101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB5554

 

Introduced , by Rep. Delia C. Ramirez

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/232 new
215 ILCS 5/409  from Ch. 73, par. 1021
215 ILCS 5/444  from Ch. 73, par. 1056

    Creates the Build Illinois Homes Tax Credit Act. Provides that the Illinois Housing Development Authority and the City of Chicago Department of Housing may award credits for certain qualified low-income housing projects. Provides that the credits may be taken against any or all of the following: (i) the taxes imposed by the Illinois Income Tax Act; or (ii) any retaliatory or privilege tax imposed by the Illinois Insurance Code. Amends the Illinois Income Tax Act and the Illinois Insurance Code to make conforming changes. Effective immediately.


LRB101 19774 HLH 69285 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5554LRB101 19774 HLH 69285 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 Build
5Illinois Homes Tax Credit Act.
 
6    Section 5. Definitions. As used in this Act, unless the
7context clearly requires otherwise:
8    "Allocation" means an award of tax credits to the owner of
9a qualified development in any allocation round, to be claimed
10ratably annually over the credit period.
11    "Allocation round" means all allocations by the Authority
12of credits under this Act to qualified developments in any
13calendar year.
14    "Authority" means:
15        (1) the Illinois Housing Development Authority; or
16        (2) the City of Chicago Department of Housing.
17    "Credit" means the credit allowed pursuant to Section 2 of
18this Act.
19    "Credit period" means the period of 10 taxable years
20beginning with the taxable year in which a qualified
21development is placed in service. If a qualified development
22consists of more than one building, the development is deemed
23to be placed in service in the taxable year during which the

 

 

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1last building of the qualified development is placed in
2service.
3    "Department" means the Illinois Department of Revenue.
4    "Federal tax credit" means the federal low-income housing
5tax credit provided by Section 42 of the federal Internal
6Revenue Code, including federal low-income housing tax credits
7issued pursuant to 26 U.S.C. 42(h)(3) and 26 U.S.C. 42(h)(4).
8    "Owner certification" means the certification issued by
9the owner of a qualified development or its designee pursuant
10to subsection (d) of Section 10 of this Act.
11    "Qualified allocation plan" means the qualified allocation
12plan adopted by the Authority pursuant to Section 42(m) of the
13federal Internal Revenue Code of 1986.
14    "Qualified basis" means the qualified basis of the
15qualified development as determined pursuant to Section 42 of
16the federal Internal Revenue Code of 1986.
17    "Qualified development" means a qualified low-income
18housing project, as that term is defined in Section 42 of the
19federal Internal Revenue Code of 1986, that is located in the
20State and is determined to be eligible for the federal tax
21credit set forth in Section 42 of the Internal Revenue Code,
22whether or not a federal tax credit is allocated with respect
23to that development.
24    "Qualified taxpayer" means an individual, person, firm,
25corporation, or other entity that owns an interest, direct or
26indirect, in a qualified development and is subject to any or

 

 

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1all of the following: (i) the taxes imposed by the Illinois
2Income Tax Act; or (ii) any retaliatory or privilege tax
3imposed by the Illinois Insurance Code.
4    "State 8609 equivalent" means a statement issued by the
5Authority with respect to each building within a qualified
6development following construction or rehabilitation of a
7qualified development certifying that each such building
8within that qualified development qualifies for the credit and
9specifying:
10        (1) the calendar year in which the last building of the
11    qualified development was placed in service;
12        (2) the amount of the credit allowed for each year of
13    the credit period; and
14        (3) the maximum qualified basis of the qualified
15    development taken into account in determining such annual
16    credit amount.
17    The State 8609 equivalent shall be issued by the Authority
18simultaneously with IRS Form 8609, if the qualified development
19was also allocated federal tax credits.
 
