Full Text of HB0186 102nd General Assembly
HB0186 102ND GENERAL ASSEMBLY |
| | 102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022 HB0186 Introduced 1/22/2021, by Rep. Maurice A. West, II SYNOPSIS AS INTRODUCED: |
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Amends the Illinois Income Tax Act. Creates a credit against withholding tax payments for employers with 250 or fewer full-time equivalent employees in an amount equal to a percentage of the compensation paid to qualified employees who received a raise from the employer.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing 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 | 9 | | or is required to deduct and withhold tax under this Act on or | 10 | | after January 1, 2008 shall make those payments and returns as | 11 | | provided in this Section. | 12 | | (b) Returns. Every employer shall, in the form and manner | 13 | | required by the Department, make returns with respect to taxes | 14 | | withheld or required to be withheld under this Article 7 for | 15 | | each quarter beginning on or after January 1, 2008, on or | 16 | | before the last day of the first month following the close of | 17 | | that quarter. | 18 | | (c) Payments. With respect to amounts withheld or required | 19 | | to 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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| 1 | | and withholds or is required to deduct and withhold tax from a | 2 | | person engaged in domestic service employment, as that term is | 3 | | defined in Section 3510 of the Internal Revenue Code, may | 4 | | comply with the requirements of this Section with respect to | 5 | | such employees by filing an annual return and paying the taxes | 6 | | required to be deducted and withheld on or before the 15th day | 7 | | of the fourth month following the close of the employer's | 8 | | taxable year. The Department may allow the employer's return | 9 | | to be submitted with the employer's individual income tax | 10 | | return or to be submitted with a return due from the employer | 11 | | under Section 1400.2 of the Unemployment Insurance Act. | 12 | | (f) Magnetic media and electronic filing. With respect to | 13 | | taxes withheld in calendar years prior to 2017, any W-2 Form | 14 | | that, under the Internal Revenue Code and regulations | 15 | | promulgated thereunder, is required to be submitted to the | 16 | | Internal Revenue Service on magnetic media or electronically | 17 | | must also be submitted to the Department on magnetic media or | 18 | | electronically for Illinois purposes, if required by the | 19 | | Department. | 20 | | With respect to taxes withheld in 2017 and subsequent | 21 | | calendar years, the Department may, by rule, require that any | 22 | | return (including any amended return) under this Section and | 23 | | any W-2 Form that is required to be submitted to the Department | 24 | | must be submitted on magnetic media or electronically. | 25 | | The due date for submitting W-2 Forms shall be as | 26 | | prescribed by the Department by rule. |
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| 1 | | (g) For amounts deducted or withheld after December 31, | 2 | | 2009, a taxpayer who makes an election under subsection (f) of | 3 | | Section 5-15 of the Economic Development for a Growing Economy | 4 | | Tax Credit Act for a taxable year shall be allowed a credit | 5 | | against payments due under this Section for amounts withheld | 6 | | during the first calendar year beginning after the end of that | 7 | | taxable year equal to the amount of the credit for the | 8 | | incremental income tax attributable to full-time employees of | 9 | | the taxpayer awarded to the taxpayer by the Department of | 10 | | Commerce and Economic Opportunity under the Economic | 11 | | Development for a Growing Economy Tax Credit Act for the | 12 | | taxable year and credits not previously claimed and allowed to | 13 | | be carried forward under Section 211(4) of this Act as | 14 | | provided in subsection (f) of Section 5-15 of the Economic | 15 | | Development for a Growing Economy Tax Credit Act. The credit | 16 | | or credits may not reduce the taxpayer's obligation for any | 17 | | payment due under this Section to less than zero. If the amount | 18 | | of the credit or credits exceeds the total payments due under | 19 | | this Section with respect to amounts withheld during the | 20 | | calendar year, the excess may be carried forward and applied | 21 | | against the taxpayer's liability under this Section in the | 22 | | succeeding calendar years as allowed to be carried forward | 23 | | under paragraph (4) of Section 211 of this Act. The credit or | 24 | | credits shall be applied to the earliest year for which there | 25 | | is a tax liability. If there are credits from more than one | 26 | | taxable year that are available to offset a liability, the |
