2applicant is entitled to a credit of $500 against the payment
3of taxes withheld under Section 704A of this Act for each
4qualified employee who is employed for at least 12 consecutive
5months after the date of hire. This credit may be taken both in
6the year that the qualified employee was hired and again in the
7amount of $500 for each year of the next 4 years where the
8qualified employee is employed for 12 consecutive months. The
9credit may be taken in equal installments for each withholding
10tax return filed by the taxpayer during the 12-month period
11occurring on or after the date on which the tax credit
12certificate is issued by the Department, and for each year
13thereafter in which the credit is taken.
14    (d) An applicant that hires a qualified employee during the
15incentive period may apply for a tax credit certificate with
16respect to a qualified employee on or after the date that is 12
17months after the date of hire of the qualified employee;
18however, no tax credit certificate shall be granted if the
19application is filed more than 18 months after the qualified
20employee's date of hire. The application shall include the
22        (1) the names, Social Security numbers, job
23    descriptions, salary or wage rates, and dates of hire of
24    the qualified employees with respect to whom the credit is
25    being requested, and an indication of whether each
26    qualified employee listed graduated from a public



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1    university in the State within a year prior to the date of
2    hire;
3        (2) a certification that each new employee listed has
4    been retained on the job for a period of 12 months after
5    the date of hire;
6        (3) the number of qualified employees hired by the
7    applicant during the incentive period;
8        (4) an agreement that the Director is authorized to
9    verify with the appropriate State agencies the information
10    contained in the request before issuing a certificate to
11    the applicant; and
12        (5) any other information the Department determines to
13    be appropriate.
14    After receipt of an application under this subsection, the
15Department shall issue a receipt to the applicant, stating the
16date and time on which the application was received by the
17Department and an identifying number assigned to the applicant
18by the Department. The Department shall then approve or deny
19the application.
20    The Department shall issue a tax credit certificate to each
21applicant that qualifies for a credit under this Section, until
22such time as the monetary limit set forth in subsection (e) is
23met. The tax credit certificate shall include the following:
24        (1) the name and taxpayer identification number of the
25    applicant;
26        (2) the date on which the certificate is issued;



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1        (3) the credit amount that will be allowed; and
2        (4) any other information the Department determines to
3    be appropriate.
4    (e) The Department shall limit the monetary amount of
5credits awarded under this Section to no more than $25,000,000.
6If applications for a greater amount are received, credits
7shall be allowed on a first-come, first-served basis, based on
8the date on which each properly completed application for a
9certificate of eligibility is received by the Department. If
10more than one certificate of eligibility is received on the
11same day, the credits will be awarded based on the time of
12submission for that particular day.
13    (f) An applicant claiming a credit under this Section shall
14submit to the Department of Revenue a copy of each tax credit
15certificate with the first return for which the credit shown on
16the tax credit certificate is claimed. However, failure to
17submit a copy of the tax credit certificate with the
18applicant's return shall not invalidate a claim for a credit.
19    (g) If the Director determines that an applicant who has
20received a credit under this Section is not complying with the
21requirements of the provisions of this Section, the Director
22shall provide notice to the applicant of the alleged
23noncompliance, and allow the taxpayer a hearing under the
24provisions of the Illinois Administrative Procedure Act. If,
25after such notice and any hearing, the Director determines that
26a noncompliance exists, the Director shall issue to the



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1Department of Revenue notice to that effect, stating the
2noncompliance date.
3    (h) The Department may adopt rules necessary to implement
4this Section. The rules may provide for recipients of credits
5under this Section to be charged fees to cover administrative
6costs of the tax credit program.
7    Section 99. Effective date. This Act takes effect upon
8becoming law.