20    Section 10. Credit for low-income housing developments.
21    (a) The Authority shall include the credit in its annual
22qualified allocation plan each year until expiration of this
23Act. Each allocation round shall be simultaneous with
24allocations of federal tax credits.
25    (b) For taxable years beginning on or after January 1,

 

 

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12021, the Authority may allocate a credit to the owner of a
2qualified development in any allocation round in an amount
3determined by the Authority, subject to the following
4guidelines:
5        (1) the Authority finding that the credit is necessary
6    for the financial feasibility of the development;
7        (2) the aggregate sum of credits allocated to qualified
8    developments in any allocation round shall not exceed
9    $35,000,000, plus the amount of unallocated credits, if
10    any, from the preceding allocation round, plus the amount
11    of any credit recaptured or otherwise returned to the
12    Authority since the previous allocation round;
13        (3) of the $35,000,000 annual allocation: (i) 75.5% of
14    the available credits in each allocation round shall be
15    allocated by the Illinois Housing Development Authority,
16    plus any credits the Illinois Housing Development
17    Authority did not allocate from the previous allocation
18    round, plus the amount of any credits recaptured or
19    otherwise returned to the Illinois Housing Development
20    Authority since the previous allocation round; and (ii)
21    24.5% of the available credits in each allocation round
22    shall be allocated by the City of Chicago Department of
23    Housing, plus any credits the City of Chicago Department of
24    Housing did not allocate from the previous allocation
25    round, plus the amount of any credits recaptured or
26    otherwise returned to the City of Chicago Department of

 

 

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1    Housing since the previous allocation round;
2        (4) unless otherwise provided in this Act, or unless
3    the context clearly requires otherwise, the Authority must
4    determine eligibility for credits and allocate credits in
5    accordance with the standards and requirements set forth in
6    Section 42 of the federal Internal Revenue Code of 1986;
7    (c) For tax years during the credit period, any qualified
8taxpayer is allowed a credit as provided in this Act against
9any or all of the following: (i) the taxes imposed by
10subsections (a), (b), and (c) of Section 201 of the Illinois
11Income Tax Act; or (ii) any retaliatory or privilege tax
12imposed under the Illinois Insurance Code.
13    (d) If an owner of a qualified development receiving an
14allocation of a credit is a partnership, limited liability
15company, S corporation, or similar pass-through entity, the
16owner may allocate the credit available during a year in the
17credit period among its partners, shareholders, members, or
18other constituent taxpayers in any manner agreed to by such
19persons and, in the case of multiple tiers of pass-through
20entities, the credit may be so allocated through any number of
21pass-through entities in any manner agreed by the owners of
22those pass-through entities, whether or not such persons are
23allocated or allowed any portion of any federal tax credit with
24respect to the qualified development. To be eligible to receive
25an allocation of credits, the partners, shareholders, members,
26or other constituent taxpayers must be a member of the entity

 

 

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1at the end of the taxable year in which the allocation occurs.
2The owner must submit an owner certification to the Department
3detailing the amount of credit allocated to each constituent
4taxpayer, or the owner must notify the Department that it has
5assigned the duty of the owner certification to one such
6constituent taxpayer who must provide such owner certification
7to the Department. Each constituent taxpayer is allowed to
8claim such amount of credit subject to any restrictions set
9forth in this Section.
10    (e) Any partner, shareholder, member or other constituent
11taxpayer that receives a direct or indirect allocation of
12credits from the owner of a qualified development may transfer
13the credit to any third party subject to taxes imposed by the
14Illinois Income Tax Act or the Illinois Insurance Code. The
15transferring partner, shareholder, member, or other
16constituent taxpayer shall be liable for any recapture pursuant
17to Section 15, and the transferee shall not be liable for
18recapture pursuant to Section 15. The owner of the qualified
19development may not transfer the credit.
20    (f) No credit may be allocated pursuant to this Act unless
21the qualified development is the subject of a recorded
22restrictive covenant requiring the development to be
23maintained and operated as a qualified development; this
24requirement for a recorded restrictive covenant may be
25satisfied by the agreement for an extended low-income housing
26commitment required for the federal tax credits as defined in