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| 1 | | earlier credit shall be applied first. Each employer who | 2 | | deducts and withholds or is required to deduct and withhold | 3 | | tax under this Act and who retains income tax withholdings | 4 | | under subsection (f) of Section 5-15 of the Economic | 5 | | Development for a Growing Economy Tax Credit Act must make a | 6 | | return with respect to such taxes and retained amounts in the | 7 | | form and manner that the Department, by rule, requires and pay | 8 | | to the Department or to a depositary designated by the | 9 | | Department those withheld taxes not retained by the taxpayer. | 10 | | For purposes of this subsection (g), the term taxpayer shall | 11 | | include taxpayer and members of the taxpayer's unitary | 12 | | business group as defined under paragraph (27) of subsection | 13 | | (a) of Section 1501 of this Act. This Section is exempt from | 14 | | the provisions of Section 250 of this Act. No credit awarded | 15 | | under the Economic Development for a Growing Economy Tax | 16 | | Credit Act for agreements entered into on or after January 1, | 17 | | 2015 may be credited against payments due under this Section. | 18 | | (h) An employer may claim a credit against payments due | 19 | | under this Section for amounts withheld during the first | 20 | | calendar year ending after the date on which a tax credit | 21 | | certificate was issued under Section 35 of the Small Business | 22 | | Job Creation Tax Credit Act. The credit shall be equal to the | 23 | | amount shown on the certificate, but may not reduce the | 24 | | taxpayer's obligation for any payment due under this Section | 25 | | to less than zero. If the amount of the credit exceeds the | 26 | | total payments due under this Section with respect to amounts |
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| 1 | | withheld during the calendar year, the excess may be carried | 2 | | forward and applied against the taxpayer's liability under | 3 | | this Section in the 5 succeeding calendar years. The credit | 4 | | shall be applied to the earliest year for which there is a tax | 5 | | liability. If there are credits from more than one calendar | 6 | | year that are available to offset a liability, the earlier | 7 | | credit shall be applied first. This Section is exempt from the | 8 | | provisions of Section 250 of this Act. | 9 | | (i) Each employer with 50 or fewer full-time equivalent | 10 | | employees during the reporting period may claim a credit | 11 | | against the payments due under this Section for each qualified | 12 | | employee in an amount equal to the maximum credit allowable. | 13 | | The credit may be taken against payments due for reporting | 14 | | periods that begin on or after January 1, 2020, and end on or | 15 | | before December 31, 2027. An employer may not claim a credit | 16 | | for an employee who has worked fewer than 90 consecutive days | 17 | | immediately preceding the reporting period; however, such | 18 | | credits may accrue during that 90-day period and be claimed | 19 | | against payments under this Section for future reporting | 20 | | periods after the employee has worked for the employer at | 21 | | least 90 consecutive days. In no event may the credit exceed | 22 | | the employer's liability for the reporting period. Each | 23 | | employer who deducts and withholds or is required to deduct | 24 | | and withhold tax under this Act and who retains income tax | 25 | | withholdings under this subsection must make a return with | 26 | | respect to such taxes and retained amounts in the form and |
