State of Illinois
90th General Assembly
Legislation

   [ Search ]   [ Legislation ]   [ Bill Summary ]
[ Home ]   [ Back ]   [ Bottom ]


[ Engrossed ][ House Amendment 001 ][ House Amendment 002 ]

90_HB2107

      New Act
      35 ILCS 5/211 new
      35 ILCS 5/701             from Ch. 120, par. 7-701
      35 ILCS 5/703             from Ch. 120, par. 7-703
          Creates  the  Rural  Manufacturing  Incentives   Program.
      Provides  that an eligible  company may apply for incentives,
      including tax credits, as part  of  an  economic  development
      project  in  a  county in Illinois whose average unemployment
      rate is higher than the State's  unemployment  rate  for  the
      past  5  consecutive years through the Department of Commerce
      and Community Affairs.  Authorizes the  Department  to  enter
      into  financing  agreements  with  the  eligible  company  it
      selects   to   undertake  an  economic  development  project.
      Provides that an approved company  may    require  that  each
      employee agree to pay a job assessment fee equal to 4% of the
      gross  wages  of  each  employee  whose  job was created as a
      result of the economic development project for the purpose of
      paying debt service.  Provides that  the    Department  shall
      work  with  the Illinois Development Finance Authority if the
      issuance of bonds is necessary for the implementation of  the
      economic development project.  Amends the Illinois Income Tax
      Act.  Creates tax credits for approved companies in an amount
      equal to 100% of the debt service of the   company  plus  any
      job  development  assessment fees.  Provides that the credits
      are available for tax years ending on or after  December  31,
      1997.   Provides that the  credits shall be available for the
      period of the financing agreement, but in no  case  for  more
      than 15 years. Effective immediately.
                                                     LRB9004298KDks
                                               LRB9004298KDks
 1        AN ACT in relation to economic development.
 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    Rural Manufacturing Incentives  Act.
 6        Section 5.  Legislative findings.
 7        (1)  The  General  Assembly  finds  and declares that the
 8    general welfare and material well-being of  citizens  of  the
 9    State, and particularly those residing in qualified counties,
10    depends  in  large measure upon the development and growth of
11    industry in the State.
12        (2)  The General Assembly further finds and declares that
13    it is in the  best  interest  of  the  State  to  induce  the
14    location   of   manufacturing   facilities  and  agribusiness
15    operations within the qualified  counties  of  the  State  in
16    order   to   advance   the   public   purposes  of  relieving
17    unemployment  by  creating  new  jobs  within  the  qualified
18    counties that but for the inducements to be  offered  by  the
19    Department to approved companies as herein provided would not
20    exist  and  of  creating  new sources of tax revenues for the
21    support of the  public services provided  by  the  State  and
22    qualified counties.
23        (3) The  General Assembly further finds and declares that
24    the  authority  granted  by  this  Act and the purposes to be
25    accomplished hereby  are    proper  governmental  and  public
26    purposes  for  which  public moneys may be expended, and that
27    the inducement of the location  of  manufacturing  facilities
28    and  agribusiness  operations within qualified counties is of
29    paramount importance, mandating that the provisions  of  this
30    Act  be  liberally  construed and applied in order to advance
31    the public purposes.
                            -2-                LRB9004298KDks
 1        Section 10.  Definitions.  As used in this Act:
 2        "Affiliate" means the following:
 3             (a)  Members of a family,  including  only  brothers
 4        and   sisters   of  the  whole  or  half  blood,  spouse,
 5        ancestors, and lineal descendents of an individual;
 6             (b)  An individual, and a corporation more than  50%
 7        in  value  of  the  outstanding  stock of which is owned,
 8        directly or indirectly, by or for that individual;
 9             (c)  An individual, and a limited liability  company
10        of which more than 50% of the capital interest or profits
11        are  owned  or  controlled, directly or indirectly, by or
12        for that individual;
13             (d)  Two corporations that are members of  the  same
14        controlled group, which includes and is limited to:
15                  (1)  One   or   more   claims  of  corporations
16             connected through  stock  ownership  with  a  common
17             parent corporation if:
18                       (A)  Stock possessing more than 50% of the
19                  total  combined  voting power of all classes of
20                  stock entitled to vote or more than 50% of  the
21                  total  value  of shares of all classes of stock
22                  of each of the corporations, except the  common
23                  parent  corporation, is owned by one or more of
24                  the other corporations; and
25                       (B)  The common  parent  corporation  owns
26                  stock  possessing  more  than  50% of the total
27                  combined voting power of all classes  of  stock
28                  entitled  to vote or more than 50% of the total
29                  value of shares of all classes of stock  of  at
30                  least one of the other corporations, excluding,
31                  in  computing  the voting power or value, stock
32                  owned directly by the other corporations; or
33                  (2)  Two or more corporations  if  5  or  fewer
34             persons  who are individuals, estates, or trusts own
                            -3-                LRB9004298KDks
 1             stock possessing more than 50% of the total combined
 2             voting power of all classes  of  stock  entitled  to
 3             vote  or  more than 50% of the total value of shares
 4             of all classes of stock of each corporation,  taking
 5             into account the stock ownership of each person only
 6             to  the extent the stock ownership is identical with
 7             respect to each corporation;
 8             (e)  A grantor and fiduciary of any trust;
 9             (f)  A fiduciary of a trust and fiduciary of another
10        trust, if the same person is a grantor of both trusts;
11             (g)  A fiduciary of a trust  and  a  beneficiary  of
