Illinois General Assembly - Full Text of SB3459
Illinois General Assembly

Previous General Assemblies

Full Text of SB3459  99th General Assembly

SB3459 99TH GENERAL ASSEMBLY

  
  

 


 
99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
SB3459

 

Introduced 1/9/2017, by Sen. Pamela J. Althoff - Melinda Bush - Neil Anderson - James F. Clayborne, Jr. - Toi W. Hutchinson, et al.

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/224 new

    Creates the Transforming, Helping, and Reviving Illinois' Versatile Economy (THRIVE) Job Creation Tax Credit Act. Provides that the Department of Commerce and Economic Opportunity shall award the credit if the taxpayer meets certain criteria. Contains job creation and capital investment requirements. Provides that the credit may not exceed 50% of the incremental income tax attributable to the applicant's project. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.


LRB099 24221 HLH 52021 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3459LRB099 24221 HLH 52021 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
5Transforming, Helping, and Reviving Illinois' Versatile
6Economy (THRIVE) Job Creation Tax Credit Act.
 
7    Section 5. Definitions.
8    "Agreement" means the Agreement between a taxpayer and the
9Department for tax credits under this Act.
10    "Applicant" means a taxpayer that is operating a business
11located within, or that the taxpayer plans to locate within,
12the State and that is engaged in interstate or intrastate
13commerce for the purpose of manufacturing, processing,
14assembling, warehousing, or distributing products, conducting
15research and development, providing tourism services, or
16providing services in interstate commerce, office industries,
17or agricultural processing, but excluding retail, retail food,
18health, or professional services. "Applicant" does not include
19a taxpayer who closes or substantially reduces an operation at
20one location in the State and relocates substantially the same
21operation to another location in the State. This does not
22prohibit a taxpayer from expanding its operations at another
23location in the State, provided that existing operations of a

 

 

SB3459- 2 -LRB099 24221 HLH 52021 b

1similar nature located within the State are not closed or
2substantially reduced. This also does not prohibit a taxpayer
3from moving its operations from one location in the State to
4another location in the State for the purpose of expanding the
5operation, provided that the Department determines that
6expansion cannot reasonably be accommodated within the
7municipality in which the business is located, or, in the case
8of a business located in an incorporated area of the county,
9within the county in which the business is located, after
10conferring with the chief elected official of the municipality
11or county and taking into consideration any evidence offered by
12the municipality or county regarding the ability to accommodate
13expansion within the municipality or county.
14    "Credit" means the amount agreed to between the Department
15and applicant under this Act, but not to exceed 50% of the
16incremental income tax attributable to the applicant's
17project.
18    "Department" means the Department of Commerce and Economic
19Opportunity.
20    "Full-time employee" means an individual who is employed
21for consideration for at least 35 hours each week. An
22individual for whom a W-2 is issued by a Professional Employer
23Organization (PEO) is a full-time employee if employed in the
24service of the applicant for consideration for at least 35
25hours each week.
26    "Incremental income tax" means the total amount withheld

 

 

SB3459- 3 -LRB099 24221 HLH 52021 b

1during the taxable year from the compensation of new employees
2under Article 7 of the Illinois Income Tax Act arising from
3employment at a project that is the subject of an agreement.
4    "New employee" means a full-time employee first employed by
5a taxpayer in the project that is the subject of an agreement
6and who is hired after the taxpayer enters into the tax credit
7agreement. The term "new employee" does not include:
8        (1) an employee of the taxpayer who performs a job that
9    was previously performed by another employee, if that job
10    existed for at least 6 months before the employee was hired
11    by the taxpayer;
12        (2) an employee of the taxpayer who was previously
13    employed in Illinois by a related member of the taxpayer
14    and whose employment was shifted to the taxpayer after the
15    taxpayer entered into the agreement; or
16        (3) a child, grandchild, parent, or spouse, other than
17    a spouse who is legally separated from the individual, of
18    any individual who has a direct or an indirect ownership
19    interest of at least 5% in the profits, capital, or value
20    of the taxpayer.
21    Notwithstanding paragraph (1) above, an employee may be
22considered a new employee under the agreement if the employee
23performs a job that was previously performed by an employee who
24was:
25        (1) treated under the agreement as a new employee; and
26        (2) promoted by the taxpayer to another job.