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| 1 | | manner that the Department, by rule, requires and pay to the | 2 | | Department or to a depositary designated by the Department | 3 | | those withheld taxes not retained by the employer. | 4 | | For each reporting period, the employer may not claim a | 5 | | credit or credits for more employees than the number of | 6 | | employees making less than the minimum or reduced wage for the | 7 | | current calendar year during the last reporting period of the | 8 | | preceding calendar year. Notwithstanding any other provision | 9 | | of this subsection, an employer shall not be eligible for | 10 | | credits for a reporting period unless the average wage paid by | 11 | | the employer per employee for all employees making less than | 12 | | $55,000 during the reporting period is greater than the | 13 | | average wage paid by the employer per employee for all | 14 | | employees making less than $55,000 during the same reporting | 15 | | period of the prior calendar year. | 16 | | For purposes of this subsection (i): | 17 | | "Compensation paid in Illinois" has the meaning ascribed | 18 | | to that term under Section 304(a)(2)(B) of this Act. | 19 | | "Employer" and "employee" have the meaning ascribed to | 20 | | those terms in the Minimum Wage Law, except that "employee" | 21 | | also includes employees who work for an employer with fewer | 22 | | than 4 employees. Employers that operate more than one | 23 | | establishment pursuant to a franchise agreement or that | 24 | | constitute members of a unitary business group shall aggregate | 25 | | their employees for purposes of determining eligibility for | 26 | | the credit. |
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| 1 | | "Full-time equivalent employees" means the ratio of the | 2 | | number of paid hours during the reporting period and the | 3 | | number of working hours in that period. | 4 | | "Maximum credit" means the percentage listed below of the | 5 | | difference between the amount of compensation paid in Illinois | 6 | | to employees who are paid not more than the required minimum | 7 | | wage reduced by the amount of compensation paid in Illinois to | 8 | | employees who were paid less than the current required minimum | 9 | | wage during the reporting period prior to each increase in the | 10 | | required minimum wage on January 1. If an employer pays an | 11 | | employee more than the required minimum wage and that employee | 12 | | previously earned less than the required minimum wage, the | 13 | | employer may include the portion that does not exceed the | 14 | | required minimum wage as compensation paid in Illinois to | 15 | | employees who are paid not more than the required minimum | 16 | | wage. | 17 | | (1) 25% for reporting periods beginning on or after | 18 | | January 1, 2020 and ending on or before December 31, 2020; | 19 | | (2) 21% for reporting periods beginning on or after | 20 | | January 1, 2021 and ending on or before December 31, 2021; | 21 | | (3) 17% for reporting periods beginning on or after | 22 | | January 1, 2022 and ending on or before December 31, 2022; | 23 | | (4) 13% for reporting periods beginning on or after | 24 | | January 1, 2023 and ending on or before December 31, 2023; | 25 | | (5) 9% for reporting periods beginning on or after | 26 | | January 1, 2024 and ending on or before December 31, 2024; |
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| 1 | | (6) 5% for reporting periods beginning on or after | 2 | | January 1, 2025 and ending on or before December 31, 2025. | 3 | | The amount computed under this subsection may continue to | 4 | | be claimed for reporting periods beginning on or after January | 5 | | 1, 2026 and: | 6 | | (A) ending on or before December 31, 2026 for | 7 | | employers with more than 5 employees; or | 8 | | (B) ending on or before December 31, 2027 for | 9 | | employers with no more than 5 employees. | 10 | | "Qualified employee" means an employee who is paid not | 11 | | more than the required minimum wage and has an average wage | 12 | | paid per hour by the employer during the reporting period | 13 | | equal to or greater than his or her average wage paid per hour | 14 | | by the employer during each reporting period for the | 15 | | immediately preceding 12 months. A new qualified employee is | 16 | | deemed to have earned the required minimum wage in the | 17 | | preceding reporting period. | 18 | | "Reporting period" means the quarter for which a return is | 19 | | required to be filed under subsection (b) of this Section. | 20 | | (j) Each employer with 250 or fewer full-time equivalent | 21 | | employees during the reporting period may claim a credit | 22 | | against the payments due under this Section for each qualified | 23 | | employee in an amount equal to the credit amount. The credit | 24 | | may be taken against payments due for reporting periods that | 25 | | begin on or after January 1, 2022 and end on or before December | 26 | | 31, 2030. Credits for a particular qualified employee may not |
