|
| | SB3527 Engrossed | | LRB100 20468 HLH 35824 b |
|
|
1 | | AN ACT concerning revenue.
|
2 | | Be it enacted by the People of the State of Illinois,
|
3 | | represented in the General Assembly:
|
4 | | Section 5. The Illinois Income Tax Act is amended by |
5 | | changing Section 221 as follows: |
6 | | (35 ILCS 5/221) |
7 | | Sec. 221. Rehabilitation costs; qualified historic |
8 | | properties; River Edge Redevelopment Zone. |
9 | | (a) For taxable years that begin beginning on or after |
10 | | January 1, 2012 and begin ending prior to January 1, 2018 |
11 | | January 1, 2022 , there shall be allowed a tax credit against |
12 | | the tax imposed by subsections (a) and (b) of Section 201 of |
13 | | this Act in an amount equal to 25% of qualified expenditures |
14 | | incurred by a qualified taxpayer during the taxable year in the |
15 | | restoration and preservation of a qualified historic structure |
16 | | located in a River Edge Redevelopment Zone pursuant to a |
17 | | qualified rehabilitation plan, provided that the total amount |
18 | | of such expenditures (i) must equal $5,000 or more and (ii) |
19 | | must exceed 50% of the purchase price of the property. |
20 | | (a-1) For taxable years that begin on or after January 1, |
21 | | 2018 and end prior to January 1, 2022, there shall be allowed a |
22 | | tax credit against the tax imposed by subsections (a) and (b) |
23 | | of Section 201 of this Act in an aggregate amount equal to 25% |
|
| | SB3527 Engrossed | - 2 - | LRB100 20468 HLH 35824 b |
|
|
1 | | of qualified expenditures incurred by a qualified taxpayer in |
2 | | the restoration and preservation of a qualified historic |
3 | | structure located in a River Edge Redevelopment Zone pursuant |
4 | | to a qualified rehabilitation plan, provided that the total |
5 | | amount of such expenditures (i) must equal $5,000 or more and |
6 | | (ii) must exceed the adjusted basis of the qualified historic |
7 | | structure on the first day the qualified rehabilitation plan |
8 | | begins. If the qualified rehabilitation plan spans multiple |
9 | | years, the aggregate credit for the entire project shall be |
10 | | allowed in the last taxable year. |
11 | | (b) To obtain a tax credit pursuant to this Section, the |
12 | | taxpayer must apply with the Department of Natural Resources |
13 | | Commerce and Economic Opportunity . The Department of Natural |
14 | | Resources Commerce and Economic Opportunity, in consultation |
15 | | with the Historic Preservation Agency, shall determine the |
16 | | amount of eligible rehabilitation costs and expenses within 30 |
17 | | days of receipt of a complete application. For rehabilitation |
18 | | projects with qualified rehabilitation costs and expenses in |
19 | | excess of $250,000, the taxpayer must provide to the Department |
20 | | of Natural Resources a third-party audit conducted by a |
21 | | professionally qualified, independent auditor verifying (i) |
22 | | the project expenses, (ii) whether they are qualified |
23 | | expenditures, and (iii) that the qualified expenditures exceed |
24 | | the adjusted basis of the qualified historic structure on the |
25 | | first day the qualified rehabilitation plan commenced. The |
26 | | Department of Natural Resources is authorized, but not |
|
| | SB3527 Engrossed | - 3 - | LRB100 20468 HLH 35824 b |
|
|
1 | | required, to accept this audit to determine the amount of |
2 | | qualified expenditures. For projects with less than $500,000 in |
3 | | qualified rehabilitation costs, the taxpayer must submit a |
4 | | certification of costs prepared by a certified public |
5 | | accountant and certify that the qualified expenditures exceed |
6 | | the adjusted basis of the qualified historic structure on the |
7 | | first day the qualified rehabilitation plan commenced. The |
8 | | Department of Natural Resources is authorized, but not |
9 | | required, to accept this certification of costs to determine |
10 | | the amount of qualified expenditures and the amount of the |
11 | | credit . The Department of Natural Resources and the National |
12 | | Park Service Historic Preservation Agency shall determine |
13 | | whether the rehabilitation is consistent with the standards of |
14 | | the Secretary of the United States Department of the Interior |
15 | | for rehabilitation. |
16 | | (b-1) Upon completion and review of the project, the |
17 | | Department of Natural Resources Commerce and Economic |
18 | | Opportunity shall issue a single certificate in the amount of |
19 | | the eligible credits equal to 25% of qualified expenditures |
20 | | incurred during the eligible taxable years, as defined in |
21 | | subsections (a) and (a-1) . At the time the certificate is |
22 | | issued, an issuance fee up to the maximum amount of 2% of the |
23 | | amount of the credits issued by the certificate may be |
24 | | collected from the applicant to administer the provisions of |
25 | | this Section. If collected, this issuance fee shall be |