 

 

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1Section 42(h)(6)(B) of the federal Internal Revenue Code of
21986.
3    (g) If, during a taxable year, there is a determination
4that no recorded restrictive covenant meeting the requirements
5of subsection (f) was in effect as of the beginning of that
6year, such determination shall not apply to any period before
7that year and subsection (f) shall be applied without regard to
8that determination if the failure is corrected within one year
9from the date of the determination.
10    (h) The credit amount may be taken against the taxes
11imposed by the Illinois Income Tax Act for each taxable year of
12the credit period. The credit amount may be taken against the
13taxes imposed by the Illinois Insurance Code for each reporting
14period in the credit period. Any credit amount that exceeds the
15tax due for a taxable year may be carried forward as a tax
16credit against payments due for up to 5 taxable years following
17the tax year to which the credit relates and must be applied
18first to the earliest reporting periods possible. Credits that
19are not claimed may not be refunded to the taxpayer.
 
20    Section 15. Recapture. If, under Section 42 of the Internal
21Revenue Code of 1986, a portion of any federal tax credit
22claimed with respect to a qualified development is required to
23be recaptured during the first 10 years after a project is
24placed in service, then the Department shall recapture a
25portion of the related credits under this Act from the taxpayer

 

 

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1who claimed the credit or, in the case of a transfer, from the
2transferee. The amount of credit subject to recapture shall be
3proportionately equal to the amount of the qualified
4development's federal tax credits which are subject to
5recapture. If that recapture of any credit is required in any
6tax year, the return submitted for that tax year by the owner
7of the qualified development to the Department must include the
8proportion of credit required to be recaptured, the identity of
9the taxpayer subject to recapture, and the amount of credit
10previously allocated to that taxpayer. The taxpayer subject to
11recapture shall increase such taxpayer's tax by the amount of
12any credit wrongfully claimed by itself or its transferee.
13Those adjustments shall be made in the year the reduction in
14qualified basis is identified.
 
15    Section 20. Filing requirements. An owner of a qualified
16development that has received an allocation and each qualified
17taxpayer to which that owner has allocated a portion of the
18credit, if any, must file with their State tax returns a copy
19of the State 8609 equivalent issued by the Authority for that
20development as well as a copy of the owner certification.
 
21    Section 25. Rules. The Illinois Housing Development
22Authority and the Department, in consultation with each other,
23shall adopt such rules as are necessary to carry out their
24respective responsibilities under this Act.
 

 

 

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1    Section 30. Compliance monitoring. The Authority, in
2consultation with the Department, shall monitor and oversee
3compliance with the provisions of this Act and shall report
4specific occurrences of noncompliance to the Department.
 
5    Section 35. Report to the General Assembly.
6    (a) The Illinois Housing Development Authority must, by
7December 31 of each allocation year, provide a written report
8to the General Assembly and must publish that report on its
9website.
10    (b) The report shall:
11        (1) set forth the number of qualified developments that
12    have been allocated tax credits under this Act during the
13    allocation year and the total number of units supported by
14    each development;
15        (2) describe each qualified development that has been
16    allocated such credits including, without limitation, the
17    geographic location of the development, the household type
18    and any specific demographic information available about
19    residents intended to be served by the development, the
20    income levels intended to be served by the development, and
21    the rents or set-asides authorized for each development;
22        (3) provide housing market and demographic information
23    that demonstrates how the qualified developments supported
24    by the tax credits are addressing the need for affordable

 

 

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1    housing within the communities they are intended to serve
2    as well as information about any remaining disparities in
3    the affordability of housing within those communities;
4        (4) provide information on the percentage of
5    developments allocated credits that received incentive
6    scoring points in the qualified allocation plan as a result
7    of the general contractor, property manager, architect, or
8    sponsor being certified under the Business Enterprise
9    Program for Minorities, Females, and Persons with a
10    Disability.
 
