Section 529.10  Purpose

 

The Department is charged with providing Tax Credit Awards to Illinois small businesses, in order to assist in the reversal of high unemployment and to help spur the economic recovery in Illinois.  [35 ILCS 25/5]

 

Section 529.20  Definitions

 

The following definitions are applicable to this Part.

 

"Act" or "SBJC Act" means the Small Business Job Creation Tax Credit Act [35 ILCS 25/5].

 

"Applicant" means an person that is operating a business located within the State of Illinois that is engaged in interstate or intrastate commerce and has no more than 50 full-time employees, without regard to the location of employment of those employees at the beginning of the incentive period. In the case of any person that is a member of a unitary business group within the meaning of subdivision (a)(27) of Section 1501 of the Illinois Income Tax Act, "applicant" refers to the unitary business group (see 35 ILCS 5/1501(a)(27)).  [35 ILCS 25/10]

 

"Basic Wage" means compensation for employment that is no less than $13.75 per hour or the equivalent salary for a new employee.  [35 ILCS 25/10] Salary shall consist of all basic wage compensation not including overtime pay, bonus pay, stock options, awards or any other equity based incentive, unreimbursed employee expenses or piecemeal rate of pay and any form of deferred compensation.

 

"Certificate" means the tax credit certificate issued by the Department under Section 35 of the Act. [35 ILCS 25/10]

 

"Certificate of eligibility" means the certificate issued by the Department under Section 20 of the Act. [35 ILCS 25/10]

 

"Credit" means the amount awarded by the Department to an applicant by issuance of a certificate under Section 35 of the Act for each new full-time equivalent employee hired or job created. [35 ILCS 25/10]

 

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 25/10]

 

"Director" means the Director of the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 25/10]

 

"Full-time employee" means an individual who is employed for a basic wage for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employee. [35 ILCS 25/10]

 

"Incentive period" means the period commencing on July 1, 2010 and ending on June 30, 2011. [35 ILCS 25/10]

 

"New employee" means a full-time employee first employed by an applicant within the incentive period, or any employee that was released from employment prior to January 1, 2010, whose hire results in a net increase in the applicant's full-time Illinois employees and who is receiving a basic wage as compensation. The term "new employee" does not include:

 

            A person who was previously employed in Illinois by the applicant or a related member prior to the onset of the incentive period, except for any employee who was  released from employment prior to January 1, 2010;

 

            Any individual who has a direct or indirect ownership interest of at least 5 percent in the profits, capital, or value of the applicant or a related member; [35 ILCS 25/10]

 

            An employee of the applicant who was previously employed in Illinois by the applicant or a related member of the applicant and whose employment was shifted to the taxpayer after the taxpayer applied for the Tax Certificate.

 

"Noncompliance date" means, in the case of an applicant that is not complying with the requirements of the provisions of the Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the provisions of the Act, as determined by the Director, pursuant to Section 45 of the Act. [35 ILCS 25/10]

 

"Related member" means a person that, with respect to the applicant during any portion of the incentive period, is any one of the following:

 

            An individual, if the individual and the members of the individual's family (as defined in section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

 

            A partnership, estate, or trust and any partner or beneficiary, if the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

 

            A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the applicant and any other related member own, in the aggregate, directly, indirectly, beneficially, or constructively, at least 50% of the value of the corporation's outstanding stock.

 

            A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the corporation and all such related parties own, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

 

            A person to or from whom there is attribution of stock ownership in accordance with section 1563(e) of the Internal Revenue Code, except that for purposes of determining whether a person is a related member under this paragraph, "20%" shall be substituted for "5%" whenever "5%" appears in section 1563(e) of the Internal Revenue Code.  [35 ILCS 25/10]

 

Section 529.30  Maximum Amount of Available Credits

 

The Department shall limit the monetary amount of credits awarded under the Act to no more than $50,000,000.  If applications for a greater amount are received, credits shall be allowed on a first-come, first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department.  If more than one certificate of eligibility is received on the same day, the credits will be awarded based on the time of submission for that particular day.  [35 ILCS 25/30]

 

Section 529.40  Eligibility Determination

 

a)         In order to qualify for credits under the Act, an applicant must adhere to the requirements established by the Department. The Department shall require that any application must be submitted via the Department's web-based application process.