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| 1 | | be taken for reporting periods that begin more than 2 years | 2 | | after the effective date of the raise. An employer may not | 3 | | claim a credit for an employee who has worked fewer than 180 | 4 | | consecutive days immediately preceding the first day of the | 5 | | first pay period during which the raise is in effect. In no | 6 | | event may the credit exceed the employer's liability for the | 7 | | reporting period. Each employer who deducts and withholds or | 8 | | is required to deduct and withhold tax under this Act and who | 9 | | retains income tax withholdings under this subsection must | 10 | | make a return with respect to such taxes and retained amounts | 11 | | in the form and manner that the Department, by rule, requires | 12 | | and pay to the Department or to a depositary designated by the | 13 | | Department those withheld taxes not retained by the employer. | 14 | | Notwithstanding any other provision of this subsection, an | 15 | | employer is not eligible for credits under this subsection for | 16 | | a reporting period unless the average wage paid by the | 17 | | employer per employee for all employees making less than | 18 | | $52,000 during the reporting period is greater than the | 19 | | average wage paid by the employer per employee for all | 20 | | employees making less than $52,000 during the same reporting | 21 | | period of the prior calendar year. | 22 | | For purposes of this subsection (j): | 23 | | "Base period" means the employer's reporting period that | 24 | | immediately precedes the reporting period in which the | 25 | | qualified employee's raise takes effect. | 26 | | "Compensation paid in Illinois" has the meaning ascribed |
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| 1 | | to that term under paragraph (B) of item (2) of subsection (a) | 2 | | of Section 304 of this Act. | 3 | | "Credit amount" means the amount listed below: | 4 | | (1) 25% of the difference between the amount of | 5 | | compensation paid in Illinois by the employer to the | 6 | | qualified employee in the base period and the portion of | 7 | | the compensation paid in Illinois by the employer to the | 8 | | qualified employee in the reporting period for which the | 9 | | credit is taken that does not exceed $37,400 when | 10 | | annualized; plus | 11 | | (2) 20% of the compensation paid in Illinois by the | 12 | | employer to the qualified employee in the reporting period | 13 | | for which the credit is taken that exceeds the greater of | 14 | | (i) the amount of compensation paid in Illinois by the | 15 | | employer to the qualified employee in the base period or | 16 | | (ii) $37,400 when annualized but does not exceed $41,600 | 17 | | when annualized; plus | 18 | | (3) 15% of the compensation paid in Illinois by the | 19 | | employer to the qualified employee in the reporting period | 20 | | for which the credit is taken that exceeds the greater of | 21 | | (i) the amount of compensation paid in Illinois by the | 22 | | employer to the qualified employee in the base period or | 23 | | (ii) $41,600 when annualized but does not exceed $52,000 | 24 | | when annualized. | 25 | | "Employer" and "employee" have the meanings ascribed to | 26 | | those terms in the Minimum Wage Law, except that "employee" |
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| 1 | | also includes employees who work for an employer with fewer | 2 | | than 4 employees. Employers that operate more than one | 3 | | establishment pursuant to a franchise agreement or that | 4 | | constitute members of a unitary business group shall aggregate | 5 | | their employees for purposes of determining eligibility for | 6 | | the credit. | 7 | | "Full-time equivalent employee" means an individual who is | 8 | | employed for a basic wage for at least 35 hours each week or | 9 | | who renders any other standard of service generally accepted | 10 | | by industry custom or practice as full-time employment. | 11 | | "Qualified employee" means an employee who receives a | 12 | | raise from an employer, whose post-raise annual salary | 13 | | attributable to that employer is not less than $31,200, and | 14 | | who continues to be employed by the employer during the | 15 | | reporting period for which the credit is taken. | 16 | | "Raise" means a permanent increase in an employee's hourly | 17 | | pay or salary that does not result in reduced hours or reduced | 18 | | benefits and is not a temporary bonus. | 19 | | "Reporting period" means the quarter for which a return is | 20 | | required to be filed under subsection (b) of this Section. | 21 | | (Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17; | 22 | | 100-863, eff. 8-14-18; 101-1, eff. 2-19-19.)
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