103RD GENERAL ASSEMBLY
State of Illinois
2023 and 2024
HB3473

 

Introduced 2/17/2023, by Rep. Nabeela Syed

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/704A

    Amends the Illinois Income Tax Act. Provides that a credit against withholding taxes in an amount equal to the amount withheld with respect to wages paid by a private employer while the employee is on organ donation leave may not exceed $20,833.33 (rather than $1,000) for each employee who takes organ donation leave. Defines "Department" for these purposes to mean the Department of Revenue. Effective immediately.


LRB103 30991 HLH 57594 b

 

 

A BILL FOR

 

HB3473LRB103 30991 HLH 57594 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 Illinois Income Tax Act is amended by
5changing Section 704A as follows:
 
6    (35 ILCS 5/704A)
7    Sec. 704A. Employer's return and payment of tax withheld.
8    (a) In general, every employer who deducts and withholds
9or is required to deduct and withhold tax under this Act on or
10after January 1, 2008 shall make those payments and returns as
11provided in this Section.
12    (b) Returns. Every employer shall, in the form and manner
13required by the Department, make returns with respect to taxes
14withheld or required to be withheld under this Article 7 for
15each quarter beginning on or after January 1, 2008, on or
16before the last day of the first month following the close of
17that quarter.
18    (c) Payments. With respect to amounts withheld or required
19to be withheld on or after January 1, 2008:
20        (1) Semi-weekly payments. For each calendar year, each
21    employer who withheld or was required to withhold more
22    than $12,000 during the one-year period ending on June 30
23    of the immediately preceding calendar year, payment must

 

 

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1    be made:
2            (A) on or before each Friday of the calendar year,
3        for taxes withheld or required to be withheld on the
4        immediately preceding Saturday, Sunday, Monday, or
5        Tuesday;
6            (B) on or before each Wednesday of the calendar
7        year, for taxes withheld or required to be withheld on
8        the immediately preceding Wednesday, Thursday, or
9        Friday.
10        Beginning with calendar year 2011, payments made under
11    this paragraph (1) of subsection (c) must be made by
12    electronic funds transfer.
13        (2) Semi-weekly payments. Any employer who withholds
14    or is required to withhold more than $12,000 in any
15    quarter of a calendar year is required to make payments on
16    the dates set forth under item (1) of this subsection (c)
17    for each remaining quarter of that calendar year and for
18    the subsequent calendar year.
19        (3) Monthly payments. Each employer, other than an
20    employer described in items (1) or (2) of this subsection,
21    shall pay to the Department, on or before the 15th day of
22    each month the taxes withheld or required to be withheld
23    during the immediately preceding month.
24        (4) Payments with returns. Each employer shall pay to
25    the Department, on or before the due date for each return
26    required to be filed under this Section, any tax withheld

 

 

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1    or required to be withheld during the period for which the
2    return is due and not previously paid to the Department.
3    (d) Regulatory authority. The Department may, by rule:
4        (1) Permit employers, in lieu of the requirements of
5    subsections (b) and (c), to file annual returns due on or
6    before January 31 of the year for taxes withheld or
7    required to be withheld during the previous calendar year
8    and, if the aggregate amounts required to be withheld by
9    the employer under this Article 7 (other than amounts
10    required to be withheld under Section 709.5) do not exceed
11    $1,000 for the previous calendar year, to pay the taxes
12    required to be shown on each such return no later than the
13    due date for such return.
14        (2) Provide that any payment required to be made under
15    subsection (c)(1) or (c)(2) is deemed to be timely to the
16    extent paid by electronic funds transfer on or before the
17    due date for deposit of federal income taxes withheld
18    from, or federal employment taxes due with respect to, the
19    wages from which the Illinois taxes were withheld.
20        (3) Designate one or more depositories to which
21    payment of taxes required to be withheld under this
22    Article 7 must be paid by some or all employers.
23        (4) Increase the threshold dollar amounts at which
24    employers are required to make semi-weekly payments under
25    subsection (c)(1) or (c)(2).
26    (e) Annual return and payment. Every employer who deducts