12        that trust;
13             (h)  A  fiduciary  of  a  trust and a beneficiary of
14        another trust, if the same person is a  grantor  of  both
15        trusts;
16             (i)  A  fiduciary  of a trust and a corporation more
17        than 50% in value of the outstanding stock  of  which  is
18        owned,  directly or indirectly, by or for the trust or by
19        or for a person who is a grantor of the trust;
20             (j)  A fiduciary of a trust and a limited  liability
21        company  more  than  50%  of the capital interest, or the
22        interest in  profits,  of  which  is  owned  directly  or
23        indirectly, by or for the trust or by or for a person who
24        is a grantor of the trust;
25             (k)  A  corporation  and  a partnership, including a
26        registered limited liability  partnership,  if  the  same
27        persons own:
28                  (1)  More  than 50% in value of the outstanding
29             stock of the corporation; and
30                  (2)  More than 50% of the capital  interest, or
31             the profits interest, in the partnership,  including
32             a registered limited liability partnership;
33             (l)  A  corporation  and a limited liability company
34        if the same persons own:
                            -4-                LRB9004298KDks
 1                  (1)  More than 50% in value of the  outstanding
 2             stock of the corporation; and
 3                  (2)  More  than  50% of the capital interest or
 4             the profits in the limited liability company;
 5             (m)  A partnership, including a  registered  limited
 6        liability partnership, and a limited liability company if
 7        the same persons own:
 8                  (1)  More  than  50% of the capital interest or
 9             profits in the partnership, including  a  registered
10             limited liability partnership; and
11             (2)  More  than  50%  of the capital interest or the
12             profits in the limited liability company;
13             (n)  An S corporation and another S  corporation  if
14        the  same  persons  own  more  than  50%  in value of the
15        outstanding stock  of  each  corporation,  S  corporation
16        designation  being the same as that designation under the
17        Internal Revenue Code of 1986, as amended; or
18             (o)  An S corporation and a C  corporation,  if  the
19        same   persons   own  more  than  50%  in  value  of  the
20        outstanding  stock  of  each   corporation;   S   and   C
21        corporation   designations   being   the  same  as  those
22        designations under the Internal Revenue Code of 1986,  as
23        amended.
24        "Agribusiness"   means   any   activity   involving   the
25    processing of raw agricultural products, including timber, or
26    the  providing  of  value-added  functions with regard to raw
27    agricultural products.
28        "Approved company" means any eligible company seeking  to
29    locate an economic development project in a qualified county,
30    which  eligible  company  is approved by the Department under
31    this Act.
32        "Approved costs" means:
33             (a)  Obligations   incurred   for   labor   and   to
34        contractors, subcontractors, builders, and materialmen in
                            -5-                LRB9004298KDks
 1        connection   with    the    acquisition,    construction,
 2        installation,   equipping,   and   rehabilitation  of  an
 3        economic development project;
 4             (b)  The cost of acquiring land or  rights  in  land
 5        and  any  cost  incidental  thereto,  including recording
 6        fees;
 7             (c)  The cost of contract bonds and of insurance  of
 8        all  kinds  that  may be required or necessary during the
 9        course  of   acquisition,   construction,   installation,
10        equipping,  and rehabilitation of an economic development
11        project that is not paid by the contractor or contractors
12        or otherwise provided for;
13             (d)  All  costs  of  architectural  and  engineering
14        services, including  test  borings,  surveys,  estimates,
15        plans and specifications, preliminary investigations, and
16        supervision   of   construction,   as  well  as  for  the
17        performance of all the duties required by  or  consequent
18        upon   the   acquisition,   construction,   installation,
19        equipping,  and rehabilitation of an economic development
20        project;
21             (e)  All costs that shall be  required  to  be  paid
22        under  the  terms  of  any  contract or contracts for the
23        acquisition, construction, installation,  equipping,  and
24        rehabilitation of an economic development project; and
25             (f)  All other costs of a nature comparable to those
26        described above.
27        "Assessment"  means  the  job  development assessment fee
28    authorized by this Act.
29        "Authority"  means  the  Illinois   Development   Finance
30    Authority  as  created  in  the  Illinois Development Finance
31    Authority Act.
32        "Bonds" means the revenue bonds,  notes,  or  other  debt
33    obligations  of  the Authority authorized to be issued by the
34    Authority, in cooperation with the Department.
                            -6-                LRB9004298KDks
 1        "Department"  means  the  Department  of   Commerce   and
 2    Community Affairs.
 3        "Eligible  economic  development  project" means a new or
 4    expanding  manufacturing   company   expenditure   for   land
 5    acquisitions,   site   development  including  architectural,
 6    engineering, and legal services,  utility  extensions,  costs
 7    and  fees, building construction or rehabilitation, equipment
 8    purchases,  re-location  of  existing   equipment   including
 9    installation  cost,  new  or expanding, storage, warehousing,
10    and related office facilities on  or  off  existing  premises
11    within the qualified counties.
12        "Eligible   company"   means   any  corporation,  limited
13    liability company, partnership, registered limited  liability
14    partnership,  sole  proprietorship,  business  trust,  or any
15    other entity engaged in manufacturing or in agribusiness.
16        "Final approval" means the action taken by the Department
17    authorizing the eligible company to receive inducements under
18    this Act.
19        "Financing agreement" means any agreement  entered  into,
20    pursuant  to  this  Act, on behalf of the Department or other
21    lenders, or both, and an approved company with respect to  an
22    economic development project.
