Sen. Steve Stadelman
Filed: 4/25/2018
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1 | AMENDMENT TO SENATE BILL 3527
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2 | AMENDMENT NO. ______. Amend Senate Bill 3527 by replacing | ||||||
3 | everything after the enacting clause with the following:
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4 | "Section 5. The Illinois Income Tax Act is amended by | ||||||
5 | changing Section 221 as follows: | ||||||
6 | (35 ILCS 5/221) | ||||||
7 | Sec. 221. Rehabilitation costs; qualified historic | ||||||
8 | properties; River Edge Redevelopment Zone. | ||||||
9 | (a) For taxable years that begin beginning on or after | ||||||
10 | January 1, 2012 and begin ending prior to January 1, 2018 | ||||||
11 | January 1, 2022 , there shall be allowed a tax credit against | ||||||
12 | the tax imposed by subsections (a) and (b) of Section 201 of | ||||||
13 | this Act in an amount equal to 25% of qualified expenditures | ||||||
14 | incurred by a qualified taxpayer during the taxable year in the | ||||||
15 | restoration and preservation of a qualified historic structure | ||||||
16 | located in a River Edge Redevelopment Zone pursuant to a |
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1 | qualified rehabilitation plan, provided that the total amount | ||||||
2 | of such expenditures (i) must equal $5,000 or more and (ii) | ||||||
3 | must exceed 50% of the purchase price of the property. | ||||||
4 | (a-1) For taxable years that begin on or after January 1, | ||||||
5 | 2018 and end prior to January 1, 2022, there shall be allowed a | ||||||
6 | tax credit against the tax imposed by subsections (a) and (b) | ||||||
7 | of Section 201 of this Act in an aggregate amount equal to 25% | ||||||
8 | of qualified expenditures incurred by a qualified taxpayer in | ||||||
9 | the restoration and preservation of a qualified historic | ||||||
10 | structure located in a River Edge Redevelopment Zone pursuant | ||||||
11 | to a qualified rehabilitation plan, provided that the total | ||||||
12 | amount of such expenditures (i) must equal $5,000 or more and | ||||||
13 | (ii) must exceed the adjusted basis of the qualified historic | ||||||
14 | structure on the first day the qualified rehabilitation plan | ||||||
15 | begins. If the qualified rehabilitation plan spans multiple | ||||||
16 | years, the aggregate credit for the entire project shall be | ||||||
17 | allowed in the last taxable year. | ||||||
18 | (b) To obtain a tax credit pursuant to this Section, the | ||||||
19 | taxpayer must apply with the Department of Natural Resources | ||||||
20 | Commerce and Economic Opportunity . The Department of Natural | ||||||
21 | Resources Commerce and Economic Opportunity, in consultation | ||||||
22 | with the Historic Preservation Agency, shall determine the | ||||||
23 | amount of eligible rehabilitation costs and expenses within 30 | ||||||
24 | days of receipt of a complete application. For rehabilitation | ||||||
25 | projects with qualified rehabilitation costs and expenses in | ||||||
26 | excess of $250,000, the taxpayer must provide to the Department |
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1 | of Natural Resources a third-party audit conducted by a | ||||||
2 | professionally qualified, independent auditor verifying (i) | ||||||
3 | the project expenses, (ii) whether they are qualified | ||||||
4 | expenditures, and (iii) that the qualified expenditures exceed | ||||||
5 | the adjusted basis of the qualified historic structure on the | ||||||
6 | first day the qualified rehabilitation plan commenced. The | ||||||
7 | Department of Natural Resources is authorized, but not | ||||||
8 | required, to accept this audit to determine the amount of | ||||||
9 | qualified expenditures. For projects with less than $500,000 in | ||||||
10 | qualified rehabilitation costs, the taxpayer must submit a | ||||||
11 | certification of costs prepared by a certified public | ||||||
12 | accountant and certify that the qualified expenditures exceed | ||||||
13 | the adjusted basis of the qualified historic structure on the | ||||||
14 | first day the qualified rehabilitation plan commenced. The | ||||||
15 | Department of Natural Resources is authorized, but not | ||||||
16 | required, to accept this certification of costs to determine | ||||||
17 | the amount of qualified expenditures and the amount of the | ||||||
18 | credit . The Department of Natural Resources and the National | ||||||
19 | Park Service Historic Preservation Agency shall determine | ||||||
20 | whether the rehabilitation is consistent with the standards of | ||||||
21 | the Secretary of the United States Department of the Interior | ||||||
22 | for rehabilitation. | ||||||
23 | (b-1) Upon completion and review of the project, the | ||||||
24 | Department of Natural Resources Commerce and Economic | ||||||
25 | Opportunity shall issue a single certificate in the amount of | ||||||
26 | the eligible credits equal to 25% of qualified expenditures |
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1 | incurred during the eligible taxable years, as defined in | ||||||
2 | subsections (a) and (a-1) . At the time the certificate is | ||||||
3 | issued, an issuance fee up to the maximum amount of 2% of the | ||||||
4 | amount of the credits issued by the certificate may be | ||||||
5 | collected from the applicant to administer the provisions of | ||||||
6 | this Section. If collected, this issuance fee shall be | ||||||