 

 

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1and withholds or is required to deduct and withhold tax from a
2person engaged in domestic service employment, as that term is
3defined in Section 3510 of the Internal Revenue Code, may
4comply with the requirements of this Section with respect to
5such employees by filing an annual return and paying the taxes
6required to be deducted and withheld on or before the 15th day
7of the fourth month following the close of the employer's
8taxable year. The Department may allow the employer's return
9to be submitted with the employer's individual income tax
10return or to be submitted with a return due from the employer
11under Section 1400.2 of the Unemployment Insurance Act.
12    (f) Magnetic media and electronic filing. With respect to
13taxes withheld in calendar years prior to 2017, any W-2 Form
14that, under the Internal Revenue Code and regulations
15promulgated thereunder, is required to be submitted to the
16Internal Revenue Service on magnetic media or electronically
17must also be submitted to the Department on magnetic media or
18electronically for Illinois purposes, if required by the
19Department.
20    With respect to taxes withheld in 2017 and subsequent
21calendar years, the Department may, by rule, require that any
22return (including any amended return) under this Section and
23any W-2 Form that is required to be submitted to the Department
24must be submitted on magnetic media or electronically.
25    The due date for submitting W-2 Forms shall be as
26prescribed by the Department by rule.

 

 

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1    (g) For amounts deducted or withheld after December 31,
22009, a taxpayer who makes an election under subsection (f) of
3Section 5-15 of the Economic Development for a Growing Economy
4Tax Credit Act for a taxable year shall be allowed a credit
5against payments due under this Section for amounts withheld
6during the first calendar year beginning after the end of that
7taxable year equal to the amount of the credit for the
8incremental income tax attributable to full-time employees of
9the taxpayer awarded to the taxpayer by the Department of
10Commerce and Economic Opportunity under the Economic
11Development for a Growing Economy Tax Credit Act for the
12taxable year and credits not previously claimed and allowed to
13be carried forward under Section 211(4) of this Act as
14provided in subsection (f) of Section 5-15 of the Economic
15Development for a Growing Economy Tax Credit Act. The credit
16or credits may not reduce the taxpayer's obligation for any
17payment due under this Section to less than zero. If the amount
18of the credit or credits exceeds the total payments due under
19this Section with respect to amounts withheld during the
20calendar year, the excess may be carried forward and applied
21against the taxpayer's liability under this Section in the
22succeeding calendar years as allowed to be carried forward
23under paragraph (4) of Section 211 of this Act. The credit or
24credits shall be applied to the earliest year for which there
25is a tax liability. If there are credits from more than one
26taxable year that are available to offset a liability, the

 

 

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1earlier credit shall be applied first. Each employer who
2deducts and withholds or is required to deduct and withhold
3tax under this Act and who retains income tax withholdings
4under subsection (f) of Section 5-15 of the Economic
5Development for a Growing Economy Tax Credit Act must make a
6return with respect to such taxes and retained amounts in the
7form and manner that the Department, by rule, requires and pay
8to the Department or to a depositary designated by the
9Department those withheld taxes not retained by the taxpayer.
10For purposes of this subsection (g), the term taxpayer shall
11include taxpayer and members of the taxpayer's unitary
12business group as defined under paragraph (27) of subsection
13(a) of Section 1501 of this Act. This Section is exempt from
14the provisions of Section 250 of this Act. No credit awarded
15under the Economic Development for a Growing Economy Tax
16Credit Act for agreements entered into on or after January 1,
172015 may be credited against payments due under this Section.
18    (g-1) For amounts deducted or withheld after December 31,
192024, a taxpayer who makes an election under the Reimagining
20Electric Vehicles in Illinois Act shall be allowed a credit
21against payments due under this Section for amounts withheld
22during the first quarterly reporting period beginning after
23the certificate is issued equal to the portion of the REV
24Illinois Credit attributable to the incremental income tax
25attributable to new employees and retained employees as
26certified by the Department of Commerce and Economic

