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91_HB4470
LRB9112443SMdv
1 AN ACT concerning employer taxes.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 5. The Illinois Municipal Code is amended by
5 adding Section 8-11-21 as follows:
6 (65 ILCS 5/8-11-21 new)
7 Sec. 8-11-21. Home Rule Municipal Employer Expense Tax.
8 (a) This Section may be cited as the Home Rule Municipal
9 Employer Expense Tax Act.
10 (b) Definitions. As used in this Section:
11 "Association" means a partnership, limited partnership,
12 or any other form of unincorporated business, syndicate, or
13 enterprise owned by 2 or more persons.
14 "Business" means any activity, enterprise, profession,
15 trade, or undertaking of any nature conducted or engaged in,
16 or ordinarily conducted or engaged in, with the object of
17 gain, benefit, or advantage, whether direct or indirect, to
18 the employer or to another or others. "Business" includes
19 (i) entities, which are subsidiary or independent, conducting
20 operations for the benefit of others and at no benefit to
21 themselves, (ii) nonprofit businesses, and (iii) trade
22 associations.
23 "Commission merchant" means a person who, for
24 compensation in the form of a commission, or partly
25 commission and partly salary, engages in buying and selling
26 activities, including the solicitation or negotiation of a
27 sale or service requirement or the forwarding or accepting of
28 sales or service orders, which lead to the sale of services
29 or of goods, wares, commodities, merchandise, shares of
30 stock, or insurance policies owned or authorized by some
31 person other than the commission merchant. "Commission
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1 merchant" includes agents or employees who receive
2 compensation in such form for such activities. "Commission
3 merchant" means only those individuals who earn or to whom
4 are owed commissions, or salaries and commissions together,
5 of at least $900 in any calendar quarter, from the same
6 employer who is subject to the tax imposed by this Section.
7 The business of a commission merchant shall be deemed to
8 include the buying and selling of services, goods, wares,
9 commodities, merchandise, shares of stock, or insurance
10 policies by a person to the extent that the person for
11 himself (i) does not engage on a continuing basis in the
12 business of servicing, manufacturing, refining, fabricating,
13 milling, treating, or other processing of the goods, wares,
14 commodities, merchandise, shares of stock, or insurance
15 policies bought and sold and does not cause goods, wares,
16 commodities, or merchandise to be manufactured, refined,
17 fabricated, milled, treated, or otherwise processed on a
18 continuing basis, (ii) does not obtain or retain title to
19 goods, wares, commodities, merchandise, or shares of stock
20 except in one or more of the following situations: while such
21 may be in transit, or for short periods of time before
22 transportation commences or after it ceases; and (iii) does
23 not store or warehouse such goods, wares, commodities, or
24 merchandise except during one or more of the following
25 situations: while such goods, wares, commodities, or
26 merchandise are actually in transit or for short periods of
27 time before transportation commences or after it ceases.
28 "Employee" means and includes any individual permitted to
29 work for remuneration by any employer in any activity,
30 enterprise, profession, trade, or undertaking of any nature
31 conducted or engaged in, or ordinarily conducted or engaged
32 in, with the object of gain, benefit, or advantage, whether
33 direct or indirect, to the taxpayer or to another or others.
34 "Employee" excludes any individual performing:
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1 (1) Agricultural labor, as that term is defined in
2 Section 214 of the Unemployment Insurance Act.
3 (2) Domestic service solely on a daily basis in a
4 private home.
5 (3) Newspaper carrier delivery or distribution
6 service when the individual is under the age of 18 years.
7 (4) Services in the employ of any organization
8 described in Sections 101(c), 101(d), or 401(c) of Title
9 26 of the United States Code, as qualified by Sections
10 102 and 103 of that Title 26, unless such organization
11 normally, annually, receives unrelated business income in
12 excess of 50% of its total income. For purposes of this
13 Section, unrelated business income shall have the meaning
14 set forth in Sections 511, 512, 513, 514, and 515 of
15 Title 26 of the United States Code.
16 (5) Services in the employ of his or her father,
17 mother, son, daughter, or spouse.
18 (6) Services in the employ of any governmental
19 unit, including federal, state, or local political
20 subdivisions.
21 "Employer" means any person that employs one or more
22 employees performing services in whole or in part within the
23 financially distressed city. An employer is subject to the
24 tax imposed by this Section for any full calendar quarter
25 during which it employs 10 or more full-time employees or
26 commission merchants, or any combination thereof.
