101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2735

 

Introduced , by Rep. Curtis J. Tarver II

 

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

    Amends the Small Business Job Creation Tax Credit Act. Renews the program for incentive periods beginning on or after July 1, 2018 and ending on or before June 30, 2025. Removes language concerning the Put Illinois to Work Program for the second series of incentive periods. Provides that the term "full-time employee" means an individual who is employed for a basic wage for at least 35 hours each week (currently, employed for a basic wage for at least 35 hours each week or renders any other standard of service generally accepted by industry custom or practice as full-time employment). Provides that a net increase in the number of full-time Illinois employees shall be treated as continuous if a different new employee is hired as a replacement within 8 weeks after the position becomes vacant (currently, a reasonable time). Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB2735LRB101 09918 HLH 55020 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 5. The Small Business Job Creation Tax Credit Act
5is amended by changing Sections 10, 25, and 35 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 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) for incentive periods ending on or before June 30,
15    2016, hired within the incentive period an employee who had
16    participated as worker-trainee in the Put Illinois to Work
17    Program during 2010.
18    In the case of any person that is a member of a unitary
19business group within the meaning of subdivision (a)(27) of
20Section 1501 of the Illinois Income Tax Act, "applicant" refers
21to the unitary business group.
22    "Certificate" means the tax credit certificate issued by
23the Department under Section 35 of this Act.

 

 

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1    "Certificate of eligibility" means the certificate issued
2by the Department under Section 20 of this Act.
3    "Credit" means the amount awarded by the Department to an
4applicant by issuance of a certificate under Section 35 of this
5Act for each new full-time equivalent employee hired or job
6created.
7    "Department" means the Department of Commerce and Economic
8Opportunity.
9    "Director" means the Director of the Department.
10    "Full-time employee" means an individual who is employed
11for a basic wage for at least 35 hours each week or who renders
12any other standard of service generally accepted by industry
13custom or practice as full-time employment. An individual for
14whom a W-2 is issued by a Professional Employer Organization is
15a full-time employee if he or she is employed in the service of
16the applicant for a basic wage for at least 35 hours each week
17or renders any other standard of service generally accepted by
18industry custom or practice as full-time employment. For the
19purposes of this Act, such an individual shall be considered a
20full-time employee of the applicant.
21    "Professional Employer Organization" (PEO) shall have the
22same meaning as defined in Section 5-5 of the Economic
23Development for a Growing Economy Tax Credit Act. As used in
24this Section, "Professional Employer Organization" does not
25include a day and temporary labor service agency regulated
26under the Day and Temporary Labor Services Act.

 

 

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1    "Incentive period" means the period beginning on July 1 and
2ending on June 30 of the following year. The first series of
3incentive periods period shall begin on July 1, 2010 and the
4last incentive period shall end on June 30, 2016. The second
5series of incentive periods shall begin on July 1, 2018 and end
6on June 30, 2025.
7    "Basic wage" means compensation for employment that is no
8less than $10 per hour or the equivalent salary for a new
9employee.
10    "New employee" means a full-time employee who first became
11employed by an applicant with less than 50 full-time employees
12within the incentive period whose hire results in a net
13increase in the applicant's full-time Illinois employees and
14who is receiving a basic wage as compensation. :
15        (1) who first became employed by an applicant with less
16    than 50 full-time employees within the incentive period
17    whose hire results in a net increase in the applicant's
18    full-time Illinois employees and who is receiving a basic
19    wage as compensation; or
20        (2) who participated as a worker-trainee in the Put
21    Illinois to Work Program during 2010 and who is
22    subsequently hired during the incentive period by an
23    applicant and who is receiving a basic wage as
24    compensation.
25    The term "new employee" does not include:
26        (1) a person who was previously employed in Illinois by

 

 