 

 

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1Opportunity pursuant to an agreement with the taxpayer under
2the Reimagining Electric Vehicles in Illinois Act for the
3taxable year. The credit or credits may not reduce the
4taxpayer's obligation for any payment due under this Section
5to less than zero. If the amount of the credit or credits
6exceeds the total payments due under this Section with respect
7to amounts withheld during the quarterly reporting period, the
8excess may be carried forward and applied against the
9taxpayer's liability under this Section in the succeeding
10quarterly reporting period as allowed to be carried forward
11under paragraph (4) of Section 211 of this Act. The credit or
12credits shall be applied to the earliest quarterly reporting
13period for which there is a tax liability. If there are credits
14from more than one quarterly reporting period that are
15available to offset a liability, the earlier credit shall be
16applied first. Each employer who deducts and withholds or is
17required to deduct and withhold tax under this Act and who
18retains income tax withholdings this subsection must make a
19return with respect to such taxes and retained amounts in the
20form and manner that the Department, by rule, requires and pay
21to the Department or to a depositary designated by the
22Department those withheld taxes not retained by the taxpayer.
23For purposes of this subsection (g-1), the term taxpayer shall
24include taxpayer and members of the taxpayer's unitary
25business group as defined under paragraph (27) of subsection
26(a) of Section 1501 of this Act. This Section is exempt from

 

 

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1the provisions of Section 250 of this Act.
2    (g-2) For amounts deducted or withheld after December 31,
32024, a taxpayer who makes an election under the Manufacturing
4Illinois Chips for Real Opportunity (MICRO) Act shall be
5allowed a credit against payments due under this Section for
6amounts withheld during the first quarterly reporting period
7beginning after the certificate is issued equal to the portion
8of the MICRO Illinois Credit attributable to the incremental
9income tax attributable to new employees and retained
10employees as certified by the Department of Commerce and
11Economic Opportunity pursuant to an agreement with the
12taxpayer under the Manufacturing Illinois Chips for Real
13Opportunity (MICRO) Act for the taxable year. The credit or
14credits may not reduce the taxpayer's obligation for any
15payment due under this Section to less than zero. If the amount
16of the credit or credits exceeds the total payments due under
17this Section with respect to amounts withheld during the
18quarterly reporting period, the excess may be carried forward
19and applied against the taxpayer's liability under this
20Section in the succeeding quarterly reporting period as
21allowed to be carried forward under paragraph (4) of Section
22211 of this Act. The credit or credits shall be applied to the
23earliest quarterly reporting period for which there is a tax
24liability. If there are credits from more than one quarterly
25reporting period that are available to offset a liability, the
26earlier credit shall be applied first. Each employer who

 

 

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1deducts and withholds or is required to deduct and withhold
2tax under this Act and who retains income tax withholdings
3this subsection must make a return with respect to such taxes
4and retained amounts in the form and manner that the
5Department, by rule, requires and pay to the Department or to a
6depositary designated by the Department those withheld taxes
7not retained by the taxpayer. For purposes of this subsection,
8the term taxpayer shall include taxpayer and members of the
9taxpayer's unitary business group as defined under paragraph
10(27) of subsection (a) of Section 1501 of this Act. This
11Section is exempt from the provisions of Section 250 of this
12Act.
13    (h) An employer may claim a credit against payments due
14under this Section for amounts withheld during the first
15calendar year ending after the date on which a tax credit
16certificate was issued under Section 35 of the Small Business
17Job Creation Tax Credit Act. The credit shall be equal to the
18amount shown on the certificate, but may not reduce the
19taxpayer's obligation for any payment due under this Section
20to less than zero. If the amount of the credit exceeds the
21total payments due under this Section with respect to amounts
22withheld during the calendar year, the excess may be carried
23forward and applied against the taxpayer's liability under
24this Section in the 5 succeeding calendar years. The credit
25shall be applied to the earliest year for which there is a tax
26liability. If there are credits from more than one calendar