 

 

SB3459- 4 -LRB099 24221 HLH 52021 b

1    An employee hired prior to the date of the Agreement who
2otherwise qualifies as a new employee may be considered a new
3employee if:
4        (1) the applicant is in receipt of a letter from the
5    Department stating an intent to enter into a credit
6    agreement;
7        (2) that letter is issued by the Department not later
8    than 15 days after the effective date of this Act; and
9        (3) the employee was hired after the date the letter
10    was issued.
11    "Noncompliance date" means, in the case of a taxpayer that
12is not complying with the requirements of the agreement or the
13provisions of this Act, the day following the last date upon
14which the taxpayer was in compliance with the requirements of
15the agreement and the provisions of this Act, as determined by
16the Director.
17    "Professional Employer Organization" or "PEO" means an
18employee leasing company, as defined in Section 206.1(A)(2) of
19the Illinois Unemployment Insurance Act.
20    "Related member" means a person that, with respect to the
21taxpayer during any portion of the taxable year, is any one of
22the following:
23        (1) an individual stockholder, if the stockholder and
24    the members of the stockholder's family (as defined in
25    Section 318 of the Internal Revenue Code) own directly,
26    indirectly, beneficially, or constructively, in the

 

 

SB3459- 5 -LRB099 24221 HLH 52021 b

1    aggregate, at least 50% of the value of the taxpayer's
2    outstanding stock;
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 value of the
8    taxpayer;
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 to the party or from the
12    party to the corporation under the attribution rules of
13    Section 318 of the Internal Revenue Code, if the taxpayer
14    owns directly, indirectly, beneficially, or constructively
15    at least 50% of the value of the corporation's outstanding
16    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    value of the taxpayer; and
25        (5) a person to or from whom there is attribution of
26    stock ownership in accordance with Section 1563(e) of the

 

 

SB3459- 6 -LRB099 24221 HLH 52021 b

1    Internal Revenue Code, except, for purposes of determining
2    whether a person is a related member under this paragraph,
3    20% shall be substituted for 5% wherever 5% appears in
4    Section 1563(e) of the Internal Revenue Code.
5    "Taxpayer" means an individual, corporation, partnership,
6or other entity that has any Illinois income tax liability.
 
7    Section 10. Powers of the Department. The Department, in
8addition to those powers granted under the Civil Administrative
9Code of Illinois, is granted and shall have all the powers
10necessary or convenient to carry out and effectuate the
11purposes and provisions of this Act, including, but not limited
12to, power and authority to:
13        (1) Promulgate procedures or regulations deemed
14    necessary and appropriate for the administration of the
15    programs; establish forms for applications, notifications,
16    contracts, or any other agreements; and accept
17    applications at any time during the year.
18        (2) Provide and assist taxpayers pursuant to the
19    provisions of this Act, and cooperate with taxpayers that
20    are parties to agreements to promote, foster, and support
21    economic development, capital investment, and job creation
22    within the State.
23        (3) Enter into agreements and memoranda of
24    understanding for participation of and engage in
25    cooperation with agencies of the federal government, units

 

 

SB3459- 7 -LRB099 24221 HLH 52021 b

1    of local government, universities, research foundations or
2    institutions, regional economic development corporations,
3    or other organizations for the purposes of this Act.
4        (4) Gather information and conduct inquiries, in the
5    manner and by the methods as it deems desirable, including
6    without limitation, gathering information with respect to
7    applicants for the purpose of making any designations or
8    certifications necessary or desirable in the furtherance
9    of the purposes of this Act.
10        (5) Establish, negotiate, and effectuate any term,
11    agreement or other document with any person, necessary or
12    appropriate to accomplish the purposes of this Act; and to
13    consent, subject to the provisions of any agreement with
14    another party, to the modification or restructuring of any
15    agreement to which the Department is a party.
16        (6) Fix, determine, charge, and collect any premiums,
17    fees, charges, costs, and expenses from Applicants,
18    including, without limitation, any application fees,
19    commitment fees, program fees, financing charges, or
20    publication fees as deemed appropriate to pay expenses
21    necessary or incident to the administration, staffing, or
22    operation in connection with the Department's activities
23    under this Act, or for preparation, implementation, and
24    enforcement of the terms of the agreement, or for
25    consultation, advisory and legal fees, and other costs;
26    however, all fees and expenses incident thereto shall be