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1    the applicant or a related member prior to the onset of the
2    incentive period; or
3        (2) any individual who has a direct or indirect
4    ownership interest of at least 5% in the profits, capital,
5    or value of the applicant or a related member.
6    "Noncompliance date" means, in the case of an applicant
7that is not complying with the requirements of the provisions
8of this Act, the day following the last date upon which the
9taxpayer was in compliance with the requirements of the
10provisions of this Act, as determined by the Director, pursuant
11to Section 45 of this Act.
12    "Put Illinois to Work Program" means a worker training and
13employment program that was established by the State of
14Illinois with funding from the United States Department of
15Health and Human Services of Emergency Temporary Assistance for
16Needy Families funds authorized by the American Recovery and
17Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
18funds were in turn used by the State of Illinois to fund the
19Put Illinois to Work Program.
20    "Related member" means a person that, with respect to the
21applicant during any portion of the incentive period, is any
22one of the following,
23        (1) An individual, if the individual and the members of
24    the individual's family (as defined in Section 318 of the
25    Internal Revenue Code) own directly, indirectly,
26    beneficially, or constructively, in the aggregate, at

 

 

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1    least 50% of the value of the outstanding profits, capital,
2    stock, or other ownership interest in the applicant.
3        (2) A partnership, estate, or trust and any partner or
4    beneficiary, if the partnership, estate, or trust and its
5    partners or beneficiaries own directly, indirectly,
6    beneficially, or constructively, in the aggregate, at
7    least 50% of the profits, capital, stock, or other
8    ownership interest in the applicant.
9        (3) A corporation, and any party related to the
10    corporation in a manner that would require an attribution
11    of stock from the corporation under the attribution rules
12    of Section 318 of the Internal Revenue Code, if the
13    applicant and any other related member own, in the
14    aggregate, directly, indirectly, beneficially, or
15    constructively, at least 50% of the value of the
16    corporation's outstanding stock.
17        (4) A corporation and any party related to that
18    corporation in a manner that would require an attribution
19    of stock from the corporation to the party or from the
20    party to the corporation under the attribution rules of
21    Section 318 of the Internal Revenue Code, if the
22    corporation and all such related parties own, in the
23    aggregate, at least 50% of the profits, capital, stock, or
24    other ownership interest in the applicant.
25        (5) A person to or from whom there is attribution of
26    stock ownership in accordance with Section 1563(e) of the

 

 

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1    Internal Revenue Code, except that for purposes of
2    determining whether a person is a related member under this
3    paragraph, "20%" shall be substituted for "5%" whenever
4    "5%" appears in Section 1563(e) of the Internal Revenue
5    Code.
6(Source: P.A. 100-863, eff. 8-14-18.)
 
7    (35 ILCS 25/25)
8    Sec. 25. Tax credit.
9    (a) Subject to the conditions set forth in this Act, an
10applicant is entitled to a credit against payment of taxes
11withheld under Section 704A of the Illinois Income Tax Act:
12        (1) for new employees who participated as
13    worker-trainees in the Put Illinois to Work Program during
14    2010, for incentive periods ending on or before June 30,
15    2016:
16            (A) in the first calendar year ending on or after
17        the date that is 6 months after December 31, 2010, or
18        the date of hire, whichever is later. Under this
19        subparagraph, the applicant is entitled to one-half of
20        the credit allowable for each new employee who is
21        employed for at least 6 months after the date of hire;
22        and
23            (B) in the first calendar year ending on or after
24        the date that is 12 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 12 months after the date of hire;
4         (2) for all other new employees, in the first calendar
5    year ending on or after the date that is 12 months after
6    the date of hire of a new employee. The credit shall be
7    allowed as a credit to an applicant for each full-time
8    employee hired during the incentive period that results in
9    a net increase in full-time Illinois employees, where the
10    net increase in the employer's full-time Illinois
11    employees is maintained for at least 12 months.
12    (b) The Department shall make credit awards under this Act
13to further job creation.
14    (c) The credit shall be claimed for the first calendar year
15ending on or after the date on which the certificate is issued
16by the Department.
17    (d) The credit shall not exceed $2,500 per new employee
18hired.
19    (e) The net increase in full-time Illinois employees,
20measured on an annual full-time equivalent basis, shall be the
21total number of full-time Illinois employees of the applicant
22on the final day of the incentive period, minus the number of
23full-time Illinois employees employed by the employer on the
24first day of that same incentive period. For purposes of the
25calculation, an employer that begins doing business in this
26State during the incentive period, as determined by the

