101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB1478

 

Introduced , by Rep. Tony McCombie

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/229 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 the certain Illinois labor, job training, and apprenticeship requirements. Sets minimum requirements and procedures for certifying a taxpayer as an "accredited manufacturer" and for awarding the credit. Effective January 1, 2020.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB1478LRB101 04732 HLH 49741 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. 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 is a crucial underpinning of the economy
8of the State of Illinois. Manufacturing employs approximately
9570,000 workers directly in jobs that pay an average of more
10than $84,000 per year in wages and benefits. Total
11manufacturing output exceeded $103,000,000,000, contributing
12the single largest share of the Illinois Gross State Product.
13Ninety-three percent of Illinois exports are manufactured
14goods and services, totaling approximately $54,800,000,000.
15However, Illinois has lost more than 300,000 manufacturing jobs
16since 2000. Since the end of the recession in 2009, Illinois
17has gained only 8,300 manufacturing jobs while neighboring
18states have increased manufacturing employment by an average of
1968,800 jobs. Illinois manufacturers are experiencing a skills
20gap with the need to find qualified workers to fill the
21pipeline before half of the workforce retires in the next 15
22years. Therefore, it is in the best interest of the State to
23make Illinois the preferred destination for manufacturing and

 

 

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1to strengthen the existing industrial base in Illinois, thereby
2promoting job growth, increased capital investment, expanded
3exports, and long-term revenue growth for the State.
 
4    Section 15. Definitions. As used in this Act:
5    "Accredited manufacturer" means a manufacturer that has
6been certified by the Department.
7    "Apprenticeship expense" means the amount incurred on
8behalf of a qualifying apprentice for tuition, book fees, and
9lab fees at the school or community college in which the
10apprentice is enrolled during the regular school year.
11    "Credit" means an amount equal to 25% of the sum of the
12qualifying Illinois labor expenditures approved by the
13Department, the job training expenditures approved by the
14Department, and the apprenticeship expenses approved by the
15Department. The accredited manufacturer is deemed to have paid,
16on its balance due day for the year, an amount equal to 25% of
17its qualified Illinois labor expenditure for the tax year.
18    "Department" means the Department of Revenue.
19    "Director" means the Director of Revenue.
20    "Illinois labor expenditure" means salary or wages paid to
21employees of an accredited manufacturer for services in
22Illinois after the effective date of this Act.
23    To qualify as an Illinois labor expenditure, the
24expenditure must be:
25        (1) Reasonable under the circumstances.

 

 

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1        (2) Included in the federal income tax basis of the
2    property.
3        (3) Incurred by the accredited manufacturer for
4    services on or after January 1, 2018.
5        (4) Incurred for the production stages of the
6    manufacturing process.
7        (5) Limited to the first $25,000 of wages paid or
8    incurred to each employee of the manufacturing company.
9        (6) Exclusive of the salary or wages paid to or
10    incurred for the 2 highest paid employees of the
11    manufacturing company.
12        (7) Directly attributable to the accredited
13    manufacturer.
14        (8) Paid in the tax year for which the applicant is
15    claiming the credit or no later than 60 days after the end
16    of the tax year.
17        (9) Paid for services rendered in Illinois.
18    "Job training expenditure" means all amounts paid or
19accrued on behalf of all persons employed by the taxpayer in
20the State for education or vocational training in
21semi-technical, semi-skilled, or skilled fields.
22    "Qualifying apprentice" means an individual who (i) is a
23resident of the State of Illinois, (ii) is between the ages of
2416 and 30 years old at the close of the school year for which a
25credit is sought, and (iii) during the school year for which a
26credit is sought was a full-time apprentice enrolled in an

 

 

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1apprenticeship program which is registered with the US
2Department of Labor, Office of Apprenticeship.
3    "School" means any public or nonpublic secondary school in
4Illinois, or any community college that is in compliance with
5Title VI of the Civil Rights Act of 1964, except that nothing
6shall be construed to allow a student to attend a community
7college not a part of an approved apprenticeship program to
8qualify for the credit under this Section.
 
9    Section 20. Tax credit awards. Subject to the conditions
10set forth in this Act, an accredited manufacturer is entitled
11to a credit of 25% of all qualifying Illinois labor
12expenditures approved by the Department.
 