 

 

SB3459- 8 -LRB099 24221 HLH 52021 b

1    the responsibility of the applicant.
2        (7) Provide for sufficient personnel to permit
3    administration, staffing, operation, and related support
4    required to adequately discharge its duties and
5    responsibilities described in this Act from funds made
6    available through charges to applicants or from funds as
7    may be appropriated by the General Assembly for the
8    administration of this Act.
9        (8) Require applicants, upon written request, to issue
10    any necessary authorization to the appropriate federal,
11    State, or local authority for the release of information
12    concerning a project being considered under the provisions
13    of this Act, with the information requested to include, but
14    not be limited to, financial reports, returns, or records
15    relating to the taxpayer or its project.
16        (9) Require that a taxpayer shall at all times keep
17    proper books of record and account in accordance with
18    generally accepted accounting principles consistently
19    applied, with the books, records, or papers related to the
20    agreement in the custody or control of the taxpayer open
21    for reasonable Department inspection and audits, and
22    including, without limitation, the making of copies of the
23    books, records, or papers, and the inspection or appraisal
24    of any of the taxpayer or project assets.
25        (10) Take whatever actions are necessary or
26    appropriate to protect the State's interest in the event of

 

 

SB3459- 9 -LRB099 24221 HLH 52021 b

1    bankruptcy, default, foreclosure, or noncompliance with
2    the terms and conditions of financial assistance or
3    participation required under this Act, including the power
4    to sell, dispose, lease, or rent, upon terms and conditions
5    determined by the Director to be appropriate, real or
6    personal property that the Department may receive as a
7    result of these actions.
 
8    Section 15. Tax credit awards. Subject to the conditions
9set forth in this Act, a taxpayer is entitled to a credit
10against the taxes imposed pursuant to subsections (a) and (b)
11of Section 201 of the Illinois Income Tax Act if the Taxpayer
12is awarded a Credit by the Department under this Act for that
13taxable year.
14    The Department shall make credit awards under this Act to
15foster job creation in Illinois.
16    A person that proposes a project to create new jobs in
17Illinois must enter into an agreement with the Department for
18the credit under this Act.
19    The credit shall be claimed for the taxable years specified
20in the agreement.
21    The credit shall not exceed 50% of the incremental income
22tax attributable to the project that is the subject of the
23agreement.
24    Nothing herein shall prohibit a tax credit award to an
25applicant that uses a PEO if all other award criteria are

 

 

SB3459- 10 -LRB099 24221 HLH 52021 b

1satisfied.
2    Credits awarded under this Act are transferable through the
3Department at the discretion of the Director within 2 years
4after the credit is awarded. Credits may be transferred only to
5a single taxpayer or to common entities within a single
6ownership structure and may not be transferred more than once.
7The Department shall maintain an online information portal
8where entities anticipating the purchase or sale of credits
9shall register their intent to do so. The Department may retain
10up to 5% of the transferred credit amount, and that amount
11shall be invested consistent with the clawback provisions set
12forth in Section 43 of this Act.
13    For partners, shareholders of Subchapter S corporations,
14and owners of limited liability companies, if the liability
15company is treated as a partnership for purposes of federal and
16State income taxation, the credit under this Act shall be
17determined in accordance with the determination of income and
18distributive share of income under Sections 702 and 704 and
19Subchapter S of the Internal Revenue Code or as allowed under
20the agreement with the Department.
21    An applicant may not receive more than one credit award for
22the same location.
 