 

b)         An applicant that has hired a new employee during the incentive period may apply via the Department's web-based application process for the credit with respect to that position on or after the date of hire of the new employee.  The date of hire shall be the first day on which the employee begins providing services for basic wage compensation. 

 

c)         An applicant may apply for the credit for more than one new employee on or after the date of hire of each qualifying new employee.  [35 ILCS 25/20(b)]

 

d)         Although an application for a tax credit certificate may be filed at any time after the conclusion of the 12-month period after a new employee was hired, an application filed more than 90 days after the earliest date on which it could have been filed shall not be awarded any credit if, prior to the date it is filed, the Department has received applications under this Section for credit totaling more than $50,000,000.  [35 ILCS 25/35(b)]

 

Section 529.50  Application Format

 

a)         The Department will provide interested applicants with information upon request. Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

 

b)         All applications shall be submitted electronically to the Department. The application shall at a minimum include:

 

1)         The name, address, email, and telephone number of applicant; key contact and title; total number of new employees to be hired; company Federal Employer Identification Number (FEIN).

 

2)         The employment start date for the hired new employee and the title for the jobs created.

 

3)         Any other provisions or information the Department determines necessary to facilitate the Department's evaluation.

 

c)         The applicant is responsible for the accuracy of all data, information and documentation submitted to the Department.

 

d)         Any materials or data made available or received by any agent or employee of the Department shall be deemed confidential and shall not be deemed public records to the extent that the materials or data consist of trade secrets or commercial or financial information regarding the operation of the business conducted by the applicant for, or recipient of, any tax credit under the Act.

 

Section 529.60  Application Review

 

a)         The Department shall accept applications during the incentive period and via the

procedures established by the Department.

 

b)         After receipt of an application, the Department shall issue a certificate of eligibility to the applicant stating:

 

1)         The date and time on which the application was received by the Department and an identifying number assigned to the applicant.

 

2)         The maximum amount of the credit the applicant could potentially receive under the Act with respect to the new employees listed on the application.

 

3)         The maximum amount of the credit potentially allowable on certificates of eligibility issued for applications received prior to the application for which the certificate of eligibility is issued. 

 

c)         The Department is not responsible for any errors or delays in providing an application denial/approval caused by errors in any of the application information provided by the applicant or by any technical problems beyond the Department's control.

 

Section 529.70  Application Approval/Denial

 

a)         Applicants shall be notified as to the Department's evaluation of all completed applications.  If the Department denies either the application for the certificate of eligibility or the tax credit certificate, it will specify the reasons for the denial.

 

b)         For tax years beginning on or after January 1, 2011, an applicant who has received a certificate of eligibility under the Act and who has sustained the mandatory employment figure is entitled to a tax credit certificate to be used against the taxes imposed under Section 201(a) and (b) of the Illinois Income Tax Act [35 ILCS 5/201(a) and (b)].

 

Section 529.80  Determination of Credit Amount 

 

a)         The Department shall determine the amount of credit awarded under the Act.  Subject to the conditions set forth in the Act, applicant is entitled to a credit against payment of taxes withheld under Section 704A of the Illinois Income Tax Act for calendar years ending on or after the date that is 12 months after the date of hire of a new employee. The credit shall be allowed as a credit to an applicant for each full-time employee hired during the incentive period that results in a net increase in full-time Illinois employees, when the net increase in the employer's full-time Illinois employees is maintained for at least 12 months. [35 ILCS 25/25(a)]

 

b)         The Department shall make credit awards under the Act to further job creation. [35 ILCS 25/25(b)]

 

c)         The credit shall be claimed for the first calendar year ending on or after the date on which the certificate is issued by the Department. [35 ILCS 25/25(c)]