23        "Inducements"  means  the  assessment  and the income tax
24    credits allowed by Section 30 of this Act and Section 211  of
25    the Illinois Income Tax Act.
26        "Manufacturing"   means   any   activity   involving  the
27    manufacturing, processing, assembling, or production  of  any
28    property,  including  the processing resulting in a change in
29    the conditions of the property and any  activity  related  to
30    it, together with the storage, warehousing, distribution, and
31    related office facilities; however, "manufacturing" shall not
32    include  mining, coal or mineral processing, or extraction of
33    minerals.
34        "Preliminary approval" means  the  action  taken  by  the
                            -7-                LRB9004298KDks
 1    Department conditioning final approval by the Department upon
 2    satisfaction  by  the  eligible  company  of the requirements
 3    under this Act.
 4        "Qualified county" means any county certified as such  by
 5    the Department under Section 15.
 6        "Revenues" shall not be considered State funds.
 7        Section   15.    Certification   of  qualified  counties;
 8    selection of eligible companies.
 9        (a) Each year the Department shall under this Act, on the
10    basis of the final unemployment  figures  calculated  by  the
11    Department  of  Employment Security, determine which counties
12    have  had  a  countywide  average  annual  unemployment  rate
13    exceeding the statewide unemployment rate in the most  recent
14    5 consecutive calendar years and shall certify those counties
15    as  qualified counties.  If the Department determines  that a
16    county that has previously  been  certified  as  a  qualified
17    county  no  longer  has  an unemployment rate above the State
18    average, the Department  shall  decertify  the  county.   The
19    Department  shall  not  finance any facilities in that county
20    and an  approved  company  shall  not  be  eligible  for  the
21    incentives   offered   by   this  Act  unless  the  financing
22    agreements required herein are entered into  by  all  parties
23    prior  to  July  1 of the year following the calendar year in
24    which the Department decertified that county.
25        (b)  The Department shall prescribe  rules  to  establish
26    the  procedures  and  standards  for  the  determination  and
27    approval of eligible companies and their economic development
28    projects.   The  criteria for approval of eligible  companies
29    and economic development projects shall include  but  not  be
30    limited  to  the  creditworthiness of eligible companies; the
31    number of new jobs to be provided by an economic  development
32    project  to residents of the State; and the likelihood of the
33    economic success of the economic development project.
                            -8-                LRB9004298KDks
 1        (c)  The economic development  project  shall  involve  a
 2    minimum  investment  of  $500,000 by the eligible company and
 3    shall result in the creation by the eligible company,  within
 4    2  years  from the date of the final approval authorizing the
 5    economic development project, a minimum of 15  new  full-time
 6    jobs  at  the  site  of  the economic development project for
 7    Illinois residents to be employed by the eligible company and
 8    to be held by persons subject to the Illinois Income Tax Act.
 9    The Department may extend this 2 year period upon the written
10    application of an eligible company requesting  an  extension.
11    No  economic  development  project  that  will  result in the
12    replacement of existing manufacturing facilities in the State
13    shall be approved by the Department; however, the  Department
14    may approve an economic development project that:
15             (1)  Rehabilitates a manufacturing facility:
16                  (A)  That  has  not  been  in  operation  for a
17             period of 90 or more consecutive days; or
18                  (B)  The title to which is vested in other than
19             the eligible company or an affiliate of the eligible
20             company and that is  sold  or  transferred  under  a
21             foreclosure   ordered   by   a  court  of  competent
22             jurisdiction or an order of a  bankruptcy  court  of
23             competent jurisdiction;
24             (2)  Replaces  a  manufacturing facility existing in
25        the State:
26                  (A)  The title to which shall have  been  taken
27             under  the  exercise of the power of eminent domain,
28             or the title to which shall  be  the  subject  of  a
29             nonappealable  judgment  granting  the  authority to
30             exercise the power  of  eminent  domain,  in  either
31             event to the extent that normal operations cannot be
32             resumed at the facility within 12 months; or
33                  (B)  That has been damaged or destroyed by fire
34             or   other   casualty  to  the  extent  that  normal
                            -9-                LRB9004298KDks
 1             operations cannot be resumed at the facility  within
 2             12 months; or
 3             (3)  Replaces  an  existing  manufacturing  facility
 4        located  in  the  same qualified county, and the existing
 5        manufacturing facility to be replaced cannot be  expanded
 6        due  to  the unavailability of real estate at or adjacent
 7        to  the  manufacturing  facility  to  be  replaced.   Any
 8        economic  development project satisfying the requirements
 9        of this paragraph shall only be eligible for  inducements
10        to  the extent of the expansion, and no inducements shall
11        be available for  the  equivalent  of  the  manufacturing
12        facility  to be replaced. No economic development project
13        otherwise satisfying the requirements of  this  paragraph
14        shall  be  approved  by the Department which results in a
15        lease abandonment or lease termination  by  the  approved
16        company without the consent of the lessor.
17        (d)  With  respect  to  each  eligible company  making an
18    application to  the  Department  for  inducements,  and  with
19    respect  to the economic development project described in the
20    application, the Department shall request materials and  make
21    inquiries of the applicant as necessary or appropriate.  Upon
22    review   of   the   application  and  completion  of  initial
23    inquiries,  the  Department  may,  by  resolution,  give  its
24    preliminary approval by designating an eligible company as  a
25    preliminarily    approved   company   and   authorizing   the
26    undertaking  of  the  economic  development  project.   After
27    preliminary  approval  and completion by the eligible company
28    of its bond, loan, or other financing and review  thereof  by
29    the   Department,   the  Department  may  by  final  approval
30    designate an eligible company to be an approved company.
