97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB0020

 

Introduced 1/27/2011, by Sen. John G. Mulroe

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 25/10
35 ILCS 25/25

    Amends the Small Business Job Creation Tax Credit Act. Makes it possible for a person who operates an Illinois business having no more than 75 full-time employees (instead of 50) to apply for the Small Business Job Creation Tax Credit. Extends the incentive period from June 30, 2011 to June 30, 2012, if the seasonally adjusted unemployment rate of the State of Illinois for the month of May 2011 is 7.0% or higher, as reported by the Illinois Department of Employment Security. Raises the cap on the credit from $2,500 to $3,500 for each new employee hired. Changes the manner in which the net increase in full-time Illinois employees is calculated in the event that the incentive period is extended. Effective immediately.


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FISCAL 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. The Small Business Job Creation Tax Credit Act
5is amended by changing Sections 10 and 25 as follows:
 
6    (35 ILCS 25/10)
7    Sec. 10. Definitions. In this Act:
8    "Applicant" means a person that is operating a business
9located within the State of Illinois that is engaged in
10interstate or intrastate commerce and either:
11        (1) has no more than 75 50 full-time employees, without
12    regard to the location of employment of such employees at
13    the beginning of the incentive period; or
14        (2) hired within the incentive period an employee who
15    had participated as worker-trainee in the Put Illinois to
16    Work Program during 2010.
17    In the case of any person that is a member of a unitary
18business group within the meaning of subdivision (a)(27) of
19Section 1501 of the Illinois Income Tax Act, "applicant" refers
20to the unitary business group.
21    "Certificate" means the tax credit certificate issued by
22the Department under Section 35 of this Act.
23    "Certificate of eligibility" means the certificate issued

 

 

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1by the Department under Section 20 of this Act.
2    "Credit" means the amount awarded by the Department to an
3applicant by issuance of a certificate under Section 35 of this
4Act for each new full-time equivalent employee hired or job
5created.
6    "Department" means the Department of Commerce and Economic
7Opportunity.
8    "Director" means the Director of the Department.
9    "Full-time employee" means an individual who is employed
10for a basic wage for at least 35 hours each week or who renders
11any other standard of service generally accepted by industry
12custom or practice as full-time employment.
13    "Incentive period" means the period beginning July 1, 2010
14and ending on June 30, 2011. However, if the seasonally
15adjusted unemployment rate for the State of Illinois for the
16month of May 2011 is 7.0% or higher, as reported by the
17Illinois Department of Employment Security, then the incentive
18period shall be extended until June 30, 2012.
19    "Basic wage" means compensation for employment that is no
20less than $10 per hour or the equivalent salary for a new
21employee.
22    "New employee" means a full-time employee:
23        (1) who first became employed by an applicant with less
24    than 75 50 full-time employees within the incentive period
25    whose hire results in a net increase in the applicant's
26    full-time Illinois employees and who is receiving a basic

 

 

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1    wage as compensation; or
2        (2) who participated as a worker-trainee in the Put
3    Illinois to Work Program during 2010 and who is
4    subsequently hired during the incentive period by an
5    applicant and who is receiving a basic wage as
6    compensation.
7    The term "new employee" does not include:
8        (1) a person who was previously employed in Illinois by
9    the applicant or a related member prior to the onset of the
10    incentive period; or
11        (2) any individual who has a direct or indirect
12    ownership interest of at least 5% in the profits, capital,
13    or value of the applicant or a related member.
14    "Noncompliance date" means, in the case of an applicant
15that is not complying with the requirements of the provisions
16of this Act, the day following the last date upon which the
17taxpayer was in compliance with the requirements of the
18provisions of this Act, as determined by the Director, pursuant
19to Section 45 of this Act.
20    "Put Illinois to Work Program" means a worker training and
21employment program that was established by the State of
22Illinois with funding from the United States Department of
23Health and Human Services of Emergency Temporary Assistance to
24Needy Families funds authorized by the American Recovery and
25Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
26funds were in turn used by the State of Illinois to fund the

 

 

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

 

 

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1    of stock from the corporation to the party or from the
2    party to the corporation under the attribution rules of
3    Section 318 of the Internal Revenue Code, if the
4    corporation and all such related parties own, in the
5    aggregate, at least 50% of the profits, capital, stock, or
6    other ownership interest in the applicant.
7        (5) A person to or from whom there is attribution of
8    stock ownership in accordance with Section 1563(e) of the
9    Internal Revenue Code, except that for purposes of
10    determining whether a person is a related member under this
11    paragraph, "20%" shall be substituted for "5%" whenever
12    "5%" appears in Section 1563(e) of the Internal Revenue
13    Code.
14(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
15    (35 ILCS 25/25)
16    Sec. 25. Tax credit.
17    (a) Subject to the conditions set forth in this Act, an
18applicant is entitled to a credit against payment of taxes
19withheld under Section 704A of the Illinois Income Tax Act:
20        (1) for new employees who participated as
21    worker-trainees in the Put Illinois to Work Program during
22    2010:
23            (A) in the first calendar year ending on or after
24        the date that is 6 months after December 31, 2010, or
25        the date of hire, whichever is later. Under this

 

 

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1        subparagraph, the applicant is entitled to one-half of
2        the credit allowable for each new employee who is
3        employed for at least 6 months after the date of hire;
4        and
5            (B) in the first calendar year ending on or after
6        the date that is 12 months after December 31, 2010, or
7        the date of hire, whichever is later. Under this
8        subparagraph, the applicant is entitled to one-half of
9        the credit allowable for each new employee who is
10        employed for at least 12 months after the date of hire;
11         (2) for all other new employees, in the first calendar
12    year ending on or after the date that is 12 months after
13    the date of hire of a new employee. The credit shall be
14    allowed as a credit to an applicant for each full-time
15    employee hired during the incentive period that results in
16    a net increase in full-time Illinois employees, where the
17    net increase in the employer's full-time Illinois
18    employees is maintained for at least 12 months.
19    (b) The Department shall make credit awards under this Act
20to further job creation.
21    (c) The credit shall be claimed for the first calendar year
22ending on or after the date on which the certificate is issued
23by the Department.
24    (d) The credit shall not exceed $3,500 $2,500 per new
25employee hired.
26    (e) The net increase in full-time Illinois employees,

 

 

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1measured on an annual full-time equivalent basis, shall be the
2total number of full-time Illinois employees of the applicant
3on June 30, 2011, minus the number of full-time Illinois
4employees employed by the employer on July 1, 2010. However, if
5the incentive period is extended until June 30, 2012, then the
6net increase in full-time Illinois employees, measured on an
7annual full-time equivalent basis, shall be the maximum total
8number of full-time Illinois employees employed by the
9applicant for at least 12 consecutive months during any portion
10of the period running from July 1, 2010 to July 1, 2012, minus
11the number of full-time Illinois employees employed by the
12employer on July 1, 2010. For purposes of these calculations
13the calculation, an employer that begins doing business in this
14State during the incentive period, as determined by the
15Director, shall be treated as having zero Illinois employees on
16July 1, 2010.
17    (f) The net increase in the number of full-time Illinois
18employees of the applicant under subsection (e) must be
19sustained continuously for at least 12 months, starting with
20the date of hire of a new employee during the incentive period.
21Eligibility for the credit does not depend on the continuous
22employment of any particular individual. For purposes of this
23subsection (f), if a new employee ceases to be employed before
24the completion of the 12-month period for any reason, the net
25increase in the number of full-time Illinois employees shall be
26treated as continuous if a different new employee is hired as a

 

 

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1replacement within a reasonable time for the same position.
2(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.