26 | | deposited into the Historic Property Administrative Fund, a |
|
| | SB3527 Engrossed | - 4 - | LRB100 20468 HLH 35824 b |
|
|
1 | | special fund created in the State treasury. Subject to |
2 | | appropriation, moneys in the Historic Property Administrative |
3 | | Fund shall be provided to the Department of Natural Resources |
4 | | as reimbursement evenly divided between the Department of |
5 | | Commerce and Economic Opportunity and the Historic |
6 | | Preservation Agency to reimburse the Department of Commerce and |
7 | | Economic Opportunity and the Historic Preservation Agency for |
8 | | the costs associated with administering this Section. The |
9 | | taxpayer must attach the certificate to the tax return on which |
10 | | the credits are to be claimed. The Department of Commerce and |
11 | | Economic Opportunity may adopt rules to implement this Section. |
12 | | (c) The taxpayer must attach the certificate to the tax |
13 | | return on which the credits are to be claimed. The tax credit |
14 | | under this Section may not reduce the taxpayer's liability to |
15 | | less than
zero. If the amount of the credit exceeds the tax |
16 | | liability for the year, the excess credit may be carried |
17 | | forward and applied to the tax liability of the 5 taxable years |
18 | | following the excess credit year. |
19 | | (c-1) If the taxpayer is a partnership, a Subchapter S |
20 | | corporation, or a limited liability company that has elected |
21 | | partnership tax treatment, the credit is allowed to the |
22 | | partners, shareholders, or members in accordance with the |
23 | | determination of income and distributive share of income under |
24 | | the Internal Revenue Code. |
25 | | (c-3) If a recapture event occurs during the recapture |
26 | | period with respect to a qualified historic structure, then for |
|
| | SB3527 Engrossed | - 5 - | LRB100 20468 HLH 35824 b |
|
|
1 | | any taxable year in which the credits allowed under subsection |
2 | | (a) or (a-1) have been applied, the tax under the applicable |
3 | | section of this Act shall be increased by applying the |
4 | | recapture percentage set forth below to the tax decrease |
5 | | resulting from the application of credits allowed under |
6 | | subsection (a) or (a-1) to the taxable year in question. |
7 | | For purposes of this subsection, the recapture percentage |
8 | | shall be determined as follows: |
9 | | (1) if the recapture event occurs within the first year |
10 | | after commencement of the recapture period, then the |
11 | | recapture percentage is 100%; |
12 | | (2) if the recapture event occurs within the second |
13 | | year after commencement of the recapture period, then the |
14 | | recapture percentage is 80%; |
15 | | (3) if the recapture event occurs within the third year |
16 | | after commencement of the recapture period, then the |
17 | | recapture percentage is 60%; |
18 | | (4) if the recapture event occurs within the fourth |
19 | | year after commencement of the recapture period, then the |
20 | | recapture percentage is 40%; and |
21 | | (5) if the recapture event occurs within the fifth year |
22 | | after commencement of the recapture period, then the |
23 | | recapture percentage is 20%. |
24 | | In the case of any recapture event, the carryforwards under |
25 | | subsection (c) above shall be adjusted by reason of such event. |
26 | | (c-4) Subject to appropriation and prior to equal |
|
| | SB3527 Engrossed | - 6 - | LRB100 20468 HLH 35824 b |
|
|
1 | | disbursement to the Department of Natural Resources, moneys in |
2 | | the Historic Property Administrative Fund shall be used, on a |
3 | | biennial basis beginning at the end of the second fiscal year |
4 | | after the effective date of this amendatory Act of the 100th |
5 | | General Assembly, to hire a qualified third party to prepare a |
6 | | biennial report to assess the overall economic impact to the |
7 | | State from the qualified rehabilitation projects under this Act |
8 | | completed in that year and in previous years. The overall |
9 | | economic impact shall include at least: (i) the direct and |
10 | | indirect or induced economic impacts of completed projects; |
11 | | (ii) temporary, permanent, and construction jobs created; |
12 | | (iii) sales, income, and property tax generation before, during |
13 | | construction, and after completion; and (iv) indirect |
14 | | neighborhood impact after completion. |
15 | | (c-5) The Department of Natural Resources may adopt rules |
16 | | to implement this Section in addition to the rules expressly |
17 | | authorized herein. |
18 | | (d) As used in this Section, the following terms have the |
19 | | following meanings. |
20 | | "Placed in service" means the date the historic structure |
21 | | or the rehabilitated portion thereof is first placed in a |
22 | | condition or state of readiness or occupancy and is operational |
23 | | for its specifically assigned function or use. If the property |
24 | | remains in service during the rehabilitation, the placed in |