31        Section 20. Financing agreement; terms;  payback;  income
32    tax  credit;  default;  activation  date.  The Department may
33    enter into, with any approved company, a financing  agreement
                            -10-               LRB9004298KDks
 1    with respect to its economic development project.  Subject to
 2    the  inclusion  of  the mandatory provisions set forth below,
 3    the terms and provisions of each financing agreement shall be
 4    determined by negotiations between  the  Department  and  the
 5    approved company.
 6        (a)  If an eligible company, at the time of submission of
 7    its  application  to  the  Department  to  become an approved
 8    company, requests the Department,  in  cooperation  with  the
 9    Authority,  in  writing to arrange for the issuance of  bonds
10    on the company's behalf, then each financing  agreement  used
11    in connection with the issuance of bonds by the Authority, in
12    cooperation  with the Department, shall include the following
13    provisions:
14             (1) The term of a financing agreement shall  not  be
15        less  than  the  last  maturity  of the bonds issued with
16        respect to the economic development project, except  that
17        the  financing  agreement  may terminate upon the earlier
18        redemption of all of the bonds issued with respect to the
19        economic development project and, if the Department  owns
20        the  economic  development  project,  the  Department may
21        grant to the approved company or its affiliate an  option
22        to  purchase,  for  the  consideration the Department may
23        approve,  the  economic  development  project  from   the
24        Department   upon   the   termination  of  the  financing
25        agreement.  Nothing in this  paragraph  shall  limit  the
26        extension  of  the term of a financing agreement if there
27        is a refunding of the correlative bonds or otherwise.
28             (2) All proceeds of any bonds incurred in connection
29        with the economic development project shall  be  expended
30        by  the  approved company within 3 years from the date of
31        the financing agreement.  In  the event that all proceeds
32        of  bonds  incurred  in  connection  with  the   economic
33        development  project  are not fully expended within the 3
34        year period, the amount  of  the  authorized  inducements
                            -11-               LRB9004298KDks
 1        shall  automatically  be  reduced  to  and  shall  not be
 2        greater than the amount of proceeds actually expended  by
 3        the approved company within the 3 year period.
 4             (3)  The  financing agreement shall specify that the
 5        annual obligations of the approved company under this Act
 6        shall equal in each year the annual debt service for that
 7        year on the bonds issued with  respect  to  the  economic
 8        development  project;  and the approved company shall pay
 9        such obligation of the financing agreement to the trustee
10        for the bonds issued for  the  benefit  of  the  approved
11        company,  at  such time and in such amounts sufficient to
12        amortize such bonds.
13             (4)  (A) In consideration  for  financing  agreement
14        payment,  the  approved  company  may  be  permitted  the
15        following  during  the  period  of  time not to exceed 15
16        years from the activation date  in  which  the  financing
17        agreement  is  in  effect,  which  period  of  time shall
18        commence for purposes of the following upon the  date  of
19        the financing agreement.
20                       (i)  A  100%  credit  against the Illinois
21                  income tax that otherwise would be owed in  the
22                  year  to  the  State by the approved company on
23                  the income of the approved company generated by
24                  or arising  out  of  the  economic  development
25                  project,  the  credit  not  to exceed the total
26                  debt  service   paid   under   the   respective
27                  financing agreement; plus
28                       (ii)  The aggregate assessment withheld by
29                  the approved company in each year.
30                  (B)  The income tax credited  to  the  approved
31             company referred to herein shall be credited for the
32             fiscal year for which the tax return of the approved
33             company is filed.  The approved company shall not be
34             required  to  pay  estimated  income tax payments as
                            -12-               LRB9004298KDks
 1             prescribed in Section 803 of the Illinois Income Tax
 2             Act.
 3             (5) (A)  The financing agreement shall provide  that
 4        the   assessments,   when   added  to  the  credit  under
 5        subsection (a) of Section 211 of the Illinois Income  Tax
 6        Act,  shall  not  exceed  the  total  annual debt service
 7        payments of the approved  company  with  respect  to  the
 8        loans  or other financing incurred in connection with the
 9        economic development project in any year; however, to the
10        extent that such  annual  debt  service  payments  excess
11        payments  may  recouped from excess credits or assessment
12        collections in succeeding years.
13                  (B)  If in any  fiscal  year  of  the  approved
14             company  during  which the financing agreement is in
15             effect the total of the income tax credit granted to
16             the approved company plus the  assessment  collected
17             from  the  wages  of the employees equals the annual
18             payment  pursuant   to   the   financing   agreement
19             accumulated  in  prior years have been recouped, the
20             assessment collected from the wages of the employees
21             shall cease for the remainder of that fiscal year of
22             the approved company, and the approved company shall
23             resume normal personal income tax  and  occupational
24             license  fee withholdings from the employees's wages
25             for the remainder of that fiscal year.
26                  (C)  If in any  fiscal  year  of  the  approved
27             company  during  which the financing agreement is in
28             effect, the total of the income tax  credit  granted
29             to   the   approved   company  plus  the  assessment
30             collected from the wages of  the  employees  exceeds
31             the   annual   payment  pursuant  to  the  financing
32             agreement, and if all excess  payments  pursuant  to
33             the  financing  agreement accumulated in prior years
34             have been recouped, the approved company  shall  pay
                            -13-               LRB9004298KDks
 1             the excess to the State as income tax.