11    Section 40. Exempt from automatic sunset. The credit under
12this Act is exempt from the provisions of Section 250 of the
13Illinois Income Tax Act.
 
14    Section 90. The Illinois Income Tax Act is amended by
15adding Section 232 as follows:
 
16    (35 ILCS 5/232 new)
17    Sec. 232. Build Illinois Homes Tax Credit Act. For taxable
18years beginning on or after January 1, 2021, taxpayers are
19entitled to credits against the taxes imposed by subsections
20(a), (b), and (c) of Section 201 as provided in the Build
21Illinois Homes Tax Credit Act.
 
22    Section 95. The Illinois Insurance Code is amended by

 

 

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1changing Sections 409 and 444 as follows:
 
2    (215 ILCS 5/409)  (from Ch. 73, par. 1021)
3    Sec. 409. Annual privilege tax payable by companies.
4    (1) As of January 1, 1999 for all health maintenance
5organization premiums written; as of July 1, 1998 for all
6premiums written as accident and health business, voluntary
7health service plan business, dental service plan business, or
8limited health service organization business; and as of January
91, 1998 for all other types of insurance premiums written,
10every company doing any form of insurance business in this
11State, including, but not limited to, every risk retention
12group, and excluding all fraternal benefit societies, all farm
13mutual companies, all religious charitable risk pooling
14trusts, and excluding all statutory residual market and special
15purpose entities in which companies are statutorily required to
16participate, whether incorporated or otherwise, shall pay, for
17the privilege of doing business in this State, to the Director
18for the State treasury a State tax equal to 0.5% of the net
19taxable premium written, together with any amounts due under
20Section 444 of this Code, except that the tax to be paid on any
21premium derived from any accident and health insurance or on
22any insurance business written by any company operating as a
23health maintenance organization, voluntary health service
24plan, dental service plan, or limited health service
25organization shall be equal to 0.4% of such net taxable premium

 

 

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1written, together with any amounts due under Section 444. Upon
2the failure of any company to pay any such tax due, the
3Director may, by order, revoke or suspend the company's
4certificate of authority after giving 20 days written notice to
5the company, or commence proceedings for the suspension of
6business in this State under the procedures set forth by
7Section 401.1 of this Code. The gross taxable premium written
8shall be the gross amount of premiums received on direct
9business during the calendar year on contracts covering risks
10in this State, except premiums on annuities, premiums on which
11State premium taxes are prohibited by federal law, premiums
12paid by the State for health care coverage for Medicaid
13eligible insureds as described in Section 5-2 of the Illinois
14Public Aid Code, premiums paid for health care services
15included as an element of tuition charges at any university or
16college owned and operated by the State of Illinois, premiums
17on group insurance contracts under the State Employees Group
18Insurance Act of 1971, and except premiums for deferred
19compensation plans for employees of the State, units of local
20government, or school districts. The net taxable premium shall
21be the gross taxable premium written reduced only by the
22following:
23        (a) the amount of premiums returned thereon which shall
24    be limited to premiums returned during the same preceding
25    calendar year and shall not include the return of cash
26    surrender values or death benefits on life policies

 

 

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1    including annuities;
2        (b) dividends on such direct business that have been
3    paid in cash, applied in reduction of premiums or left to
4    accumulate to the credit of policyholders or annuitants. In
5    the case of life insurance, no deduction shall be made for
6    the payment of deferred dividends paid in cash to
7    policyholders on maturing policies; dividends left to
8    accumulate to the credit of policyholders or annuitants
9    shall be included as gross taxable premium written when
10    such dividend accumulations are applied to purchase
11    paid-up insurance or to shorten the endowment or premium
12    paying period.
13    (2) The annual privilege tax payment due from a company
14under subsection (4) of this Section may be reduced by: (a) the
15excess amount, if any, by which the aggregate income taxes paid
16by the company, on a cash basis, for the preceding calendar
17year under Sections 601 and 803 of the Illinois Income Tax Act
18exceed 1.5% of the company's net taxable premium written for
19that prior calendar year, as determined under subsection (1) of
20this Section; and (b) the amount of any fire department taxes
21paid by the company during the preceding calendar year under
22Section 11-10-1 of the Illinois Municipal Code. Any deductible
23amount or offset allowed under items (a) and (b) of this
24subsection for any calendar year will not be allowed as a
25deduction or offset against the company's privilege tax
26liability for any other taxing period or calendar year.

