97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB1405

 

Introduced , by Rep. Bill Mitchell

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/221 new

    Creates the Manufacturing Job Destination Tax Credit Act and amends the Illinois Income Tax Act. Provides for a credit of 25% of the Illinois labor expenditures made by a manufacturing company in order to foster job creation and retention in Illinois. Authorizes the Department of Revenue to award a tax credit to taxpayer-employers who apply for the credit and meet certain Illinois labor expenditure requirements. Sets minimum requirements and procedures for certifying a taxpayer as an "accredited manufacturer" and for awarding the credit. Effective immediately.


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FISCAL NOTE ACT MAY APPLY
HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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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. Short title. This Act may be cited as the
5Manufacturing Job Destination Tax Credit Act.
 
6    Section 10. Purpose. The General Assembly finds that the
7manufacturing sector provides a crucial underpinning for the
8economy of the State of Illinois. Therefore, it is in the best
9interest of the State of Illinois to make Illinois the
10preferred destination for manufacturing and to strengthen the
11existing industrial base in Illinois, thereby promoting job
12growth, an expedited economic recovery, and long-term revenue
13growth for the State.
 
14    Section 15. Definitions. As used in this Act:
15    "Accredited manufacturer" means a manufacturer that has
16been certified by the Department.
17    "Credit" means an amount equal to 25% of qualifying
18Illinois labor expenditures approved by the Department. The
19accredited manufacturer is deemed to have paid, on its balance
20due day for the year, an amount equal to 25% of its qualified
21Illinois labor expenditure for the tax year.
22    "Department" means the Department of Revenue.

 

 

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1    "Director" means the Director of Revenue.
2    "Illinois labor expenditure" means salary or wages paid to
3employees of an accredited manufacturer for services rendered
4in Illinois.
5    To qualify as an Illinois labor expenditure, the
6expenditure must be:
7        (1) reasonable under the circumstances;
8        (2) included in the federal income tax basis of the
9    property;
10        (3) incurred in a county in the State that has had a
11    seasonally adjusted unemployment rate of more than 9.5% for
12    at least 3 consecutive months during the taxable year in
13    which the credit is sought;
14        (4) incurred by the accredited manufacturer for
15    services on or after January 1, 2011;
16        (5) incurred for the production stages of the
17    manufacturing process;
18        (6) limited to the first $25,000 of wages paid to or
19    incurred for each employee of the manufacturing company;
20        (7) exclusive of the salary or wages paid to or
21    incurred for the 2 highest paid employees of the
22    manufacturing company;
23        (8) directly attributable to the accredited
24    manufacturer;
25        (9) paid in the tax year for which the applicant is
26    claiming the credit or no later than 60 days after the end

 

 

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1    of the tax year; and
2        (10) paid for services rendered in Illinois.
 
3    Section 20. Tax credit awards. Subject to the conditions
4set forth in this Act, an accredited manufacturer is entitled
5to a credit of 25% of all qualifying Illinois labor
6expenditures approved by the Department.
 
7    Section 25. Accredited manufacturing company
8certification. Any taxpayer may request certification as an
9accredited manufacturing company by formal application to the
10Department. In determining whether to issue an accredited
11manufacturing company certificate, the Department must
12determine that all of the following conditions exist:
13        (1) The taxpayer is engaged primarily in the business
14    of manufacturing goods.
15        (2) The taxpayer intends to employ workers in the State
16    of Illinois.
17        (3) The taxpayer provides health insurance to its
18    employees.
19        (4) The taxpayer provides to its employees either a
20    pension plan or a 401k plan.
21        (5) The taxpayer offers to its employees elder care
22    benefits and a dependent care flexible spending account.
23        (6) The taxpayer intends to expend a portion of its
24    research and development budgets in the State of Illinois.

 

 

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1        (7) The taxpayer must reside or be doing business in a
2    county in the State that has had a seasonally adjusted
3    unemployment rate of more than 9.5% for at least 3
4    consecutive months during the taxable year in which the
5    credit is sought.
 
6    Section 30. Issuance of manufacturing job destination tax
7credit certification.
8    (a) In order to qualify for a tax credit under this Act, an
9accredited manufacturer must file, on forms prescribed by the
10Department, all information necessary to calculate the tax
11credit.
12    (b) Upon satisfactory review of the application, the
13Department shall issue a manufacturing job destination tax
14credit certificate stating the amount of the tax credit.
 
15    Section 35. Amount and duration of the credit. The amount
16of the credit awarded under this Act is based on the amount of
17qualifying Illinois labor expenditures approved by the
18Department in any tax year beginning on or after January 1,
192012 for the applicant.
 
20    Section 40. Evaluation of tax credit program. The
21Department shall evaluate the tax credit program. The
22evaluation must include an assessment of the effectiveness of
23the program in creating and retaining jobs in Illinois and of

 

 

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1the revenue impact of the program and may include a review of
2the practices and experiences of other states or nations with
3similar programs. Upon completion of this evaluation, the
4Department shall determine the overall success of the program
5and may make a recommendation to extend, modify, or not extend
6the program based on this evaluation.
 
7    Section 45. Program terms and conditions. Any documentary
8materials or data made available to or received by any agent or
9employee of the Department are confidential and are not public
10records to the extent that the materials or data consist of
11commercial or financial information regarding the
12manufacturing operation of the applicant for or recipient of
13any tax credit under this Act.
 
14    Section 50. Appeals. If the Department denies a taxpayer
15certification under Section 25 of this Act, the denial must be
16in writing and must state the reasons for the denial. The
17taxpayer shall have 60 days after the first denial to correct
18any deficiency that was the reason for the initial denial of
19certification.
20     If the Department again denies the certification, the
21taxpayer may appeal the second denial within 60 days after that
22denial and request a hearing. At the hearing, if the taxpayer
23shows, by preponderance of evidence, that he or she has
24complied with the requirements of this Section, then the

 

 

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1taxpayer shall be certified as an accredited manufacturer.
2     If the taxpayer disagrees with the Department about the
3amount of the tax credit available for any tax year, the
4taxpayer may appeal the certification and request a hearing. If
5the taxpayer shows, by a preponderance of evidence, that he or
6she is entitled to a larger amount, the Department shall
7approve the larger amount. However, in no instance may the
8Department determine a lesser amount.
9     The provisions of the Administrative Review Law, and the
10rules adopted pursuant thereto, apply to and govern all
11proceedings for the judicial review of this Act.
 
12    Section 90. The Illinois Income Tax Act is amended by
13adding Section 221 as follows:
 
14    (35 ILCS 5/221 new)
15    Sec. 221. Manufacturing job destination tax credit. For tax
16years beginning on or after January 1, 2012, a taxpayer who has
17been awarded a tax credit under the Manufacturing Job
18Destination Tax Credit Act is entitled to a credit against the
19taxes imposed under subsections (a) and (b) of Section 201 of
20this Act in an amount determined by the Department under the
21Manufacturing Job Destination Tax Credit Act. If the taxpayer
22is a partnership or Subchapter S corporation, the credit is
23allowed to the partners or shareholders in accordance with the
24determination of income and distributive share of income under

 

 

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1Sections 702 and 704 and Subchapter S of the Internal Revenue
2Code. The Department must prescribe rules to enforce and
3administer the provisions of this Section. This Section is
4exempt from the provisions of Section 250 of this Act.
5    The credit may not be carried forward or back. In no event
6shall a credit under this Section reduce the taxpayer's
7liability to less than zero.
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.