 2                  (D)  If  in  any  fiscal  year  of the approved
 3             company during which the financing agreement  is  in
 4             effect  the  assessment  collected from the wages of
 5             the employees exceeds the annual payment pursuant to
 6             the financing agreement, and if all excess  payments
 7             pursuant  to  the financing agreement accumulated in
 8             prior  years  have  been  recouped,  the  assessment
 9             collected from the  wages  of  the  employees  shall
10             cease  for  the remainder of that fiscal year of the
11             approved company, the approved company shall  resume
12             normal  personal income tax and occupational license
13             fee withholdings from the employees' wages  for  the
14             remainder  of  that  fiscal  year,  and the approved
15             company shall remit  to  the  State  and  applicable
16             local  jurisdictions  their respective shares of the
17             excess  assessment  collected  on  the   withholding
18             filing date for employees' wages next succeeding the
19             first  date  when  the  approved  company  collected
20             excess assessments.
21             (6)  The  financing  agreement  shall   provide   in
22        substance that:
23                  (A)  It may be assigned by the approved company
24             only   upon   the   prior  written  consent  of  the
25             Department following the adoption of a resolution by
26             the Department to such effect; and
27                  (B)  Upon default by the  approved  company  in
28             any  obligations  under  the  financing agreement or
29             other documents evidencing, securing, or related  to
30             the  approved company's obligations, the Department,
31             or any of its assignees, shall have  the  right,  at
32             its  option,  to  declare the financing agreement or
33             such other documents in default; and
34                       (i) Accelerate and declare  the  total  of
                            -14-               LRB9004298KDks
 1                  all  such  payments due by the approved company
 2                  and sell the economic  development  project  at
 3                  public, private, or judicial sale;
 4                       (ii)  Pursue any remedy provided under the
 5                  financing agreement or other such documents;
 6                       (iii)  Pursue all other remedies available
 7                  to  it  under  the  Illinois Uniform Commercial
 8                  Code;
 9                       (iv)  Be entitled to the appointment of  a
10                  receiver  by the circuit court wherein any part
11                  of the economic development project is located;
12                  and
13                       (v)  Pursue any other  remedy  at  law  to
14                  which it appears entitled.
15                  (C)  All remedies proved in item B of paragraph
16             (6)  of    subsection  (a)  of this Section shall be
17             cumulative.
18                  (D)  If an eligible company,  at  the  time  of
19             submission  of  its application to the Department to
20             become an approved company,  does  not  request  the
21             Department  in writing to arrange with the Authority
22             for the issuance of  bonds  on  the  behalf  of  the
23             company,  then  each  financing  agreement  used  in
24             connection with loans or other financing (other than
25             bonds  issued  by the Authority for which subsection
26             (a) of this Section shall be used) shall include the
27             following provisions:
28             (1)  The term of a financing agreement, which  shall
29        commence  on  the  date of the financing agreement, shall
30        not be longer than:
31                  (A)  The  maturity  of  any   loan   or   other
32             financing  incurred  in connection with the economic
33             development  project,  except  that  the   financing
34             agreement  may terminate upon the earlier prepayment
                            -15-               LRB9004298KDks
 1             of  all  loans  or  other  financing   incurred   in
 2             connection with the economic development project; or
 3                  (B)  Fifteen years from the activation date.
 4                  (C)  Nothing in this subsection shall limit the
 5             extension  of  the  term of a financing agreement if
 6             there is a  refinancing  of  the    loans  or  other
 7             financing.  The authority shall not own an  economic
 8             development  project  that  is  the  subject of this
 9             form of financing agreement.
10             (2)  All proceeds of any  loan  or  other  financing
11        incurred  in  connection    with the economic development
12        project shall be expended by the  approved company within
13        3 years from the date of the financing    agreement.   In
14        the  event  that  all  proceeds  of  any  loan  or  other
15        financing   incurred  in  connection  with  the  economic
16        development  project are not fully expended within the  3
17        year   period,   the      authorized   inducements  shall
18        automatically be reduced to and   shall  not  be  greater
19        than  the  amount  of  proceeds actually  expended by the
20        approved company within the 3 year period.
21             (3)(A)  The approved company may  be  permitted  the
22        following during  the term of the financing agreement:
23                       (i)  A  100%  credit  against the Illinois
24                  income tax that otherwise  would be owed in the
25                  year, as determined under the Illinois   Income
26                  Tax  Act,  to the State by the approved company
27                  on    the  income  of  the   approved   company
28                  generated  by  or   arising out of the economic
29                  development project, such  credit not to exceed
30                  the total debt service paid with  respect    to
31                  the   loans  or  other  financing  incurred  in
32                  connection  with    the  economic   development
33                  project; plus
34                       (ii)  The aggregate assessment withheld by
                            -16-               LRB9004298KDks
 1                  the approved  company in each year.
 2                  (B)  The  income  tax  credited to the approved
 3             company shall be  credited for the fiscal  year  for
 4             which  the  tax  return  of the approved  company is
 5             filed.  The approved company shall not  be  required
 6             to  pay    estimated  income  tax  as  prescribed in
 7             Section 803 of the Illinois  Income Tax Act.
 8                  (4)(A)  The financing agreement  shall  provide
 9             that the assessments, when added to the credit under
10             subsection (a) of Section 211 of the Illinois Income
11             Tax  Act,  shall  not  exceed  the total annual debt
12             service  payments  of  the  approved  company   with
13             respect  to the loans or other financing incurred in
14             connection with the economic development project  in
15             any  year;  however,  to the extent that such annual
16             debt service payments exceed  credits  received  and
17             assessments   collected  in  any  year,  the  excess
18             payment may  be  recouped  from  excess  credits  or
19             assessment collection in succeeding years.