 

d)         The total amount of the credit shall not exceed $2,500 per new employee hired. [35 ILCS 25/25(d)]

 

e)         The net increase in full-time Illinois employees, measured on an annual full-time equivalent basis, shall be the total number of full-time Illinois employees of the applicant on June 30, 2011, minus the number of full-time Illinois employees employed by the employer on July 1, 2010. For purposes of the calculation, an employer that begins doing business in this State during the incentive period, as determined by the Director, shall be treated as having zero Illinois employees on July 1, 2010. [35 ILCS 25/25(e)]

 

f)         The net increase in the number of full-time Illinois employees of the applicant must be sustained continuously for at least 12 months, starting with the date of hire of a new employee during the incentive period. Eligibility for the credit does not depend on the continuous employment of any particular individual. For purposes of this subsection (f), if a new employee ceases to be employed before the completion of the 12-month period for any reason, the net increase in the number of full-time Illinois employees shall be treated as continuous if a different new employee is hired as a replacement within a reasonable time for the same position. [35 ILCS 25/25(f)]

 

Section 529.90  Applicant Responsibilities

 

Each applicant who the Department determines qualifies for a credit agrees to the requisites of the Act.  Requirements that the applicant must comply with include, but are not limited to, the following:

 

a)         A requirement that the applicant retain any new employee for the 12-month period after a new employee has been hired. The applicant shall also provide the following:

 

1)         The names, Social Security numbers, job descriptions, salary or wage rates, and dates of hire of the new employees with respect to whom the credit is being requested.

 

2)         Certification that each new employee listed has been retained on the job for one year from the date of hire.

 

3)         The number of new employees hired by the applicant during the incentive period.

 

4)         The net increase in the number of full-time Illinois employees of the applicant (including the new employees listed in the request) between the beginning of the incentive period and the dates on which the new employees listed in the request were hired.

 

5)         An acknowledgement that the Director is authorized to verify with the appropriate State agencies the information contained in the request before issuing a certificate to the applicant. [35 ILCS 25/35]

 

b)         A requirement that the Department is authorized to verify with the appropriate State agencies information required to be reported by the applicant. 

 

c)         A requirement that the applicant shall provide notification to the Department not more than 30 days after the job creation is no longer being or will be achieved or maintained as set forth in the terms and conditions of the Act.

 

d)         Any other provisions that the Department determines are necessary to comply with the Act and other applicable State laws and administrative rules.

 

Section 529.100  Tax Credit Certificate  

 

a)         Upon receipt of applicant verification that compliance was maintained in accordance within Section 529.90, the Department shall provide the applicant with a tax credit certificate.  The certificate shall include the following:

 

1)         The name and taxpayer identification number of the applicant.

 

2)         The date on which the certificate is issued.

 

3)         The credit amount.

 

4)         Any other information the Department determines to be appropriate.  [35 ILCS 25/35]

 

b)         An applicant claiming a credit under the Act shall submit to the Illinois Department of Revenue a copy of each certificate issued under Section 35 of the Act with the first return for which the credit shown on the certificate is claimed.  However, failure to submit a copy of the certificate with the applicant's return shall not invalidate a claim for a credit. [35 ILCS 25/40]

 

Section 529.110  Noncompliance

 

a)         If the Department determines that an applicant who has received a credit under the Act is not complying with the requirements or provisions of the Act, the Director shall provide notice to the applicant of the alleged noncompliance, and allow the applicant 35 days to request a hearing under the provisions of the Illinois Administrative Procedure Act [5 ILCS 100]. If, after notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the noncompliance date for each credit claimed. Alleged noncompliance shall include:

 

1)         Demonstration that the taxpayer failed materially to comply with the Act.

 

2)         Demonstration that the taxpayer failed to retain any new employee hired or claimed to have been hired during the incentive period.

 

b)         The Department shall notify an applicant in writing that it is subject to revocation. The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

 

c)         Following revocation the Department will contact the Director of the Illinois Department of Revenue who shall begin proceedings to recover wrongfully exempted State taxes.