27 "Financially distressed city" means any municipality that
28 is a home rule unit and that is certified by the Department
29 of Revenue as being in the highest 5% of all home rule
30 municipalities in terms of the aggregate of the rate per cent
31 of all taxes levied pursuant to statute or ordinance upon all
32 taxable property of the municipality and as being in the
33 lowest 5% of all home rule municipalities in terms of per
34 capita tax yield.
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1 "Full-time employee" means an individual who earns or to
2 whom are accrued wages from employment of at least $900 in
3 any calendar quarter of a year from or for the same employer
4 who is subject to the tax imposed by this Section.
5 "Individual" means a natural person, a human being, as
6 distinguished from an artificial person, such as a
7 corporation or political subdivision.
8 (c) Tax imposed. The corporate authorities of a
9 financially distressed city may, for as long as that city
10 continues to be a home rule municipality and financially
11 distressed, impose by ordinance a tax upon every employer
12 who, in connection with the employer's business, engages,
13 hires, employs, or contracts with 10 or more individuals as
14 commission merchants and full-time employees, or any
15 combination thereof, to perform work or render services in
16 whole or in part within the financially distressed city. The
17 amount of the tax shall be $4 per month for each commission
18 merchant and full-time employee to whom commission or
19 employment compensation is paid or to whom such commission or
20 compensation has accrued. The incidence of this tax shall be
21 upon the employer alone as an employer's expense tax and
22 shall not be transferred directly or indirectly to the
23 commission merchant or full-time employee under any
24 circumstances.
25 The tax shall be levied only upon the number of those
26 commission merchants or employees whose work or service is
27 performed within the financially distressed city, or if
28 partly within and partly without the financially distressed
29 city, the numbers of those individuals who perform 10% or
30 more of their work or service per calendar quarter within the
31 financially distressed city.
32 If it is impractical to apportion the work or service
33 performed within the financially distressed city either
34 because of the peculiar nature of the work or service or
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1 because of unusual bases of compensation, or for any other
2 similar reason, then the numbers of such individuals
3 attributable to work performed or services rendered in the
4 financially distressed city shall be determined in accordance
5 with rules and regulations adopted or promulgated by the
6 financially distressed city for this purpose, and in
7 furtherance of the purposes of this ordinance. If the
8 financially distressed city determines that the percentage of
9 work attributable to the financially distressed city for any
10 one or more employers is a relatively stable percentage, then
11 the financially distressed city is hereby authorized to
12 establish that percentage as a prima facie percentage of work
13 attributable to the financially distressed city; provided,
14 however, that the financially distressed city shall condition
15 the establishment of such fixed percentage upon the
16 obligation of the employer to report immediately to the
17 financially distressed city any significant change in his or
18 her mode of business which might or will have some effect
19 upon the portion of work performed or service attributable to
20 the financially distressed city.
21 The tax is due for each calendar quarter the employer has
22 10 or more full-time employees or commission merchants, or
23 combination thereof, at any time during the quarter except
24 that, for any month within the quarter the employer's number
25 of full-time employees or commission merchants, or
26 combination thereof, falls below 10, then no tax shall be due
27 for that month.
28 (d) Residence of taxpayer. The tax imposed under this
29 Section applies only to employers doing business within the
30 financially distressed city. An employer does business
31 within the financially distressed city, for the purposes of
32 this Section, if he or she engages, hires, employs, or
33 contracts with one or more individuals, as commission
34 merchants or full-time employees, to perform work or render
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1 services in whole or in part within the financially
2 distressed city and fulfills one or more of the following
3 criteria: (i) the employer maintains a fixed place of
4 business within the financially distressed city, or (ii) a
5 commission merchant or employee of the employer maintains a
6 fixed place of business within the financially distressed
7 city for the benefit or partial benefit of the employer, or
8 (iii) the employer or his or her commission merchant or
9 employee owns or leases real property within the financially
10 distressed city for business purposes, or (iv) the employer
11 or his or her commission merchant or employee regularly
12 maintains a stock of tangible personal property in the
13 financially distressed city for sale in the ordinary course
14 of business, or (v) the employer employs or otherwise uses
15 real or personal property within the financially distressed
16 city, or (vi) the employer or his or her commission merchant
17 or employee conducts continuous solicitation of business
18 within the financially distressed city.
19 (e) Payments, returns, and extensions of time. The
20 financially distressed city shall administer and collect the
21 tax imposed under this Section by ordinance. Upon adopting
22 an ordinance imposing the tax under this Section the
23 financially distressed city shall file a certified copy of
24 the ordinance with the Department of Revenue. After a
25 certified copy of the ordinance imposing the tax under this
26 Section is filed with the Department of Revenue, the
27 Department shall assist the financially distressed city by
28 adopting rules and forms for the administration of the tax
29 imposed under this Section and by providing advice to the
30 financially distressed city concerning the administration of
31 the tax.