20                  (B)  If,  in  any  fiscal  year of the approved
21             company during which the financing agreement  is  in
22             effect,  the  total of the income tax credit granted
23             to  the  approved  company,  plus   the   assessment
24             collected  form  the  wages of the employees, equals
25             the annual debt service payments with respect to the
26             loans or other financing incurred in connection with
27             the economic development project, and if all  excess
28             payments   with   respect  to  the  loans  or  other
29             financing incurred in connection with  the  economic
30             development  project accumulated in prior years have
31             been recouped, the  assessment  collected  from  the
32             wages of the employees shall cease for the remainder
33             of  that fiscal year of the approved company and the
34             approved company shall resume normal personal income
                            -17-               LRB9004298KDks
 1             tax and occupational license fee  withholdings  from
 2             the  employees'  wages  for  the  remainder  of that
 3             fiscal year.
 4                  (C)  If in any  fiscal  year  of  the  approved
 5             company  during  which the financing agreement is in
 6             effect, the total of the income tax  credit  granted
 7             to   the   approved   company  plus  the  assessment
 8             collected from the wages of  the  employees  exceeds
 9             the   annual   payment  pursuant  to  the  financing
10             agreement, and if all excess  payments  pursuant  to
11             the   financing agreement accumulated in prior years
12             have been recouped,  the approved company shall  pay
13             the excess to the State as income  tax.
14                  (D)  If  in  any  fiscal  year  of the approved
15             company during which the financing agreement  is  in
16             effect  the  assessment  collected from the wages of
17             the employees exceeds the annual payment pursuant to
18             the financing agreement, and if all excess  payments
19             pursuant  to  the financing agreement accumulated in
20             prior  years  have  been  recouped,  the  assessment
21             collected from the  wages  of  the  employees  shall
22             cease  for  the remainder of that fiscal year of the
23             approved company, the approved company shall  resume
24             normal  personal income tax and occupational license
25             fee withholdings from the employees' wages  for  the
26             remainder  of  that  fiscal  year,  and the approved
27             company shall remit  to  the  State  and  applicable
28             local  jurisdictions  their respective shares of the
29             excess  assessment  collected  on  the   withholding
30             filing date for employees' wages next succeeding the
31             first  date  when  the  approved  company  collected
32             excess assessments.
33             (5)  The   financing   agreement  shall  provide  in
34        substance that it  may  be    assigned  by  the  approved
                            -18-               LRB9004298KDks
 1        company  only  upon  the  prior  written  consent  of the
 2        Department following the adoption of a resolution by  the
 3        Department to that effect.
 4             (6)  The  financing  agreement shall provide that an
 5        approved company shall  require  of  any  lender  to  the
 6        approved  company  funding  the  loans or other financing
 7        incurred in  connection  with  the  economic  development
 8        project written evidence to be provided to the Department
 9        of  payments  of annual debt service to such lender. Such
10        evidence shall be provided to the  Department  within  45
11        days  after  the end of each fiscal year of the financing
12        agreement.
13             (7)  The financing agreement shall provide  that  if
14        an  approved  company fails to comply with its respective
15        obligations under the financing agreement,  or  that  the
16        lender  to  an  approved company fails to comply with its
17        requirements set forth in paragraph (6) of subsection (b)
18        of this Section, or is  declared  in  default  under  the
19        loans  or other financing incurred in connection with the
20        economic  development project, then  the  Department,  or
21        any  of  its  assignees,  shall  have  the  right, at its
22        option, to:
23             (A)  Suspend the  availability  of  the  income  tax
24             credits  and  job development assessment fees to the
25             approved company;
26             (B)  Pursue any remedy provided under the  financing
27             agreement, including termination thereof; and
28             (C)  Pursue  any  other  remedy  at  law to which it
29             appears entitled.
30        (c)  All remedies provided in item (B) of  paragraph  (7)
31    of subsection (b) of this Section shall be deemed cumulative.
32        (d)  Pursuant  to this Section, the activation date shall
33    be established by  the  approved  company  in  the  financing
34    agreement  at  any  time in a 2 year period after the date of
                            -19-               LRB9004298KDks
 1    final approval of the financing agreement by  the  authority.
 2    To  implement the activation date, the approved company shall
 3    notify the  Department, the Department of  Revenue,  and  the
 4    approved  company's employees of the activation date when the
 5    implementation of the inducements authorized in the financing
 6    agreement shall occur.  If  the  approved  company  does  not
 7    satisfy   the   minimum  investment  and  minimum  employment
 8    requirements of subsection (c) of Section 15 of this  Act  by
 9    the  activation  date,  the  approved  company  shall  not be
10    entitled to receive inducements  under  this  Act  until  the
11    approved  company satisfies the requirements; however, the 15
12    year period for the term of  the  financing  agreement  shall
13    begin  from the activation date. Notwithstanding the previous
14    sentence, if  the  approved  company  does  not  satisfy  the
15    minimum  investment  and  minimum  employment requirements of
16    subsection (c) of Section 15 of this Act within 2 years  from
17    the  date  of final approval of the financing agreement, then
18    the    approved  company  shall  be  ineligible  to   receive
19    inducements under this Act unless an extension is approved by
20    the Department.
