SB3194 100TH GENERAL ASSEMBLY

LRB100 18917 HLH 34163 b

100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018
SB3194

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

SYNOPSIS AS INTRODUCED:

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.

FISCAL NOTE ACT MAY APPLY

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by adding Section 227 as follows:

(35 ILCS 5/227 new)

Sec. 227. Hire Illinois Tax Credit.

(a) As used in this Section:

"Applicant" means a corporation, partnership, limited liability company, or natural person that hires a qualified employee.

"Basic wage" means compensation for employment that is no less than $10 per hour or the equivalent salary for a new employee.

"Certificate of eligibility" means the certificate issued by the Department under subsection (c).

"Credit" means the amount awarded by the Department to an applicant by issuance of a tax credit certificate.

"Date of hire" means the first day on which the employee begins providing services for basic wage compensation.

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of Commerce and Economic Opportunity.

"Full-time employee" means an individual who is employed for a basic wage for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment.

"Incentive period" means the period beginning January 1, 2017 and ending December 31, 2018.

"Noncompliance date" means, in the case of an applicant that is not complying with the requirements of the provisions of this Section, the day following the last date upon which the taxpayer was in compliance with the requirements of the provisions of this Section, as determined by the Director.

"Qualified employee" means a full-time employee who (i) is hired by the applicant during the incentive period and (ii) graduated from a public university in the State within a year prior to being hired by the applicant. "Qualified employee" does not include:

(1) a person who was previously employed by the applicant or a related member prior to the onset of the incentive period; or

(2) any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital, or value of the applicant or a related member.

"Related member" means a person that, with respect to the applicant during any portion of the incentive period, is any one of the following:

(1) An individual, if the individual and the members of the individual's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the outstanding profits, capital, stock, or other ownership interest in the applicant.

(2) A partnership, estate, or trust and any partner or beneficiary, if the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

(3) A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the applicant and any other related member own, in the aggregate, directly, indirectly, beneficially, or constructively, at least 50% of the value of the corporation's outstanding stock.

(4) A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

(5) A person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except that for purposes of determining whether a person is a related member under this paragraph, "20%" shall be substituted for "5%" whenever "5%" appears in Section 1563(e) of the Internal Revenue Code.

"Tax credit certificate" means the tax credit certificate issued by the Department under subsection (d).

(b) The Department, in addition to those powers granted under the Civil Administrative Code of Illinois, is granted and shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of this Section, including, but not limited to, the power and authority to do all of the following:

(1) Adopt rules deemed necessary and appropriate for the administration of this Section; establish forms for applications, notifications, contracts, or any other agreements; and accept applications at any time during the year and require that all applications be submitted via the Internet. The Department shall require that applications be submitted in electronic form.

(2) Provide guidance and assistance to applicants pursuant to the provisions of this Section, and cooperate with applicants to promote, foster, and support job creation within the State.

(3) Enter into agreements and memoranda of understanding for participation of and engage in cooperation with agencies of the federal government, units of local government, universities, research foundations or institutions, regional economic development corporations, or other organizations for the purposes of this Section.

(4) Gather information and conduct inquiries, in the manner and by the methods it deems desirable, including, without limitation, gathering information with respect to applicants for the purpose of making any designations or certifications necessary or desirable or to gather information in furtherance of the purposes of this Section.

(5) Establish, negotiate, and effectuate any term, agreement, or other document with any person necessary or appropriate to accomplish the purposes of this Section and consent, subject to the provisions of any agreement with another party, to the modification or restructuring of any agreement to which the Department is a party.

(6) Provide for sufficient personnel to permit administration, staffing, operation, and related support required to adequately discharge its duties and responsibilities described in this Section from funds made available through charges to applicants or from funds as may be appropriated by the General Assembly for the administration of this Section.

(7) Require applicants, upon written request, to issue any necessary authorization to the appropriate federal, State, or local authority or any other person for the release to the Department of information requested by the Department, with the information requested to include, but not be limited to, financial reports, returns, or records relating to the applicant or to the amount of credit allowable under this Section.

(8) Require that an applicant shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the agreement in the custody or control of the applicant open for reasonable Department inspection and audits, and including, without limitation, the making of copies of the books, records, or papers.

(9) Take whatever actions are necessary or appropriate to protect the State's interest in the event of bankruptcy, default, foreclosure, or noncompliance with the terms and conditions of financial assistance or participation required under this Section, including the power to sell, dispose of, lease, or rent, upon terms and conditions determined by the Director to be appropriate, real or personal property that the Department may recover as a result of these actions.

(c) Subject to the conditions set forth in this Section, an applicant is entitled to a credit of $500 against the payment of taxes withheld under Section 704A of this Act for each qualified employee who is employed for at least 12 consecutive months after the date of hire. This credit may be taken both in the year that the qualified employee was hired and again in the amount of $500 for each year of the next 4 years where the qualified employee is employed for 12 consecutive months. The credit may be taken in equal installments for each withholding tax return filed by the taxpayer during the 12-month period occurring on or after the date on which the tax credit certificate is issued by the Department, and for each year thereafter in which the credit is taken.

(d) An applicant that hires a qualified employee during the incentive period may apply for a tax credit certificate with respect to a qualified employee on or after the date that is 12 months after the date of hire of the qualified employee; however, no tax credit certificate shall be granted if the application is filed more than 18 months after the qualified employee's date of hire. The application shall include the following:

(1) the names, Social Security numbers, job descriptions, salary or wage rates, and dates of hire of the qualified employees with respect to whom the credit is being requested, and an indication of whether each qualified employee listed graduated from a public university in the State within a year prior to the date of hire;

(2) a certification that each new employee listed has been retained on the job for a period of 12 months after the date of hire;

(3) the number of qualified employees hired by the applicant during the incentive period;

(4) an agreement that the Director is authorized to verify with the appropriate State agencies the information contained in the request before issuing a certificate to the applicant; and

(5) any other information the Department determines to be appropriate.

After receipt of an application under this subsection, the Department shall issue a receipt to the applicant, stating the date and time on which the application was received by the Department and an identifying number assigned to the applicant by the Department. The Department shall then approve or deny the application.

The Department shall issue a tax credit certificate to each applicant that qualifies for a credit under this Section, until such time as the monetary limit set forth in subsection (e) is met. The tax credit certificate shall include the following:

(1) the name and taxpayer identification number of the applicant;

(2) the date on which the certificate is issued;

(3) the credit amount that will be allowed; and

(4) any other information the Department determines to be appropriate.

(e) The Department shall limit the monetary amount of credits awarded under this Section to no more than $25,000,000. If applications for a greater amount are received, credits shall be allowed on a first-come, first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department. If more than one certificate of eligibility is received on the same day, the credits will be awarded based on the time of submission for that particular day.

(f) An applicant claiming a credit under this Section shall submit to the Department of Revenue a copy of each tax credit certificate with the first return for which the credit shown on the tax credit certificate is claimed. However, failure to submit a copy of the tax credit certificate with the applicant's return shall not invalidate a claim for a credit.

(g) If the Director determines that an applicant who has received a credit under this Section is not complying with the requirements of the provisions of this Section, the Director shall provide notice to the applicant of the alleged noncompliance, and allow the taxpayer a hearing under the provisions of the Illinois Administrative Procedure Act. If, after such notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the noncompliance date.

(h) The Department may adopt rules necessary to implement this Section. The rules may provide for recipients of credits under this Section to be charged fees to cover administrative costs of the tax credit program.

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