23    Section 20. Application for a project to create new jobs.
24    (a) Any taxpayer proposing a project located or planned to
25be located in Illinois may request consideration for

 

 

SB3459- 11 -LRB099 24221 HLH 52021 b

1designation of its project, by formal application to the
2Department in which the applicant states its intent to meet the
3criteria set forth in this Section.
4    (b) The applicant's project must: (1) employ a number of
5new employees equal to the lesser of (A) 10% of the number of
6employees employed by the applicant on the date the application
7is filed with the Department or (B) 50 new employees; and (2)
8involve a capital investment of at least $2,500,000 at a
9project location in the State, except that, if the applicant
10employs fewer than 100 employees on the date the application is
11filed with the Department, then the applicant's capital
12investment may be less than $500,000 if the capital investment
13is approved by the Department at the time of the application.
14    (c) The Department may enter into an agreement with the
15applicant if the application is accepted.
 
16    Section 25. Relocation of jobs within Illinois; baseline
17employment. A taxpayer is not entitled to claim the credit
18provided by this Act with respect to any jobs that the taxpayer
19relocates from one site in Illinois to another site in
20Illinois. In addition, a taxpayer is not entitled to claim a
21credit under this Act for a taxable year if the average number
22of full-time employees employed by the taxpayer in this State
23during that taxable year is less than the average number of
24full-time employees employed by the taxpayer in this State in
25the taxable year prior to taxable year in which the credit was

 

 

SB3459- 12 -LRB099 24221 HLH 52021 b

1first awarded. If the project is a qualifying project certified
2under the Corporate Headquarters Relocation Act, however, then
3the taxpayer is not subject to the requirements of this Section
4but is nevertheless considered an applicant for purposes of
5this Act. Moreover, any full-time employee of an eligible
6business relocated to Illinois in connection with that
7qualifying project is deemed to be a new employee for purposes
8of this Act. Determinations under this Section shall be made by
9the Department and at the Department's discretion.
 
10    Section 30. Determination of amount of the credit. In
11determining the amount of the credit that should be awarded,
12the Department may take into consideration, the following
13factors:
14        (1) The number and location of jobs created in relation
15    to the economy of the county where the projected investment
16    is to occur.
17        (2) The potential impact on the economy of Illinois.
18        (3) The magnitude of the cost differential between
19    Illinois and the competing state.
20        (4) The incremental payroll attributable to the
21    project.
22        (5) The capital investment attributable to the
23    project.
24        (6) The amount of the average wage and benefits paid by
25    the applicant in relation to the wage and benefits of the

 

 

SB3459- 13 -LRB099 24221 HLH 52021 b

1    area of the project.
2        (7) The costs to Illinois and the affected political
3    subdivisions with respect to the project.
4        (8) The financial assistance that is otherwise
5    provided by Illinois and the affected political
6    subdivisions.
 
7    Section 35. Duration of the credit. The duration of the
8credit may not exceed 10 taxable years, except that, if the
9project is located in a census tract with an unemployment rate
10that is greater than 150% of the State unemployment rate at the
11time the application is filed with the Department, then the
12duration of the credit may not exceed 15 taxable years. The
13credit may not exceed the amount of taxes imposed pursuant to
14subsections (a) and (b) of Section 201 of the Illinois Income
15Tax Act. Any credit that is unused in the year the credit is
16computed may be carried forward and applied to the tax
17liability of the 5 taxable years following the excess credit
18year. The credit shall be applied to the earliest year for
19which there is a tax liability. If there are credits from more
20than one tax year that are available to offset a liability, the
21earlier credit shall be applied first.
 
22    Section 40. Contents of agreements with applicants. The
23Department shall enter into an agreement with an applicant that
24is awarded a credit under this Act. The agreement must include

 

 

SB3459- 14 -LRB099 24221 HLH 52021 b

1all of the following:
2        (1) A detailed description of the project that is the
3    subject of the agreement, including the location and amount
4    of the investment and jobs created.
5        (2) The duration of the credit and the first taxable
6    year for which the credit may be claimed.
7        (3) The credit amount that will be allowed for each
8    taxable year.
9        (4) A requirement that the taxpayer shall maintain
10    operations at the project location that shall be stated as
11    a minimum number of years not to exceed 10.
12        (5) A requirement that the Department is authorized to
13    verify with the appropriate State agencies the amounts
14    reported under paragraph (5), and after doing so shall
15    issue a certificate to the taxpayer stating that the
16    amounts have been verified.
17        (6) A requirement that the taxpayer shall provide
18    written notification to the Department not more than 30
19    days after the taxpayer makes or receives a proposal that
20    would transfer the taxpayer's State tax liability
21    obligations to a successor taxpayer.
22        (7) A detailed description of the number of new
23    employees to be hired, and the occupation and payroll of
24    the full-time jobs to be created as a result of the
25    project.
26        (8) The minimum investment the business enterprise