 

 

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1year that are available to offset a liability, the earlier
2credit shall be applied first. This Section is exempt from the
3provisions of Section 250 of this Act.
4    (i) Each employer with 50 or fewer full-time equivalent
5employees during the reporting period may claim a credit
6against the payments due under this Section for each qualified
7employee in an amount equal to the maximum credit allowable.
8The credit may be taken against payments due for reporting
9periods that begin on or after January 1, 2020, and end on or
10before December 31, 2027. An employer may not claim a credit
11for an employee who has worked fewer than 90 consecutive days
12immediately preceding the reporting period; however, such
13credits may accrue during that 90-day period and be claimed
14against payments under this Section for future reporting
15periods after the employee has worked for the employer at
16least 90 consecutive days. In no event may the credit exceed
17the employer's liability for the reporting period. Each
18employer who deducts and withholds or is required to deduct
19and withhold tax under this Act and who retains income tax
20withholdings under this subsection must make a return with
21respect to such taxes and retained amounts in the form and
22manner that the Department, by rule, requires and pay to the
23Department or to a depositary designated by the Department
24those withheld taxes not retained by the employer.
25    For each reporting period, the employer may not claim a
26credit or credits for more employees than the number of

 

 

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1employees making less than the minimum or reduced wage for the
2current calendar year during the last reporting period of the
3preceding calendar year. Notwithstanding any other provision
4of this subsection, an employer shall not be eligible for
5credits for a reporting period unless the average wage paid by
6the employer per employee for all employees making less than
7$55,000 during the reporting period is greater than the
8average wage paid by the employer per employee for all
9employees making less than $55,000 during the same reporting
10period of the prior calendar year.
11    For purposes of this subsection (i):
12    "Compensation paid in Illinois" has the meaning ascribed
13to that term under Section 304(a)(2)(B) of this Act.
14    "Employer" and "employee" have the meaning ascribed to
15those terms in the Minimum Wage Law, except that "employee"
16also includes employees who work for an employer with fewer
17than 4 employees. Employers that operate more than one
18establishment pursuant to a franchise agreement or that
19constitute members of a unitary business group shall aggregate
20their employees for purposes of determining eligibility for
21the credit.
22    "Full-time equivalent employees" means the ratio of the
23number of paid hours during the reporting period and the
24number of working hours in that period.
25    "Maximum credit" means the percentage listed below of the
26difference between the amount of compensation paid in Illinois

 

 

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1to employees who are paid not more than the required minimum
2wage reduced by the amount of compensation paid in Illinois to
3employees who were paid less than the current required minimum
4wage during the reporting period prior to each increase in the
5required minimum wage on January 1. If an employer pays an
6employee more than the required minimum wage and that employee
7previously earned less than the required minimum wage, the
8employer may include the portion that does not exceed the
9required minimum wage as compensation paid in Illinois to
10employees who are paid not more than the required minimum
11wage.
12        (1) 25% for reporting periods beginning on or after
13    January 1, 2020 and ending on or before December 31, 2020;
14        (2) 21% for reporting periods beginning on or after
15    January 1, 2021 and ending on or before December 31, 2021;
16        (3) 17% for reporting periods beginning on or after
17    January 1, 2022 and ending on or before December 31, 2022;
18        (4) 13% for reporting periods beginning on or after
19    January 1, 2023 and ending on or before December 31, 2023;
20        (5) 9% for reporting periods beginning on or after
21    January 1, 2024 and ending on or before December 31, 2024;
22        (6) 5% for reporting periods beginning on or after
23    January 1, 2025 and ending on or before December 31, 2025.
24    The amount computed under this subsection may continue to
25be claimed for reporting periods beginning on or after January
261, 2026 and:

 

 