 

 

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1    (3) If a company survives or was formed by a merger,
2consolidation, reorganization, or reincorporation, the
3premiums received and amounts returned or paid by all companies
4party to the merger, consolidation, reorganization, or
5reincorporation shall, for purposes of determining the amount
6of the tax imposed by this Section, be regarded as received,
7returned, or paid by the surviving or new company.
8    (4)(a) All companies subject to the provisions of this
9Section shall make an annual return for the preceding calendar
10year on or before March 15 setting forth such information on
11such forms as the Director may reasonably require. Payments of
12quarterly installments of the taxpayer's total estimated tax
13for the current calendar year shall be due on or before April
1415, June 15, September 15, and December 15 of such year, except
15that all companies transacting insurance in this State whose
16annual tax for the immediately preceding calendar year was less
17than $5,000 shall make only an annual return. Failure of a
18company to make the annual payment, or to make the quarterly
19payments, if required, of at least 25% of either (i) the total
20tax paid during the previous calendar year or (ii) 80% of the
21actual tax for the current calendar year shall subject it to
22the penalty provisions set forth in Section 412 of this Code.
23    (b) Notwithstanding the foregoing provisions, no annual
24return shall be required or made on March 15, 1998, under this
25subsection. For the calendar year 1998:
26        (i) each health maintenance organization shall have no

 

 

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1    estimated tax installments;
2        (ii) all companies subject to the tax as of July 1,
3    1998 as set forth in subsection (1) shall have estimated
4    tax installments due on September 15 and December 15 of
5    1998 which installments shall each amount to no less than
6    one-half of 80% of the actual tax on its net taxable
7    premium written during the period July 1, 1998, through
8    December 31, 1998; and
9        (iii) all other companies shall have estimated tax
10    installments due on June 15, September 15, and December 15
11    of 1998 which installments shall each amount to no less
12    than one-third of 80% of the actual tax on its net taxable
13    premium written during the calendar year 1998.
14    In the year 1999 and thereafter all companies shall make
15annual and quarterly installments of their estimated tax as
16provided by paragraph (a) of this subsection.
17    (5) In addition to the authority specifically granted under
18Article XXV of this Code, the Director shall have such
19authority to adopt rules and establish forms as may be
20reasonably necessary for purposes of determining the
21allocation of Illinois corporate income taxes paid under
22subsections (a) through (d) of Section 201 of the Illinois
23Income Tax Act amongst members of a business group that files
24an Illinois corporate income tax return on a unitary basis, for
25purposes of regulating the amendment of tax returns, for
26purposes of defining terms, and for purposes of enforcing the

 

 

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1provisions of Article XXV of this Code. The Director shall also
2have authority to defer, waive, or abate the tax imposed by
3this Section if in his opinion the company's solvency and
4ability to meet its insured obligations would be immediately
5threatened by payment of the tax due.
6    (6) This Section is subject to the provisions of Section 10
7of the New Markets Development Program Act.
8    (7) This Section is subject to the provisions of the Build
9Illinois Homes Tax Credit Act.
10(Source: P.A. 97-813, eff. 7-13-12; 98-1169, eff. 1-9-15.)
 