7 | deposited into the Historic Property Administrative Fund, a | ||||||
8 | special fund created in the State treasury. Subject to | ||||||
9 | appropriation, moneys in the Historic Property Administrative | ||||||
10 | Fund shall be provided to the Department of Natural Resources | ||||||
11 | as reimbursement evenly divided between the Department of | ||||||
12 | Commerce and Economic Opportunity and the Historic | ||||||
13 | Preservation Agency to reimburse the Department of Commerce and | ||||||
14 | Economic Opportunity and the Historic Preservation Agency for | ||||||
15 | the costs associated with administering this Section. The | ||||||
16 | taxpayer must attach the certificate to the tax return on which | ||||||
17 | the credits are to be claimed. The Department of Commerce and | ||||||
18 | Economic Opportunity may adopt rules to implement this Section. | ||||||
19 | (c) The taxpayer must attach the certificate to the tax | ||||||
20 | return on which the credits are to be claimed. The tax credit | ||||||
21 | under this Section may not reduce the taxpayer's liability to | ||||||
22 | less than
zero. If the amount of the credit exceeds the tax | ||||||
23 | liability for the year, the excess credit may be carried | ||||||
24 | forward and applied to the tax liability of the 5 taxable years | ||||||
25 | following the excess credit year. | ||||||
26 | (c-1) If the taxpayer is a partnership, a Subchapter S |
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1 | corporation, or a limited liability company that has elected | ||||||
2 | partnership tax treatment, the credit is allowed to the | ||||||
3 | partners, shareholders, or members in accordance with the | ||||||
4 | determination of income and distributive share of income under | ||||||
5 | the Internal Revenue Code. | ||||||
6 | (c-3) If a recapture event occurs during the recapture | ||||||
7 | period with respect to a qualified historic structure, then for | ||||||
8 | any taxable year in which the credits allowed under subsection | ||||||
9 | (a) or (a-1) have been applied, the tax under the applicable | ||||||
10 | section of this Act shall be increased by applying the | ||||||
11 | recapture percentage set forth below to the tax decrease | ||||||
12 | resulting from the application of credits allowed under | ||||||
13 | subsection (a) or (a-1) to the taxable year in question. | ||||||
14 | For purposes of this subsection, the recapture percentage | ||||||
15 | shall be determined as follows: | ||||||
16 | (1) if the recapture event occurs within the first year | ||||||
17 | after commencement of the recapture period, then the | ||||||
18 | recapture percentage is 100%; | ||||||
19 | (2) if the recapture event occurs within the second | ||||||
20 | year after commencement of the recapture period, then the | ||||||
21 | recapture percentage is 80%; | ||||||
22 | (3) if the recapture event occurs within the third year | ||||||
23 | after commencement of the recapture period, then the | ||||||
24 | recapture percentage is 60%; | ||||||
25 | (4) if the recapture event occurs within the fourth | ||||||
26 | year after commencement of the recapture period, then the |
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1 | recapture percentage is 40%; and | ||||||
2 | (5) if the recapture event occurs within the fifth year | ||||||
3 | after commencement of the recapture period, then the | ||||||
4 | recapture percentage is 20%. | ||||||
5 | In the case of any recapture event, the carryforwards under | ||||||
6 | subsection (c) above shall be adjusted by reason of such event. | ||||||
7 | (c-4) Subject to appropriation and prior to equal | ||||||
8 | disbursement to the Department of Natural Resources, moneys in | ||||||
9 | the Historic Property Administrative Fund shall be used, on a | ||||||
10 | biennial basis beginning at the end of the second fiscal year | ||||||
11 | after the effective date of this amendatory Act of the 100th | ||||||
12 | General Assembly, to hire a qualified third party to prepare a | ||||||
13 | biennial report to assess the overall economic impact to the | ||||||
14 | State from the qualified rehabilitation projects under this Act | ||||||
15 | completed in that year and in previous years. The overall | ||||||
16 | economic impact shall include at least: (i) the direct and | ||||||
17 | indirect or induced economic impacts of completed projects; | ||||||
18 | (ii) temporary, permanent, and construction jobs created; | ||||||
19 | (iii) sales, income, and property tax generation before, during | ||||||
20 | construction, and after completion; and (iv) indirect | ||||||
21 | neighborhood impact after completion. | ||||||
22 | (c-5) The Department of Natural Resources may adopt rules | ||||||
23 | to implement this Section in addition to the rules expressly | ||||||
24 | authorized herein. | ||||||
25 | (d) As used in this Section, the following terms have the | ||||||
26 | following meanings. |
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1 | "Placed in service" means the date the historic structure | ||||||
2 | or the rehabilitated portion thereof is first placed in a | ||||||
3 | condition or state of readiness or occupancy and is operational | ||||||
4 | for its specifically assigned function or use. If the property | ||||||
5 | remains in service during the rehabilitation, the placed in | ||||||
6 | service date will be commensurate with the date of completion | ||||||
7 | of the rehabilitation project as per the qualified | ||||||