21        Section 25.  Financing agreement; adoption; publication.
22        (a)  The  Department  may execute and deliver a financing
23    agreement and consummate the transactions  described  in  the
24    agreement upon:
25             (1)  The  adoption of a resolution by the Department
26        authorizing the  financing  agreement,  as  described  in
27        subsection (b) of Section 20, with respect to an approved
28        company  and loans for other financing in connection with
29        an economic development project; and
30             (2)  The publication of a  summary  of  the  adopted
31        resolution in:
32                  (A)  A newspaper authorized to publish official
33             advertisements for the Department; and
                            -20-               LRB9004298KDks
 1                  (B)  A  newspaper of general circulation in the
 2             qualified county in which the  economic  development
 3             project is to be located.
 4        (b)  The   summary  of  the  resolution  as  provided  in
 5    paragraph (2) of subsection (a) of this Section shall include
 6    the following:
 7             (1)  The date the  resolution  was  adopted  by  the
 8        Department;
 9             (2)  The title of the resolution;
10             (3)  The maximum amount of loans or other financing,
11        as described in subsection (b) of Section 20, incurred in
12        connection with the economic development project; and
13             (4)  The name of the approved company.
14        Section  30.  Determination  of  income tax credit by the
15    Department of Revenue.
16        (a)  The approved company shall  be  entitled  to  a  tax
17    credit  as provided in Section 211 of the Illinois Income Tax
18    Act on any income that may result from the operation  of  the
19    approved  economic  development  project. The credit shall be
20    equal to the total amount of the tax liability, and  together
21    with  the  aggregate assessments not to exceed the total debt
22    service paid:
23             (1) Under the financing agreement in connection with
24        the economic development project  financed  by  bonds  as
25        described in subsection (a) of Section 20; or
26             (2)  On  loans  or  other financing, as described in
27        subsection (b) of Section 20, incurred in connection with
28        the economic development project.
29        (b)  Ninety days after the filing of the  tax  return  of
30    the approved company, the Department of Revenue shall certify
31    to  the Department the income tax liability for the preceding
32    fiscal year of the approved company for which the  return was
33    filed  with  respect  to  an  economic  development   project
                            -21-               LRB9004298KDks
 1    financed  through  the  issuance  of  bonds,  loans, or other
 2    financing  incurred   in   connection   with   the   economic
 3    development  project  and  the amounts of any tax credits and
 4    job development assessment fees taken under the Act.
 5        Section  35.  Job  development  assessment  fee;  credits
 6    against Illinois income and local occupational taxes.
 7        (a)  The approved company may require that each  employee
 8    subject  to  tax under Section 201 of the Illinois Income Tax
 9    Act, as a  condition  of  employment,  agree  to  pay  a  job
10    development assessment fee, equal to 4% of the gross wages of
11    each  employee  whose  job  was  created  as  a result of the
12    economic development project, for the purpose of retiring:
13             (1)  The bonds, as described in  subsection  (a)  of
14        Section   20   of  this  Act,  which  fund  the  economic
15        development project; or
16             (2)  The loans or other financing  as  described  in
17        subsection  (b)  of  Section  20 of this Act, incurred in
18        connection with the economic development project.
19        (b)  Each employee  so  assessed  shall  be  entitled  to
20    credits   against  Illinois  income  tax  equal  to  the  job
21    development assessment fee withheld  from  wages  during  the
22    calendar  year  as  provided  by  Sections 701 and 703 of the
23    Illinois Income Tax Act.
24        (c)  If an approved company shall  elect  to  impose  the
25    assessment   as  a  condition  of  employment,  it  shall  be
26    authorized to deduct the assessment  from  each  paycheck  of
27    each employee.
28        (d)  Any  approved  company  collecting  an assessment as
29    provided in subsection (a) of this  Section  shall  make  its
30    payroll books and records available to the Department at such
31    reasonable  times  as  the Department shall request and shall
32    file  with  the  Department  documentation   respecting   the
33    assessment as the Department may require.
                            -22-               LRB9004298KDks
 1        Any  assessment  of the wages of employees of an approved
 2    company in connection with their employment  at  an  economic
 3    development  project  under  subsection  (a)  of this Section
 4    shall permanently lapse on the date:
 5             (1)  The bonds, as described in  subsection  (a)  of
 6        Section 20, are retired; or
 7             (2)  Any  loans  or other financing, as described in
 8        subsection (b) of Section 20, incurred in connection with
 9        the economic development project mature  or  are  prepaid
10        in full.
11        Section  80.  The  Illinois  Income Tax Act is amended by
12    adding Section 211 and  changing  Sections  703  and  711  as
13    follows:
14        (35 ILCS 5/211 new)
15        Sec. 211. Rural manufacturing incentive tax.
16        (a)  For  a  period  of 15 years beginning with tax years
17    ending on or after December 31,  1997,  an  approved  company
18    under  the Rural Manufacturing Incentives Act subject to this
19    Act is entitled to  a  credit  against  the  tax  imposed  by
20    subsections  (a) and (b) of Section 201 in an amount equal to
21    100% of the amount expended by the taxpayer  during  the  tax
22    year on debt service for capital investments and expenditures
23    in  Illinois  as  prescribed  in  Section  30  of  the  Rural
24    Manufacturing Incentives Act.
25        If the amount of credit exceeds the tax liability for the
26    year,  the  excess  may be carried forward and applied to the
27    tax liability of the term of  the  financing  agreement.  The
28    credit  shall be applied to the earliest year for which there
29    is a tax liability. If there are credits from more  than  one
30    tax  year  that  are  available  to  offset  a liability, the
31    earlier credit shall be applied first.