 

 

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1Director, shall be treated as having zero Illinois employees on
2the first day of the incentive period.
3    (f) The net increase in the number of full-time Illinois
4employees of the applicant under subsection (e) must be
5sustained continuously for at least 12 months, starting with
6the date of hire of a new employee during the incentive period.
7Eligibility for the credit does not depend on the continuous
8employment of any particular individual. For purposes of this
9subsection (f), if a new employee ceases to be employed before
10the completion of the 12-month period for any reason, the net
11increase in the number of full-time Illinois employees shall be
12treated as continuous if a different new employee is hired as a
13replacement within a reasonable time for the same position
14within 8 weeks after the position becomes vacant.
15    (g) The Department shall promulgate rules to enable an
16applicant for which a PEO has been contracted to issue W-2s and
17make payment of taxes withheld under Section 704A of the
18Illinois Income Tax Act for new employees to retain the benefit
19of tax credits to which the applicant is otherwise entitled
20under this Act.
21(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
2297-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)
 
23    (35 ILCS 25/35)
24    Sec. 35. Application for award of tax credit; tax credit
25certificate.

 

 

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1    (a) On or after the conclusion of the 12-month period (or
26-month period, for purposes of subparagraph (A) of item (1) of
3subsection (a) of Section 25) after a new employee has been
4hired, an applicant shall file with the Department an
5application for award of a credit. The application shall
6include the following:
7        (1) The names, Social Security numbers, job
8    descriptions, salary or wage rates, and dates of hire of
9    the new employees with respect to whom the credit is being
10    requested, and an indication of whether each new employee
11    listed participated as a worker-trainee in the Put Illinois
12    to Work Program.
13        (2) A certification that each new employee listed has
14    been retained on the job for one year (or 6 months, for
15    purposes of subparagraph (A) of item (1) of subsection (a)
16    of Section 25) from the date of hire.
17        (3) The number of new employees hired by the applicant
18    during the incentive period.
19        (4) The net increase in the number of full-time
20    Illinois employees of the applicant (including the new
21    employees listed in the request) between the beginning of
22    the incentive period and the dates on which the new
23    employees listed in the request were hired. This
24    requirement does not apply for tax credits the applicant is
25    seeking because the new employee had participated as a
26    worker-trainee in the Put Illinois to Work Program.

 

 

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1        (5) An agreement that the Director is authorized to
2    verify with the appropriate State agencies the information
3    contained in the request before issuing a certificate to
4    the applicant.
5        (6) Any other information the Department determines to
6    be appropriate.
7    (b) Although an application may be filed at any time after
8the conclusion of the 12-month period (or 6-month period, for
9purposes of subparagraph (A) of item (1) of subsection (a) of
10Section 25) after a new employee was hired, an application
11filed more than 90 days after the earliest date on which it
12could have been filed shall not be awarded any credit if, prior
13to the date it is filed, the Department has received
14applications under this Section for credits totaling more than
15$50,000,000.
16    (c) The Department shall issue a certificate to each
17applicant awarded a credit under this Act. The certificate
18shall include the following:
19        (1) The name and taxpayer identification number of the
20    applicant.
21        (2) The date on which the certificate is issued.
22        (3) The credit amount that will be allowed.
23        (4) Any other information the Department determines to
24    be appropriate.
25(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
26    Section 99. Effective date. This Act takes effect upon

 

 

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1becoming law.