8 | rehabilitation plan. | ||||||
9 | "Qualified expenditure" means all the costs and expenses | ||||||
10 | defined as qualified rehabilitation expenditures under Section | ||||||
11 | 47 of the federal Internal Revenue Code that were incurred in | ||||||
12 | connection with a qualified historic structure. | ||||||
13 | "Qualified historic structure" means a certified historic | ||||||
14 | structure as defined under Section 47(c)(3) of the federal | ||||||
15 | Internal Revenue Code. | ||||||
16 | "Qualified rehabilitation plan" means a project that is | ||||||
17 | approved by the Department of Natural Resources and the | ||||||
18 | National Park Service Historic Preservation Agency as being | ||||||
19 | consistent with the standards in effect on the effective date | ||||||
20 | of this amendatory Act of the 97th General Assembly for | ||||||
21 | rehabilitation as adopted by the federal Secretary of the | ||||||
22 | Interior. | ||||||
23 | "Qualified taxpayer" means the owner of the qualified | ||||||
24 | historic structure or any other person who qualifies for the | ||||||
25 | federal rehabilitation credit allowed by Section 47 of the | ||||||
26 | federal Internal Revenue Code with respect to that qualified |
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1 | historic structure. Partners, shareholders of subchapter S | ||||||
2 | corporations, and owners of limited liability companies (if the | ||||||
3 | limited liability company is treated as a partnership for | ||||||
4 | purposes of federal and State income taxation) are entitled to | ||||||
5 | a credit under this Section to be determined in accordance with | ||||||
6 | the determination of income and distributive share of income | ||||||
7 | under Sections 702 and 703 and subchapter S of the Internal | ||||||
8 | Revenue Code, provided that credits granted to a partnership, a | ||||||
9 | limited liability company taxed as a partnership, or other | ||||||
10 | multiple owners of property shall be passed through to the | ||||||
11 | partners, members, or owners respectively on a pro rata basis | ||||||
12 | or pursuant to an executed agreement among the partners, | ||||||
13 | members, or owners documenting any alternate distribution | ||||||
14 | method.
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15 | "Recapture event" means any of the following events | ||||||
16 | occurring during the recapture period: | ||||||
17 | (1) failure to place in service the rehabilitated | ||||||
18 | portions of the qualified historic structure, or failure to | ||||||
19 | maintain the rehabilitated portions of the qualified | ||||||
20 | historic structure in service after they are placed in | ||||||
21 | service; provided that a recapture event under this | ||||||
22 | paragraph (1) shall not include a removal from service for | ||||||
23 | a reasonable period of time to conduct maintenance and | ||||||
24 | repairs that are reasonably necessary to protect the health | ||||||
25 | and safety of the public or to protect the structural | ||||||
26 | integrity of the qualified historic structure or a |
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1 | neighboring structure; | ||||||
2 | (2) demolition or other alteration of the qualified | ||||||
3 | historic structure in a manner that is inconsistent with | ||||||
4 | the qualified rehabilitation plan or the Secretary of the | ||||||
5 | Interior's Standards for Rehabilitation; | ||||||
6 | (3) disposition of the rehabilitated qualified | ||||||
7 | historic structure in whole or a proportional disposition | ||||||
8 | of a partnership interest therein, except as otherwise | ||||||
9 | permitted by this Section; or | ||||||
10 | (4) use of the qualified historic structure in a manner | ||||||
11 | that is inconsistent with the qualified rehabilitation | ||||||
12 | plan or that is otherwise inconsistent with the provisions | ||||||
13 | and intent of this Section. | ||||||
14 | A recapture event occurring in one taxable year shall be | ||||||
15 | deemed continuing to subsequent taxable years unless and until | ||||||
16 | corrected. | ||||||
17 | The following dispositions of a qualified historic | ||||||
18 | structure shall not be deemed to be a recapture event for | ||||||
19 | purposes of this Section: | ||||||
20 | (1) a transfer by reason of death; | ||||||
21 | (2) a transfer between spouses incident to divorce; | ||||||
22 | (3) a sale by and leaseback to an entity that, when the | ||||||
23 | rehabilitated portions of the qualified historic structure | ||||||
24 | are placed in service, will be a lessee of the qualified | ||||||
25 | historic structure, but only for so long as the entity | ||||||
26 | continues to be a lessee; and |
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1 | (4) a mere change in the form of conducting the trade | ||||||
2 | or business by the owner (or, if applicable, the lessee) of | ||||||
3 | the qualified historic structure, so long as the property | ||||||
4 | interest in such qualified historic structure is retained | ||||||
5 | in such trade or business and the owner or lessee retains a | ||||||
6 | substantial interest in such trade or business. | ||||||
7 | "Recapture period" means the 5-year period beginning on the | ||||||
8 | date that the qualified historic structure or rehabilitated | ||||||
9 | portions thereof are placed in service. | ||||||
10 | (Source: P.A. 99-914, eff. 12-20-16; 100-236, eff. 8-18-17.)".
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