32        (b)  In addition to the tax credit provided in subsection
                            -23-               LRB9004298KDks
 1    (a), an approved company may retain, in any tax year,  up  to
 2    4%  of  its  employees' gross wages that otherwise would have
 3    been withheld under Section 701 as provided in Section 35  of
 4    the   Rural  Manufacturing  Incentives  Act.  If  the  credit
 5    allowable under subsection (a) exceeds 4% of  the  employees'
 6    gross  wages,  the  approved  company  may carry forward that
 7    amount of the credit in excess of 4% of the employees'  gross
 8    wages to the following tax year.
 9        (35 ILCS 5/701) (from Ch. 120, par. 7-701)
10        Sec. 701.  Requirement and Amount of Withholding.
11        (a) In General.
12        Except   as  provided  in  Section  211,  every  employer
13    maintaining an office or  transacting  business  within  this
14    State  and  required  under  the  provisions  of the Internal
15    Revenue Code to withhold a tax on:
16             (1)  compensation paid in this State (as  determined
17        under Section 304 (a) (2) (B) to an individual; or
18             (2)  payments  described  in  subsection  (b)  shall
19        deduct  and  withhold  from  such  compensation  for each
20        payroll  period  (as  defined  in  Section  3401  of  the
21        Internal Revenue Code) an amount equal to the  amount  by
22        which   such   individual's   compensation   exceeds  the
23        proportionate  part   of   this   withholding   exemption
24        (computed as provided in Section 702) attributable to the
25        payroll  period  for  which  such compensation is payable
26        multiplied by a percentage equal to  the  percentage  tax
27        rate  for  individuals  provided  in  subsection  (b)  of
28        Section 201.
29        Any  amounts  of  an  employee's  wages  retained  by the
30    employer instead of withheld, as provided in  Section  35  of
31    the  Rural Manufacturing Incentives Act and subsection (b) of
32    Section 211 of this Act, shall be  treated  as  withheld  for
33    purposes of payment of the employee's tax liability.
                            -24-               LRB9004298KDks
 1        (b)  Payment to Residents.
 2        Any  payment  (including compensation) to a resident by a
 3    payor maintaining an office or  transacting  business  within
 4    this  State and on which withholding of tax is required under
 5    the provisions of the Internal Revenue Code shall  be  deemed
 6    to  be  compensation  paid in this State by an employer to an
 7    employee for the purposes of Article 7 and  Section  601  (b)
 8    (1) to the extent such payment is included in the recipient's
 9    base  income  and  not  subjected  to  withholding by another
10    state.
11        (c)  Special Definitions.
12        Withholding  shall  be  considered  required  under   the
13    provisions  of  the  Internal  Revenue Code to the extent the
14    Internal Revenue Code either requires withholding  or  allows
15    for  voluntary  withholding  the  payor  and  recipient  have
16    entered  into such a voluntary withholding agreement. For the
17    purposes  of  Article  7  and  Section  1002  (c)  the   term
18    "employer" includes any payor who is required to withhold tax
19    pursuant to this Section.
20        (d)  Reciprocal Exemption.
21        The  Director may enter into an agreement with the taxing
22    authorities of any state which imposes a tax on  or  measured
23    by  income to provide that compensation paid in such state to
24    residents of this State shall be exempt from  withholding  of
25    such  tax;  in such case, any compensation paid in this State
26    to residents of such state shall be exempt from withholding.
27        (e)  Notwithstanding subsection (a) (2) of this  Section,
28    no  withholding is required on payments for which withholding
29    is required under  Section  3405  or  3406  of  the  Internal
30    Revenue Code of 1954.
31    (Source: P.A. 85-731; 86-1475.)
32        (35 ILCS 5/703) (from Ch. 120, par. 7-703)
33        Sec. 703. Information Statement.
                            -25-               LRB9004298KDks
 1        Every  employer required to deduct and withhold tax under
 2    this Act from compensation of an employee, or who would  have
 3    been required so to deduct and withhold tax if the employee's
 4    withholding  exemption  were  not  in excess of $1,000, shall
 5    furnish in duplicate to each such employee in respect of  the
 6    compensation  paid  by  such employer to such employee during
 7    the calendar year on or before January 31 of  the  succeeding
 8    year, or, if his employment is terminated before the close of
 9    such  calendar year, on the date on which the last payment of
10    compensation is made, a written statement in such form as the
11    Department may by regulation prescribe showing the amount  of
12    compensation paid by the employer to the employee, the amount
13    deducted  and  withheld as tax, and such other information as
14    the Department shall prescribe. If  an  employer  retains  an
15    employee's  wages  in  lieu  of  withholding,  as provided in
16    Section 35 of the  Rural  Manufacturing  Incentives  Act  and
17    subsection  (b)  of  Section  211  of  this  Act, the written
18    statement shall show those amounts retained by  the  employer
19    as  withheld as tax.  A copy of such statement shall be filed
20    by the employee with his return for his taxable year to which
21    it relates (as determined under section 601(b) (1).
22    (Source: P. A. 76-261.)
23        Section 99. Effective date. This Act  takes  effect  upon
24    becoming law.

[ Top ]