 

 

SB3459- 15 -LRB099 24221 HLH 52021 b

1    will make in capital improvements, the time period for
2    placing the property in service, and the designated
3    location in Illinois for the investment.
4        (9) A requirement that the taxpayer shall provide
5    written notification to the Department not more than 30
6    days after the taxpayer determines that the minimum job
7    creation, employment payroll, or investment no longer is
8    being or will be achieved or maintained as set forth in the
9    terms and conditions of the agreement.
10        (10) A provision specifying that, if the taxpayer
11    ceases principal operations with the intent to shut down
12    the project in the State permanently, then the entire
13    credit amount awarded to the taxpayer prior to the date the
14    taxpayer ceases principal operations shall be returned to
15    the Department and shall be reallocated to the local
16    workforce investment area in which the project was located
17    as provided in Section 43.
18        (11) Any other performance conditions or contract
19    provisions as the Department determines are appropriate.
 
20    Section 43. Taxpayer ceases principal operations. If the
21taxpayer ceases principal operations at the project location
22during the term of the agreement with the intent to shut down
23the project in the State permanently, then the entire credit
24amount awarded to the taxpayer prior to the date the taxpayer
25ceases principal operations shall be returned to the Department

 

 

SB3459- 16 -LRB099 24221 HLH 52021 b

1and shall be reallocated to the local workforce investment area
2in which the project was located for the purposes of workforce
3development, expanded opportunities for unemployed persons,
4and expanded opportunities for women and minorities in the
5workforce.
 
6    Section 45. Certificate of verification; submission to the
7Department of Revenue. A taxpayer claiming a credit under this
8Act shall submit to the Department of Revenue a copy of the
9certificate of verification under this Act for the taxable
10year. However, failure to submit a copy of the certificate with
11the taxpayer's tax return shall not invalidate a claim for a
12credit.
13    For a taxpayer to be eligible for a certificate of
14verification, the taxpayer shall provide proof as required by
15the Department prior to the end of each calendar year,
16including, but not limited to, attestation by the Taxpayer that
17the project continues to meet the terms of the agreement.
 
18    Section 50. Noncompliance; notice; assessment. If the
19Department determines that a taxpayer who has received a credit
20under this Act is not complying with the requirements of the
21agreement or all of the provisions of this Act, the Department
22shall provide notice to the taxpayer of the alleged
23noncompliance, and allow the taxpayer a hearing under the
24provisions of the Illinois Administrative Procedure Act. If,

 

 

SB3459- 17 -LRB099 24221 HLH 52021 b

1after such notice and any hearing, the Department determines
2that a noncompliance exists, the Department shall issue to the
3Department of Revenue notice to that effect, stating the
4noncompliance date.
 
5    Section 55. Rules. The Department may adopt rules under the
6Illinois Administrative Procedure Act necessary to implement
7this Act.
 
8    Section 800. The Illinois Income Tax Act is amended by
9adding Section 224 as follows:
 
10    (35 ILCS 5/224 new)
11    Sec. 224. Transforming, Helping, and Reviving Illinois'
12Versatile Economy (THRIVE) Job Creation Tax Credit. For taxable
13years beginning on on after January 1, 2017, a taxpayer who has
14been granted a credit under the Transforming, Helping, and
15Reviving Illinois' Versatile Economy (THRIVE) Job Creation Tax
16Credit Act is entitled to a credit against the taxes imposed
17under subsections (a) and (b) of Section 201 as provided in
18that Act.
 
19    Section 999. Effective date. This Act takes effect upon
20becoming law.