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1        (A) ending on or before December 31, 2026 for
2    employers with more than 5 employees; or
3        (B) ending on or before December 31, 2027 for
4    employers with no more than 5 employees.
5    "Qualified employee" means an employee who is paid not
6more than the required minimum wage and has an average wage
7paid per hour by the employer during the reporting period
8equal to or greater than his or her average wage paid per hour
9by the employer during each reporting period for the
10immediately preceding 12 months. A new qualified employee is
11deemed to have earned the required minimum wage in the
12preceding reporting period.
13    "Reporting period" means the quarter for which a return is
14required to be filed under subsection (b) of this Section.
15    (j) For reporting periods beginning on or after January 1,
162023, if a private employer grants all of its employees the
17option of taking a paid leave of absence of at least 30 days
18for the purpose of serving as an organ donor or bone marrow
19donor, then the private employer may take a credit against the
20payments due under this Section in an amount equal to the
21amount withheld under this Section with respect to wages paid
22while the employee is on organ donation leave, not to exceed
23$20,833.33 $1,000 in withholdings for each employee who takes
24organ donation leave. To be eligible for the credit, such a
25leave of absence must be taken without loss of pay, vacation
26time, compensatory time, personal days, or sick time for at

 

 

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1least the first 30 days of the leave of absence. The private
2employer shall adopt rules governing organ donation leave,
3including rules that (i) establish conditions and procedures
4for requesting and approving leave and (ii) require medical
5documentation of the proposed organ or bone marrow donation
6before leave is approved by the private employer. A private
7employer must provide, in the manner required by the
8Department, documentation from the employee's medical
9provider, which the private employer receives from the
10employee, that verifies the employee's organ donation. The
11private employer must also provide, in the manner required by
12the Department, documentation that shows that a qualifying
13organ donor leave policy was in place and offered to all
14qualifying employees at the time the leave was taken. For the
15private employer to receive the tax credit, the employee
16taking organ donor leave must allow for the applicable medical
17records to be disclosed to the Department. If the private
18employer cannot provide the required documentation to the
19Department, then the private employer is ineligible for the
20credit under this Section. A private employer must also
21provide, in the form required by the Department, any
22additional documentation or information required by the
23Department to administer the credit under this Section. The
24credit under this subsection (j) shall be taken within one
25year after the date upon which the organ donation leave
26begins. If the leave taken spans into a second tax year, the

 

 

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1employer qualifies for the allowable credit in the later of
2the 2 years. If the amount of credit exceeds the tax liability
3for the year, the excess may be carried and applied to the tax
4liability for the 3 taxable years following the excess credit
5year. The tax credit shall be applied to the earliest year for
6which there is a tax liability. If there are credits for more
7than one year that are available to offset liability, the
8earlier credit shall be applied first.
9    Nothing in this subsection (j) prohibits a private
10employer from providing an unpaid leave of absence to its
11employees for the purpose of serving as an organ donor or bone
12marrow donor; however, if the employer's policy provides for
13fewer than 30 days of paid leave for organ or bone marrow
14donation, then the employer shall not be eligible for the
15credit under this Section.
16    As used in this subsection (j):
17    "Department" means the Department of Revenue.
18    "Organ" means any biological tissue of the human body that
19may be donated by a living donor, including, but not limited
20to, the kidney, liver, lung, pancreas, intestine, bone, skin,
21or any subpart of those organs.
22    "Organ donor" means a person from whose body an organ is
23taken to be transferred to the body of another person.
24    "Private employer" means a sole proprietorship,
25corporation, partnership, limited liability company, or other
26entity with one or more employees. "Private employer" does not

 

 

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1include a municipality, county, State agency, or other public
2employer.
3    This subsection (j) is exempt from the provisions of
4Section 250 of this Act.
5(Source: P.A. 101-1, eff. 2-19-19; 102-669, eff. 11-16-21;
6102-700, Article 30, Section 30-5, eff. 4-19-22; 102-700,
7Article 110, Section 110-905, eff. 4-19-22; revised 6-1-22.)
 
8    Section 99. Effective date. This Act takes effect upon
9becoming law.