97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3564

 

Introduced 2/24/2011, by Rep. Darlene J. Senger - Sidney H. Mathias - Chris Nybo - Dwight Kay - Patricia R. Bellock, et al.

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/704  from Ch. 120, par. 7-704
35 ILCS 10/5-16 new

    Amends the Economic Development for a Growing Economy Tax Credit Act. Provides that an applicant who has been awarded a Credit under the Act may, in the applicant's sole discretion, opt to retain taxes withheld under the Illinois Income Tax Act in lieu of an income tax credit. Provides that the amount of withheld taxes retained by the applicant in a taxable year may not exceed the amount of the Credit awarded by the Department of Commerce and Economic Opportunity for that taxable year. Provides that each employee whose taxes were withheld by an employer who retains amounts under this subsection must receive credit for 100% of the taxes withheld from his or her pay. Requires the Department to report annually to the Governor and the General Assembly on the progress of the incentive payment program. Amends the Illinois Income Tax Act to make corresponding changes concerning tax withholding. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning economic development.
 
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 704 as follows:
 
6    (35 ILCS 5/704)  (from Ch. 120, par. 7-704)
7    Sec. 704. Employer's Return and Payment of Tax Withheld.
8    (a) In general, every employer who deducts and withholds or
9is required to deduct and withhold tax under this Act prior to
10January 1, 2008, shall make such payments and returns as
11provided in this Section.
12    (b) Quarter Monthly Payments: Returns. Every employer who
13deducts and withholds or is required to deduct and withhold tax
14under this Act shall, on or before the third banking day
15following the close of a quarter monthly period, pay to the
16Department or to a depositary designated by the Department,
17pursuant to regulations prescribed by the Department, the taxes
18so required to be deducted and withheld, whenever the aggregate
19amount withheld by such employer (together with amounts
20previously withheld and not paid to the Department) exceeds
21$1,000. For purposes of this Section, Saturdays, Sundays, legal
22holidays and local bank holidays are not banking days. A
23quarter monthly period, for purposes of this subsection, ends

 

 

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1on the 7th, 15th, 22nd and last day of each calendar month.
2Every such employer shall for each calendar quarter, on or
3before the last day of the first month following the close of
4such quarter, and for the calendar year, on or before January
531 of the succeeding calendar year, make a return with respect
6to such taxes in such form and manner as the Department may by
7regulations prescribe, and pay to the Department or to a
8depositary designated by the Department all withheld taxes not
9previously paid to the Department.
10    (c) Monthly Payments: Returns. Every employer required to
11deduct and withhold tax under this Act shall, on or before the
1215th day of the second and third months of each calendar
13quarter, and on or before the last day of the month following
14the last month of each such quarter, pay to the Department or
15to a depositary designated by the Department, pursuant to
16regulations prescribed by the Department, the taxes so required
17to be deducted and withheld, whenever the aggregate amount
18withheld by such employer (together with amounts previously
19withheld and not paid to the Department) exceeds $500 but does
20not exceed $1,000. Every such employer shall for each calendar
21quarter, on or before the last day of the first month following
22the close of such quarter, and for the calendar year, on or
23before January 31 of the succeeding calendar year, make a
24return with respect to such taxes in such form and manner as
25the Department may by regulations prescribe, and pay to the
26Department or to a depositary designated by the Department all

 

 

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1withheld taxes not previously paid to the Department.
2    (d) Annual Payments: Returns. Where the amount of
3compensation paid by an employer is not sufficient to require
4the withholding of tax from the compensation of any of its
5employees (or where the aggregate amount withheld is less than
6$500), the Department may by regulation permit such employer to
7file only an annual return and to pay the taxes required to be
8deducted and withheld at the time of filing such annual return.
9    (e) Annual Return. The Department may, as it deems
10appropriate, prescribe by regulation for the filing of annual
11returns in lieu of quarterly returns described in subsections
12(b) and (c).
13    (e-5) Annual Return and Payment. On and after January 1,
141998, notwithstanding subsections (b) through (d) of this
15Section, every employer who deducts and withholds or is
16required to deduct and withhold tax from a person engaged in
17domestic service employment, as that term is defined in Section
183510 of the Internal Revenue Code, may comply with the
19requirements of this Section by filing an annual return and
20paying the taxes required to be deducted and withheld on or
21before the 15th day of the fourth month following the close of
22the employer's taxable year. The annual return may be submitted
23with the employer's individual income tax return.
24    (f) Magnetic Media Filing. Forms W-2 that, pursuant to the
25Internal Revenue Code and regulations promulgated thereunder,
26are required to be submitted to the Internal Revenue Service on

 

 

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1magnetic media, must also be submitted to the Department on
2magnetic media for Illinois purposes, if required by the
3Department.
4    (g) EDGE Credit assistance. Every employer who deducts and
5withholds or is required to deduct and withhold tax under this
6Act who retains income tax withholdings under Section 5-16 of
7the Economic Development for a Growing Economy Tax Credit Act
8must make a return with respect to such taxes and retained
9amounts in the form and manner that the Department, by rule,
10requires and pay to the Department or to a depositary
11designated by the Department those withheld taxes not retained
12by the taxpayer.
13(Source: P.A. 95-8, eff. 6-29-07.)
 
14    Section 10. The Economic Development for a Growing Economy
15Tax Credit Act is amended by adding Section 5-16 as follows:
 
16    (35 ILCS 10/5-16 new)
17    Sec. 5-16. Optional retention income tax withholding.
18    (a) An applicant who has been awarded a Credit under this
19this Act may, in the applicant's sole discretion, opt to retain
20taxes withheld under Article 7 of the Illinois Income Tax Act
21in lieu of an income tax credit. The amount of withheld taxes
22retained by the applicant in a taxable year may not exceed the
23amount of the Credit awarded by the Department for that taxable
24year.

 

 

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1    (b) Each employee whose taxes were withheld by an employer
2who retains amounts under this subsection must receive credit
3for 100% of the taxes withheld from his or her pay.
4    (c) The Department shall file annual reports with the
5General Assembly and the Governor on or before January 1 each
6year concerning the applicants' retention of withheld taxes
7during the previous year and regarding the progress this
8assistance has made in advancing economic development in
9Illinois and its various regions.
 
10    Section 99. Effective date. This Act takes effect upon
11becoming law.