11    (215 ILCS 5/444)  (from Ch. 73, par. 1056)
12    Sec. 444. Retaliation.
13    (1) Whenever the existing or future laws of any other state
14or country shall require of companies incorporated or organized
15under the laws of this State as a condition precedent to their
16doing business in such other state or country, compliance with
17laws, rules, regulations, and prohibitions more onerous or
18burdensome than the rules and regulations imposed by this State
19on foreign or alien companies, or shall require any deposit of
20securities or other obligations in such state or country, for
21the protection of policyholders or otherwise or require of such
22companies or agents thereof or brokers the payment of
23penalties, fees, charges, or taxes greater than the penalties,
24fees, charges, or taxes required in the aggregate for like
25purposes by this Code or any other law of this State, of

 

 

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1foreign or alien companies, agents thereof or brokers, then
2such laws, rules, regulations, and prohibitions of said other
3state or country shall apply to companies incorporated or
4organized under the laws of such state or country doing
5business in this State, and all such companies, agents thereof,
6or brokers doing business in this State, shall be required to
7make deposits, pay penalties, fees, charges, and taxes, in
8amounts equal to those required in the aggregate for like
9purposes of Illinois companies doing business in such state or
10country, agents thereof or brokers. Whenever any other state or
11country shall refuse to permit any insurance company
12incorporated or organized under the laws of this State to
13transact business according to its usual plan in such other
14state or country, the director may, if satisfied that such
15company of this State is solvent, properly managed, and can
16operate legally under the laws of such other state or country,
17forthwith suspend or cancel the license of every insurance
18company doing business in this State which is incorporated or
19organized under the laws of such other state or country to the
20extent that it insures in this State against any of the risks
21or hazards which are sought to be insured against by the
22company of this State in such other state or country.
23    (2) The provisions of this Section shall not apply to
24residual market or special purpose assessments or guaranty fund
25or guaranty association assessments, both under the laws of
26this State and under the laws of any other state or country,

 

 

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1and any tax offset or credit for any such assessment shall, for
2purposes of this Section, be treated as a tax paid both under
3the laws of this State and under the laws of any other state or
4country.
5    (3) The terms "penalties", "fees", "charges", and "taxes"
6in subsection (1) of this Section shall include: the penalties,
7fees, charges, and taxes collected on a cash basis under State
8law and referenced within Article XXV exclusive of any items
9referenced by subsection (2) of this Section, but including any
10tax offset allowed under Section 531.13 of this Code; the
11aggregate Illinois corporate income taxes paid under Sections
12601 and 803 of the Illinois Income Tax Act during the calendar
13year for which the retaliatory tax calculation is being made,
14less the recapture of any Illinois corporate income tax cash
15refunds to the extent that the amount of tax refunded was
16reported as part of the Illinois basis in the calculation of
17the retaliatory tax for a prior tax year, provided that such
18recaptured refund shall not exceed the amount necessary for
19equivalence of the Illinois basis with the state of
20incorporation basis in such tax year, and after any tax offset
21allowed under Section 531.13 of this Code; income or personal
22property taxes imposed by other states or countries; penalties,
23fees, charges, and taxes of other states or countries imposed
24for purposes like those of the penalties, fees, charges, and
25taxes specified in Article XXV of this Code exclusive of any
26item referenced in subsection (2) of this Section; and any

 

 

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1penalties, fees, charges, and taxes required as a franchise,
2privilege, or licensing tax for conducting the business of
3insurance whether calculated as a percentage of income, gross
4receipts, premium, or otherwise.
5    (4) Nothing contained in this Section or Section 409 or
6Section 444.1 is intended to authorize or expand any power of
7local governmental units or municipalities to impose taxes,
8fees, or charges.
9    (5) This Section is subject to the provisions of Section 10
10of the New Markets Development Program Act.
11    (6) This Section is subject to the provisions of the Build
12Illinois Homes Tax Credit Act.
13(Source: P.A. 98-1169, eff. 1-9-15.)
 
14    Section 99. Effective date. This Act takes effect upon
15becoming law.