Full Text of HB1478 101st General Assembly
HB1478 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 HB1478 Introduced , by Rep. Tony McCombie SYNOPSIS AS INTRODUCED: |
| |
Creates the Manufacturing Job Destination Tax Credit Act and amends the Illinois Income Tax Act. Provides for a credit of 25% of the Illinois labor expenditures made by a manufacturing company in order to foster job creation and retention in Illinois. Authorizes the Department of Revenue to award a tax credit to taxpayer-employers who apply for the credit and meet the certain Illinois labor, job training, and apprenticeship requirements. Sets minimum requirements and procedures for certifying a taxpayer as an "accredited manufacturer" and for awarding the credit. Effective January 1, 2020.
|
| |
| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
|
| | | HB1478 | | LRB101 04732 HLH 49741 b |
|
| 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 1. Short title. This Act may be cited as the | 5 | | Manufacturing Job Destination Tax Credit Act. | 6 | | Section 10. Purpose. The General Assembly finds that the | 7 | | manufacturing sector is a crucial underpinning of the economy | 8 | | of the State of Illinois. Manufacturing employs approximately | 9 | | 570,000 workers directly in jobs that pay an average of more | 10 | | than $84,000 per year in wages and benefits. Total | 11 | | manufacturing output exceeded $103,000,000,000, contributing | 12 | | the single largest share of the Illinois Gross State Product. | 13 | | Ninety-three percent of Illinois exports are manufactured | 14 | | goods and services, totaling approximately $54,800,000,000. | 15 | | However, Illinois has lost more than 300,000 manufacturing jobs | 16 | | since 2000. Since the end of the recession in 2009, Illinois | 17 | | has gained only 8,300 manufacturing jobs while neighboring | 18 | | states have increased manufacturing employment by an average of | 19 | | 68,800 jobs. Illinois manufacturers are experiencing a skills | 20 | | gap with the need to find qualified workers to fill the | 21 | | pipeline before half of the workforce retires in the next 15 | 22 | | years. Therefore, it is in the best interest of the State to | 23 | | make Illinois the preferred destination for manufacturing and |
| | | HB1478 | - 2 - | LRB101 04732 HLH 49741 b |
|
| 1 | | to strengthen the existing industrial base in Illinois, thereby | 2 | | promoting job growth, increased capital investment, expanded | 3 | | exports, and long-term revenue growth for the State. | 4 | | Section 15. Definitions. As used in this Act: | 5 | | "Accredited manufacturer" means a manufacturer that has | 6 | | been certified by the Department. | 7 | | "Apprenticeship expense" means the amount incurred on | 8 | | behalf of a qualifying apprentice for tuition, book fees, and | 9 | | lab fees at the school or community college in which the | 10 | | apprentice is enrolled during the regular school year. | 11 | | "Credit" means an amount equal to 25% of the sum of the | 12 | | qualifying Illinois labor expenditures approved by the | 13 | | Department, the job training expenditures approved by the | 14 | | Department, and the apprenticeship expenses approved by the | 15 | | Department. The accredited manufacturer is deemed to have paid, | 16 | | on its balance due day for the year, an amount equal to 25% of | 17 | | its qualified Illinois labor expenditure for the tax year. | 18 | | "Department" means the Department of Revenue. | 19 | | "Director" means the Director of Revenue. | 20 | | "Illinois labor expenditure" means salary or wages paid to | 21 | | employees of an accredited manufacturer for services in | 22 | | Illinois after the effective date of this Act. | 23 | | To qualify as an Illinois labor expenditure, the | 24 | | expenditure must be: | 25 | | (1) Reasonable under the circumstances. |
| | | HB1478 | - 3 - | LRB101 04732 HLH 49741 b |
|
| 1 | | (2) Included in the federal income tax basis of the | 2 | | property. | 3 | | (3) Incurred by the accredited manufacturer for | 4 | | services on or after January 1, 2018. | 5 | | (4) Incurred for the production stages of the | 6 | | manufacturing process. | 7 | | (5) Limited to the first $25,000 of wages paid or | 8 | | incurred to each employee of the manufacturing company. | 9 | | (6) Exclusive of the salary or wages paid to or | 10 | | incurred for the 2 highest paid employees of the | 11 | | manufacturing company. | 12 | | (7) Directly attributable to the accredited | 13 | | manufacturer. | 14 | | (8) Paid in the tax year for which the applicant is | 15 | | claiming the credit or no later than 60 days after the end | 16 | | of the tax year. | 17 | | (9) Paid for services rendered in Illinois. | 18 | | "Job training expenditure" means all amounts paid or | 19 | | accrued on behalf of all persons employed by the taxpayer in | 20 | | the State for education or vocational training in | 21 | | semi-technical, semi-skilled, or skilled fields. | 22 | | "Qualifying apprentice" means an individual who (i) is a | 23 | | resident of the State of Illinois, (ii) is between the ages of | 24 | | 16 and 30 years old at the close of the school year for which a | 25 | | credit is sought, and (iii) during the school year for which a | 26 | | credit is sought was a full-time apprentice enrolled in an |
| | | HB1478 | - 4 - | LRB101 04732 HLH 49741 b |
|
