Public Act 095-0375
 		





SB0499 Enrolled
LRB095 09029 BDD 29220 b






    AN ACT concerning revenue.

 
    Be it enacted by the People of the State of Illinois,
 
represented in the General Assembly:


 
    Section 5. The Economic Development for a Growing Economy 
Tax Credit Act is amended  by changing Sections 5-5 and 5-15 as 
follows:
 



    (35 ILCS 10/5-5)



    Sec. 5-5. Definitions. As used in this Act:

    "Agreement" means the Agreement between a Taxpayer and the 
Department under
the provisions of Section 5-50 of this Act.

    "Applicant" means a Taxpayer that is operating a business 
located or that
the Taxpayer plans to locate within the State 
of Illinois and that is engaged
in interstate or intrastate 
commerce for the purpose of manufacturing,
processing, 
assembling, warehousing, or distributing products, conducting

research and development, providing tourism services, or 
providing services
in interstate commerce, office industries, 
or agricultural processing, but
excluding retail, retail food, 
health, or professional services.
"Applicant" does not include 
a Taxpayer who closes or
substantially reduces an operation at 
one location in the State and relocates
substantially the same 
operation to another location in the State.  This does
not 
prohibit a Taxpayer from expanding its operations at another 
location in
the State, provided that existing operations of a 
similar nature located within
the State are not closed or 
substantially reduced.  This also does not prohibit
a Taxpayer 
from moving its operations from one location in the State to 
another
location in the State for the purpose of expanding the 
operation provided that
the Department determines that 
expansion cannot reasonably be accommodated
within the 
municipality in which the business is located, or in the case 
of a
business located in an incorporated area of the county, 
within the county in
which the business is located, after 
conferring with the chief elected
official of the municipality 
or county and taking into consideration any
evidence offered by 
the municipality or county regarding the ability to
accommodate 
expansion within the municipality or county.

    "Committee" means the Illinois Business Investment 
Committee created under
Section 5-25 of this Act within the 
Illinois Economic Development Board.

    "Credit" means the amount agreed to between the Department 
and Applicant
under this Act, but not to exceed the Incremental 
Income Tax attributable to
the Applicant's project.

    "Department" means the Department of Commerce and Economic 
Opportunity.

    "Director" means the Director of Commerce and Economic 
Opportunity.

    "Full-time Employee" means an individual who is employed 
for consideration
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 employment. An 
individual for whom a W-2 is issued by a Professional Employer 
Organization (PEO) is a full-time employee if employed in the 
service of the Applicant for consideration 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 
employment to Applicant.


    "Incremental Income Tax" means the total amount withheld 
during the taxable
year from the compensation of New Employees 
under Article 7 of the Illinois
Income Tax Act arising from 
employment at a project that is the subject of an
Agreement.

    "New Employee" means:


        (a) A Full-time Employee first employed by a Taxpayer 
    in the project
that is the subject of an Agreement and who 
    is hired after the Taxpayer
enters into the tax credit 
    Agreement.


        (b) The term "New Employee" does not include:


            (1) an employee of the Taxpayer who performs a job 
        that was previously
performed by another employee, if 
        that job existed for at least 6
months before hiring 
        the employee;


            (2) an employee of the Taxpayer who was previously 
        employed in
Illinois by a Related Member of the 
        Taxpayer and whose employment was
shifted to the 
        Taxpayer after the Taxpayer entered into the tax credit

        Agreement; or


            (3) a child, grandchild, parent, or spouse, other 
        than a spouse who
is legally separated from the 
        individual, of any individual who has a direct
or an 
        indirect ownership interest of at least 5% in the 
        profits, capital, or
value of the Taxpayer.


        (c) Notwithstanding paragraph (1) of subsection (b), 
    an employee may be
considered a New Employee under the 
    Agreement if the employee performs a job
that was 
    previously performed by an employee who was:


            (1) treated under the Agreement as a New Employee; 
        and


            (2) promoted by the Taxpayer to another job.


        (d) Notwithstanding subsection (a), the Department may 
    award Credit to an
Applicant with respect to an employee 
    hired prior to the date of the Agreement
if:


            (1) the Applicant is in receipt of a letter from 
        the Department stating
an
intent to enter into a credit 
        Agreement;


            (2) the letter described in paragraph (1) is issued 
        by the
Department not later than 15 days after the 
        effective date of this Act; and


            (3) the employee was hired after the date the 
        letter described in
paragraph (1) was issued.

    "Noncompliance Date" means, in the case of a Taxpayer that 
is not complying
with the requirements of the Agreement or the 
provisions of this Act, the day
following the last date upon 
which the Taxpayer was in compliance with the
requirements of 
the Agreement and the provisions of this Act, as determined
by 
the Director, pursuant to Section 5-65.

    "Pass Through Entity" means an entity that is exempt from 
the tax under
subsection (b) or (c) of Section 205 of the 
Illinois Income Tax Act.

    "Professional Employer Organization" (PEO) means an 
employee leasing company, as defined in Section 206.1(A)(2) of 
the Illinois Unemployment Insurance Act.

    "Related Member" means a person that, with respect to the 
Taxpayer during
any portion of the taxable year, is any one  of 
the following:


        (1) An individual stockholder, if the stockholder and 
    the members of the
stockholder'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 value of the Taxpayer's 
    outstanding stock.


        (2) 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 value of the

    Taxpayer.


        (3) A corporation, and any party related to the 
    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 Taxpayer 
    owns
directly, indirectly, beneficially, or constructively 
    at least
50% of the value of the corporation's outstanding 
    stock.


        (4) 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 
    value of the
Taxpayer.


        (5) A person to or from whom there is attribution of 
    stock ownership
in accordance with Section 1563(e) of the 
    Internal Revenue Code, except,
for purposes of determining 
    whether a person is a Related Member under
this paragraph, 
    20% shall be substituted for 5% wherever  5% appears in

    Section 1563(e) of the Internal Revenue Code.

    "Taxpayer" means an individual, corporation, partnership, 
or other entity
that has any Illinois Income Tax liability.

(Source: P.A. 94-793, eff. 5-19-06.)

 



    (35 ILCS 10/5-15)



    Sec. 5-15. Tax Credit Awards. Subject to the conditions set 
forth in this
Act, a Taxpayer is
entitled to a Credit against 
taxes imposed pursuant to subsections (a) and (b)
of Section 
201 of the Illinois
Income Tax Act that may be imposed on the 
Taxpayer for a taxable year beginning
on or
after January 1, 
1999,
if the Taxpayer is awarded a Credit by the Department 
under this Act for that
taxable year.

    (a) The Department shall make Credit awards under this Act 
to foster job
creation and retention in Illinois.

    (b) A person that proposes a project to create new jobs in 
Illinois must
enter into an Agreement with the
Department for 
the Credit under this Act.

    (c) The Credit shall be claimed for the taxable years 
specified in the
Agreement.

    (d) The Credit shall not exceed the Incremental Income Tax 
attributable to
the project that is the subject of the 
Agreement.

    (e) Nothing herein shall prohibit a Tax Credit Award to an 
Applicant that uses a PEO if all other award criteria are 
satisfied.

(Source: P.A. 91-476, eff. 8-11-99.)

 

    Section 99. Effective date. This Act takes effect upon 
becoming law.