25 | | service date will be commensurate with the date of completion |
26 | | of the rehabilitation project as per the qualified |
|
| | SB3527 Engrossed | - 7 - | LRB100 20468 HLH 35824 b |
|
|
1 | | rehabilitation plan. |
2 | | "Qualified expenditure" means all the costs and expenses |
3 | | defined as qualified rehabilitation expenditures under Section |
4 | | 47 of the federal Internal Revenue Code that were incurred in |
5 | | connection with a qualified historic structure. |
6 | | "Qualified historic structure" means a certified historic |
7 | | structure as defined under Section 47(c)(3) of the federal |
8 | | Internal Revenue Code. |
9 | | "Qualified rehabilitation plan" means a project that is |
10 | | approved by the Department of Natural Resources and the |
11 | | National Park Service Historic Preservation Agency as being |
12 | | consistent with the standards in effect on the effective date |
13 | | of this amendatory Act of the 97th General Assembly for |
14 | | rehabilitation as adopted by the federal Secretary of the |
15 | | Interior. |
16 | | "Qualified taxpayer" means the owner of the qualified |
17 | | historic structure or any other person who qualifies for the |
18 | | federal rehabilitation credit allowed by Section 47 of the |
19 | | federal Internal Revenue Code with respect to that qualified |
20 | | historic structure. Partners, shareholders of subchapter S |
21 | | corporations, and owners of limited liability companies (if the |
22 | | limited liability company is treated as a partnership for |
23 | | purposes of federal and State income taxation) are entitled to |
24 | | a credit under this Section to be determined in accordance with |
25 | | the determination of income and distributive share of income |
26 | | under Sections 702 and 703 and subchapter S of the Internal |
|
| | SB3527 Engrossed | - 8 - | LRB100 20468 HLH 35824 b |
|
|
1 | | Revenue Code, provided that credits granted to a partnership, a |
2 | | limited liability company taxed as a partnership, or other |
3 | | multiple owners of property shall be passed through to the |
4 | | partners, members, or owners respectively on a pro rata basis |
5 | | or pursuant to an executed agreement among the partners, |
6 | | members, or owners documenting any alternate distribution |
7 | | method.
|
8 | | "Recapture event" means any of the following events |
9 | | occurring during the recapture period: |
10 | | (1) failure to place in service the rehabilitated |
11 | | portions of the qualified historic structure, or failure to |
12 | | maintain the rehabilitated portions of the qualified |
13 | | historic structure in service after they are placed in |
14 | | service; provided that a recapture event under this |
15 | | paragraph (1) shall not include a removal from service for |
16 | | a reasonable period of time to conduct maintenance and |
17 | | repairs that are reasonably necessary to protect the health |
18 | | and safety of the public or to protect the structural |
19 | | integrity of the qualified historic structure or a |
20 | | neighboring structure; |
21 | | (2) demolition or other alteration of the qualified |
22 | | historic structure in a manner that is inconsistent with |
23 | | the qualified rehabilitation plan or the Secretary of the |
24 | | Interior's Standards for Rehabilitation; |
25 | | (3) disposition of the rehabilitated qualified |
26 | | historic structure in whole or a proportional disposition |
|
| | SB3527 Engrossed | - 9 - | LRB100 20468 HLH 35824 b |
|
|
1 | | of a partnership interest therein, except as otherwise |
2 | | permitted by this Section; or |
3 | | (4) use of the qualified historic structure in a manner |
4 | | that is inconsistent with the qualified rehabilitation |
5 | | plan or that is otherwise inconsistent with the provisions |
6 | | and intent of this Section. |
7 | | A recapture event occurring in one taxable year shall be |
8 | | deemed continuing to subsequent taxable years unless and until |
9 | | corrected. |
10 | | The following dispositions of a qualified historic |
11 | | structure shall not be deemed to be a recapture event for |
12 | | purposes of this Section: |
13 | | (1) a transfer by reason of death; |
14 | | (2) a transfer between spouses incident to divorce; |
15 | | (3) a sale by and leaseback to an entity that, when the |
16 | | rehabilitated portions of the qualified historic structure |
17 | | are placed in service, will be a lessee of the qualified |
18 | | historic structure, but only for so long as the entity |
19 | | continues to be a lessee; and |
20 | | (4) a mere change in the form of conducting the trade |
21 | | or business by the owner (or, if applicable, the lessee) of |
22 | | the qualified historic structure, so long as the property |
23 | | interest in such qualified historic structure is retained |
24 | | in such trade or business and the owner or lessee retains a |
25 | | substantial interest in such trade or business. |
26 | | "Recapture period" means the 5-year period beginning on the |