| 1 | | apprenticeship program which is registered with the US | 2 | | Department of Labor, Office of Apprenticeship. | 3 | | "School" means any public or nonpublic secondary school in | 4 | | Illinois, or any community college that is in compliance with | 5 | | Title VI of the Civil Rights Act of 1964, except that nothing | 6 | | shall be construed to allow a student to attend a community | 7 | | college not a part of an approved apprenticeship program to | 8 | | qualify for the credit under this Section. | 9 | | Section 20. Tax credit awards. Subject to the conditions | 10 | | set forth in this Act, an accredited manufacturer is entitled | 11 | | to a credit of 25% of all qualifying Illinois labor | 12 | | expenditures approved by the Department. | 13 | | Section 25. Accredited manufacturing company | 14 | | certification. Any taxpayer may request certification as an | 15 | | accredited manufacturing company by formal application to the | 16 | | Department. In determining whether to issue an accredited | 17 | | manufacturing company certificate, the Department must | 18 | | determine that the following conditions exist: | 19 | | (1) The taxpayer is engaged primarily in the business | 20 | | of manufacturing goods. | 21 | | (2) The taxpayer intends to employ workers in the State | 22 | | of Illinois. | 23 | | (3) The taxpayer provides health insurance to its | 24 | | employees. |
| | | HB1478 | - 5 - | LRB101 04732 HLH 49741 b |
|
| 1 | | (4) The taxpayer provides to its employees either a | 2 | | pension plan or a 401k plan. | 3 | | (5) The taxpayer offers to its employees paid time-off | 4 | | benefits. | 5 | | (6) The taxpayer intends to expend a portion of its | 6 | | research and development budgets in the State of Illinois. | 7 | | Section 30. Issuance of manufacturing job destination tax | 8 | | credit certification. | 9 | | (a) In order to qualify for a tax credit under this Act, an | 10 | | accredited manufacturer must file, on forms prescribed by the | 11 | | Department, all information necessary to calculate the tax | 12 | | credit. | 13 | | (b) Upon satisfactory review of the application, the | 14 | | Department shall issue a manufacturing job destination tax | 15 | | credit certificate stating the amount of the tax credit. | 16 | | Section 35. Amount and duration of the credit. The amount | 17 | | of the credit awarded under this Act is based on the amount of | 18 | | qualifying Illinois labor expenditures approved by the | 19 | | Department in any tax year beginning on January 1, 2020 or | 20 | | thereafter for the applicant. | 21 | | Section 40. Evaluation of tax credit program. The | 22 | | Department shall evaluate the tax credit program annually. The | 23 | | evaluation must include an assessment of the effectiveness of |
| | | HB1478 | - 6 - | LRB101 04732 HLH 49741 b |
|
| 1 | | the program in creating and retaining jobs in Illinois, | 2 | | improving the skill level of workers, and of the revenue impact | 3 | | of the program and may include a review of the practices and | 4 | | experiences of other states or nations with similar programs. | 5 | | Upon completion of this evaluation, the Department shall | 6 | | determine the overall success of the program. | 7 | | Section 45. Program terms and conditions. Any documentary | 8 | | materials or data made available to or received by any agent or | 9 | | employee of the Department are confidential and are not public | 10 | | records to the extent that the materials or data consist of | 11 | | commercial or financial information regarding the | 12 | | manufacturing operation of the applicant for or recipient of | 13 | | any tax credit under this Act. | 14 | | Section 50. Appeals. If the Department denies a taxpayer | 15 | | certification under Section 25 of this Act, the denial must be | 16 | | in writing stating the reasons for the denial. The taxpayer | 17 | | shall have 60 days to correct any deficiency that was the | 18 | | reason for the initial denial of certification. | 19 | | If the Department again denies the certification, the | 20 | | taxpayer may appeal the denial within 60 days after the denial | 21 | | and request a hearing. At the hearing, if the taxpayer shows, | 22 | | by preponderance of evidence, that he or she has complied with | 23 | | the requirements of this Section, then the taxpayer shall be | 24 | | certified as an accredited manufacturer. |
| | | HB1478 | - 7 - | LRB101 04732 HLH 49741 b |
|
| 1 | | If the taxpayer disagrees with the Department about the | 2 | | amount of the tax credit available for any tax year, the | 3 | | taxpayer may appeal the certification and request a hearing. If | 4 | | the taxpayer shows, by a preponderance of evidence, that he or | 5 | | she is entitled to a larger amount, the Department shall | 6 | | approve the larger amount. However, in no instance may the | 7 | | Department determine a lesser amount. | 8 | | The provisions of the Administrative Review Law, and the | 9 | | rules adopted pursuant thereto, apply to and govern all | 10 | | proceedings for the judicial review of this Act. | 11 | | Section 90. The Illinois Income Tax Act is amended by | 12 | | adding Section 229 as follows:
| 13 | | (35 ILCS 5/229 new) | 14 | | Sec. 229. Manufacturing job destination tax credit. For tax | 15 | | years beginning on or after January 1, 2020, a taxpayer who has | 16 | | been awarded a tax credit under the Manufacturing Job | 17 | | Destination Tax Credit Act is entitled to a credit against the | 18 | | taxes imposed under subsections (a) and (b) of Section 201 of | 19 | | this Act in an amount determined by the Department under the | 20 | | Manufacturing Job Destination Tax Credit Act. If the taxpayer | 21 | | is a partnership or Subchapter S corporation, the credit is | 22 | | allowed to the partners or shareholders in accordance with the | 23 | | determination of income and distributive share of income under | 24 | | Sections 702 and 704 and Subchapter S of the Internal Revenue |
| | | HB1478 | - 8 - | LRB101 04732 HLH 49741 b |
|
| 1 | | Code. The Department must prescribe rules to enforce and | 2 | | administer the provisions of this Section. This Section is | 3 | | exempt from the provisions of Section 250 of this Act. | 4 | | The credit is non-refundable, but may be sold, transferred, | 5 | | or conveyed to other taxpayers who are primarily engaged in | 6 | | manufacturing. | 7 | | The credit may not be carried forward or back. In no event | 8 | | shall a credit under this Section reduce the taxpayer's | 9 | | liability to less than zero.
| 10 | | Section 99. Effective date. This Act takes effect January | 11 | | 1, 2020.
|
|