32 The taxes imposed under this Section shall become due and
33 payable for the preceding calendar quarter on the last day of
34 the month following that calendar quarter and shall be
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1 considered delinquent if not paid on or before that date.
2 Each employer subject to the tax imposed under this Section
3 shall execute and file an employer expense tax return, on
4 forms prepared for that purpose by the Department of Revenue,
5 concurrently with the payment of taxes imposed under this
6 Section.
7 Each employer in the financially distressed city, whether
8 subject to the tax imposed under this Section or not, shall
9 prepare and maintain at some accessible place within the
10 financially distressed city, permanent, just, and accurate
11 books, papers, and records setting forth the name and address
12 of each commission merchant or employee performing work or
13 rendering services in whole or in part for that employer in
14 the financially distressed city, designating that portion of
15 the work for each such commission merchant or employee
16 attributable to the financially distressed city, plus the
17 aggregate number of all such individuals whose work or
18 service is attributable to the financially distressed city,
19 and such other and further pertinent information as the
20 financially distressed city may require in furtherance of the
21 purposes of the tax imposed under this Section.
22 The financially distressed city is hereby authorized, for
23 good cause shown by affidavit, to grant extensions not in
24 excess of 60 days for payment of the tax imposed under this
25 Section and the making of the employer expense tax return, in
26 which case no penalty shall be added to the amount due and
27 payable if the tax is paid within the extension period
28 granted by the financially distressed city.
29 (f) Duties of financially distressed city. It shall be
30 the duty of the financially distressed city to collect and
31 receive the tax imposed under this Section. The financially
32 distressed city shall keep an accurate and separate account
33 of all tax payments imposed under this Section received by it
34 showing the name and address of the taxpayer and the date of
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1 each payment. The financially distressed city is hereby
2 empowered to adopt, promulgate, and enforce rules and
3 regulations relating to any matter or thing pertaining to the
4 administration and enforcement of the tax imposed under this
5 Section, including rules and regulations relating to
6 reexamination, correction, and amendment of all returns. The
7 financially distressed city, or any agent or employee
8 designated in writing by the chief presiding officer of the
9 financially distressed city, is hereby authorized to examine
10 the books, papers, and records of any employer or alleged
11 employer during regular business hours in order to verify the
12 accuracy of any return made, or if no return was made, to
13 ascertain the tax imposed by this ordinance.
14 (g) Registration. Every employer subject to the tax
15 imposed under this Section shall, within 10 days after the
16 imposition of the tax under this Section by a financially
17 distressed city or within 10 days after he or she commences
18 business within the financially distressed city, as the case
19 may be, file with the financially distressed city a
20 certificate setting forth the name under which the business
21 is, or is to be, conducted or transacted and the full name or
22 names and address or addresses of the individual or
23 individuals conducting or transacting the business, unless
24 the party so certified is a corporation or trustee, in which
25 event it shall set forth the address of its principal office
26 or place of business and when and where incorporated or
27 organized. The certificate shall be executed and duly
28 acknowledged by the person or persons so conducting or
29 intending to conduct the business or by the president or
30 secretary of the corporation, as the case may be.
31 In the event of a change in the identity of an employer
32 or termination of his or her operations, a similar
33 certificate setting forth the facts with respect to the
34 change or termination shall be filed with the financially
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1 distressed city within 10 days thereafter.
2 (h) Corporate fund. All proceeds resulting from the
3 imposition of the tax under this Section, including
4 penalties, shall be paid into the treasury of the financially
5 distressed city and shall be credited to and deposited in the
6 corporate fund of the city.
7 (i) Severability. If any provision, clause, sentence,
8 paragraph, or subsection of this Section or application
9 thereof to any person or circumstance shall, for any reason,
10 be adjudged by a court of competent jurisdiction to be
11 unconstitutional or invalid, the judgment shall not affect,
12 impair, or invalidate the remainder of this Section and the
13 application of such provision to other persons, firms,
14 corporations, public agencies, or circumstances, but shall be
15 confined in its operation to the provision, clause, sentence,
16 paragraph, or subsection directly involved in the controversy
17 in which such judgment shall have been rendered and to the
18 person, firm, corporation, public agency, or circumstances
19 involved. It is hereby declared to be the legislative intent
20 of the General Assembly that this Section would have been
21 adopted had such unconstitutional or invalid provision,
22 clause, sentence, paragraph, or subsection not been included.
23 Section 99. Effective date. This Act takes effect upon
24 becoming law.