13    Section 25. Accredited manufacturing company
14certification. Any taxpayer may request certification as an
15accredited manufacturing company by formal application to the
16Department. In determining whether to issue an accredited
17manufacturing company certificate, the Department must
18determine that the following conditions exist:
19        (1) The taxpayer is engaged primarily in the business
20    of manufacturing goods.
21        (2) The taxpayer intends to employ workers in the State
22    of Illinois.
23        (3) The taxpayer provides health insurance to its
24    employees.

 

 

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1        (4) The taxpayer provides to its employees either a
2    pension plan or a 401k plan.
3        (5) The taxpayer offers to its employees paid time-off
4    benefits.
5        (6) The taxpayer intends to expend a portion of its
6    research and development budgets in the State of Illinois.
 
7    Section 30. Issuance of manufacturing job destination tax
8credit certification.
9    (a) In order to qualify for a tax credit under this Act, an
10accredited manufacturer must file, on forms prescribed by the
11Department, all information necessary to calculate the tax
12credit.
13    (b) Upon satisfactory review of the application, the
14Department shall issue a manufacturing job destination tax
15credit certificate stating the amount of the tax credit.
 
16    Section 35. Amount and duration of the credit. The amount
17of the credit awarded under this Act is based on the amount of
18qualifying Illinois labor expenditures approved by the
19Department in any tax year beginning on January 1, 2020 or
20thereafter for the applicant.
 
21    Section 40. Evaluation of tax credit program. The
22Department shall evaluate the tax credit program annually. The
23evaluation must include an assessment of the effectiveness of

 

 

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1the program in creating and retaining jobs in Illinois,
2improving the skill level of workers, and of the revenue impact
3of the program and may include a review of the practices and
4experiences of other states or nations with similar programs.
5Upon completion of this evaluation, the Department shall
6determine the overall success of the program.
 
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 stating the reasons for the denial. The taxpayer
17shall have 60 days to correct any deficiency that was the
18reason for the initial denial of certification.
19     If the Department again denies the certification, the
20taxpayer may appeal the denial within 60 days after the denial
21and request a hearing. At the hearing, if the taxpayer shows,
22by preponderance of evidence, that he or she has complied with
23the requirements of this Section, then the taxpayer shall be
24certified as an accredited manufacturer.

 

 

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1     If the taxpayer disagrees with the Department about the
2amount of the tax credit available for any tax year, the
3taxpayer may appeal the certification and request a hearing. If
4the taxpayer shows, by a preponderance of evidence, that he or
5she is entitled to a larger amount, the Department shall
6approve the larger amount. However, in no instance may the
7Department determine a lesser amount.
8     The provisions of the Administrative Review Law, and the
9rules adopted pursuant thereto, apply to and govern all
10proceedings for the judicial review of this Act.
 
11    Section 90. The Illinois Income Tax Act is amended by
12adding Section 229 as follows:
 
13    (35 ILCS 5/229 new)
14    Sec. 229. Manufacturing job destination tax credit. For tax
15years beginning on or after January 1, 2020, a taxpayer who has
16been awarded a tax credit under the Manufacturing Job
17Destination Tax Credit Act is entitled to a credit against the
18taxes imposed under subsections (a) and (b) of Section 201 of
19this Act in an amount determined by the Department under the
20Manufacturing Job Destination Tax Credit Act. If the taxpayer
21is a partnership or Subchapter S corporation, the credit is
22allowed to the partners or shareholders in accordance with the
23determination of income and distributive share of income under
24Sections 702 and 704 and Subchapter S of the Internal Revenue

 

 

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1Code. The Department must prescribe rules to enforce and
2administer the provisions of this Section. This Section is
3exempt from the provisions of Section 250 of this Act.
4    The credit is non-refundable, but may be sold, transferred,
5or conveyed to other taxpayers who are primarily engaged in
6manufacturing.
7    The credit may not be carried forward or back. In no event
8shall a credit under this Section reduce the taxpayer's
9liability to less than zero.
 
10    Section 99. Effective date. This Act takes effect January
111, 2020.