SB3165 96TH GENERAL ASSEMBLY

LRB096 15788 HLH 31028 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
SB3165

Introduced 2/9/2010, by Sen. Bill Brady

SYNOPSIS AS INTRODUCED:

35 ILCS 5/219 new
35 ILCS 5/704A

Amends the Illinois Income Tax Act. Creates an income tax credit for taxpayers, other than taxpayers that receive credits under the Economic Development for a Growing Economy Tax Credit Act, in an amount equal to $2,100 for each new employee who is (i) hired by the taxpayer on and after the effective date of the amendatory Act and (ii) employed by the taxpayer for a period of exactly 12 consecutive months at any point during the taxable year. Provides that all or a portion of the credit may be used as a credit against the taxpayer's withholding tax liability. Provides that the credit may be carried forward. 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 changing Section 704A and by adding Section 219 as follows:

(35 ILCS 5/219 new)

Sec. 219. New employee credit. For taxable years ending on or after December 31, 2010, each taxpayer, other than a taxpayer that receives credits under the Economic Development for a Growing Economy Tax Credit Act during the taxable year, is entitled to a credit against (i) the tax imposed by subsections (a) and (b) of Section 201 or (ii) the taxpayer's withholding tax liability under Article 7 of this Act, in an amount equal to $2,100 for each new employee who is (i) hired by the taxpayer on and after the effective date of this amendatory Act of the 96th General Assembly and (ii) employed by the taxpayer for a period of exactly 12 consecutive months at any point during the taxable year. If the amount of the credit awarded exceeds the taxpayer's income tax liability for that taxable year, then the excess may be carried forward and applied to the tax liability of the next taxable year until the entire amount of the credit has been claimed. If there are credits for more than one taxable year that are available to offset a liability, the earlier credit shall be applied first.

In addition, the taxpayer may elect to use all or a portion of the credit awarded under this Section as a credit against its withholding tax liability under Article 7 of this Act. Such an election shall be made in the form and manner prescribed by the Department by rule and, once made, shall be irrevocable.

For the purposes of this Section, "new employee" means a full-time employee of the taxpayer who is hired to perform a job that was not previously performed by another employee. The term "new employee" does not include (i) an employee of the taxpayer who was previously employed in Illinois by a related member of the taxpayer and whose employment was shifted to the taxpayer during the taxable year or (ii) a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, capital, or value of the taxpayer.

For the purposes of this Section, the term "related member" means:

(1) an individual stockholder, if the stockholder and the members of the stockholder'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 taxpayer's outstanding stock;

(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 value of the taxpayer;

(3) a corporation, and any party related to the 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 taxpayer owns 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 value of the taxpayer; or

(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, for purposes of determining whether a person is a related member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

(35 ILCS 5/704A)

Sec. 704A. Employer's return and payment of tax withheld.

(a) In general, every employer who deducts and withholds or is required to deduct and withhold tax under this Act on or after January 1, 2008 shall make those payments and returns as provided in this Section.

(b) Returns. Every employer shall, in the form and manner required by the Department, make returns with respect to taxes withheld or required to be withheld under this Article 7 for each quarter beginning on or after January 1, 2008, on or before the last day of the first month following the close of that quarter.

(c) Payments. With respect to amounts withheld or required to be withheld on or after January 1, 2008:

(1) Semi-weekly payments. For each calendar year, each employer who withheld or was required to withhold more than $12,000 during the one-year period ending on June 30 of the immediately preceding calendar year, payment must be made:

(A) on or before each Friday of the calendar year, for taxes withheld or required to be withheld on the immediately preceding Saturday, Sunday, Monday, or Tuesday;

(B) on or before each Wednesday of the calendar year, for taxes withheld or required to be withheld on the immediately preceding Wednesday, Thursday, or Friday.

(2) Semi-weekly payments. Any employer who withholds or is required to withhold more than $12,000 in any quarter of a calendar year is required to make payments on the dates set forth under item (1) of this subsection (c) for each remaining quarter of that calendar year and for the subsequent calendar year.

(3) Monthly payments. Each employer, other than an employer described in items (1) or (2) of this subsection, shall pay to the Department, on or before the 15th day of each month the taxes withheld or required to be withheld during the immediately preceding month.

(4) Payments with returns. Each employer shall pay to the Department, on or before the due date for each return required to be filed under this Section, any tax withheld or required to be withheld during the period for which the return is due and not previously paid to the Department.

(d) Regulatory authority. The Department may, by rule:

(1) If the aggregate amounts required to be withheld under this Article 7 do not exceed $1,000 for the calendar year, permit employers, in lieu of the requirements of subsections (b) and (c), to file annual returns due on or before January 31 of the following year for taxes withheld or required to be withheld during that calendar year and to pay the taxes required to be shown on each such return no later than the due date for such return.

(2) Provide that any payment required to be made under subsection (c)(1) or (c)(2) is deemed to be timely to the extent paid by electronic funds transfer on or before the due date for deposit of federal income taxes withheld from, or federal employment taxes due with respect to, the wages from which the Illinois taxes were withheld.

(3) Designate one or more depositories to which payment of taxes required to be withheld under this Article 7 must be paid by some or all employers.

(4) Increase the threshold dollar amounts at which employers are required to make semi-weekly payments under subsection (c)(1) or (c)(2).

(e) Annual return and payment. Every employer who deducts and withholds or is required to deduct and withhold tax from a person engaged in domestic service employment, as that term is defined in Section 3510 of the Internal Revenue Code, may comply with the requirements of this Section with respect to such employees by filing an annual return and paying the taxes required to be deducted and withheld on or before the 15th day of the fourth month following the close of the employer's taxable year. The Department may allow the employer's return to be submitted with the employer's individual income tax return or to be submitted with a return due from the employer under Section 1400.2 of the Unemployment Insurance Act.

(f) Magnetic media and electronic filing. Any W-2 Form that, under the Internal Revenue Code and regulations promulgated thereunder, is required to be submitted to the Internal Revenue Service on magnetic media or electronically must also be submitted to the Department on magnetic media or electronically for Illinois purposes, if required by the Department.

(g) For amounts deducted or withheld after December 31, 2009, a taxpayer who makes an election under Section 5-15(f) of the Economic Development for a Growing Economy Act for a taxable year shall be allowed a credit against payments due under this Section for amounts withheld during the first calendar year beginning after the end of that taxable year equal to the amount of the credit awarded to the taxpayer by the Department of Commerce and Economic Opportunity under the Economic Development for a Growing Economy Act for the taxable year. The credit may not reduce the taxpayer's obligation for any payment due under this Section to less than zero. If the amount of the credit exceeds the total payments due under this Section with respect to amounts withheld during the calendar year, the excess may be carried forward and applied against the taxpayer's liability under this Section in the 5 succeeding calendar years. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one taxable year that are available to offset a liability, the earlier credit shall be applied first. This Section is exempt from the provisions of Section 250 of this Act.

(h) A taxpayer may elect to claim all or a part of the credit awarded under Section 219 of this Act as a credit against payments due under this Section. Such an election shall be made in the form and manner prescribed by the Department by rule. If, in any payment period, the amount of the credit that is eligible to be applied toward the taxpayer's withholding tax liability exceeds the amount required to be withheld by the taxpayer for that payment period, then the excess may carried forward to the next payment period until the entire amount has been applied . If there are credits from more than one payment period that are available to offset a liability, the earlier credit shall be applied first.

(Source: P.A. 95-8, eff. 6-29-07; 95-707, eff. 1-11-08; 96-834, eff. 12-14-09.)

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