Bill Text: IL HB5038 | 2017-2018 | 100th General Assembly | Introduced

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Bill Title: Amends the Economic Development for a Growing Economy Tax Credit Act. Repeals provisions allowing an applicant to move its operations from one location in the State to another location in the State for the purpose of expanding the operation. Provides that an employee of the Taxpayer who was previously employed in Illinois by the Taxpayer and whose employment was shifted to the project after the Taxpayer entered into the Agreement is not considered a new employee for purposes of the Act. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2019-01-08 - Session Sine Die [HB5038 Detail]

Download: Illinois-2017-HB5038-Introduced.html

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100TH GENERAL ASSEMBLY State of Illinois 2017 and 2018 HB5038 Introduced , by Rep. Bill Mitchell SYNOPSIS AS INTRODUCED:
35 ILCS 10/5-5
35 ILCS 10/5-35
Amends the Economic Development for a Growing Economy Tax Credit Act. Repeals provisions allowing an applicant to move its operations from one location in the State to another location in the State for the purpose of expanding the operation. Provides that an employee of the Taxpayer who was previously employed in Illinois by the Taxpayer and whose employment was shifted to the project after the Taxpayer entered into the Agreement is not considered a new employee for purposes of the Act. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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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 5-35 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

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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 lesser of:
(1) the sum of (i) 50% of the Incremental Income Tax
attributable to New Employees at the Applicant's project and
(ii) 10% of the training costs of New Employees; or (2) 100% of
the Incremental Income Tax attributable to New Employees at the
Applicant's project. However, if the project is located in an
underserved area, then the amount of the Credit may not exceed
the lesser of: (1) the sum of (i) 75% of the Incremental Income

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Tax attributable to New Employees at the Applicant's project
and (ii) 10% of the training costs of New Employees; or (2)
100% of the Incremental Income Tax attributable to New
Employees at the Applicant's project. If an Applicant agrees to
hire the required number of New Employees, then the maximum
amount of the Credit for that Applicant may be increased by an
amount not to exceed 25% of the Incremental Income Tax
attributable to retained employees at the Applicant's project;
provided that, in order to receive the increase for retained
employees, the Applicant must provide the additional evidence
required under paragraph (3) of subsection (b) of Section 5-25.
"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

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during the taxable year from the compensation of New Employees
and, if applicable, retained 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; or .
(4) an employee of the Taxpayer who was previously
employed in Illinois by the Taxpayer and whose

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employment was shifted to the project after the
Taxpayer entered into the Agreement.
(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.

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"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

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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.
"Underserved area" means a geographic area that meets one
or more of the following conditions:
(1) the area has a poverty rate of at least 20%
according to the latest federal decennial census;
(2) 75% or more of the children in the area participate
in the federal free lunch program according to reported
statistics from the State Board of Education;

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(3) at least 20% of the households in the area receive
assistance under the Supplemental Nutrition Assistance
Program (SNAP); or
(4) the area has an average unemployment rate, as
determined by the Illinois Department of Employment
Security, that is more than 120% of the national
unemployment average, as determined by the U.S. Department
of Labor, for a period of at least 2 consecutive calendar
years preceding the date of the application.
(Source: P.A. 100-511, eff. 9-18-17.)
(35 ILCS 10/5-35)
Sec. 5-35. Relocation of jobs in Illinois. A taxpayer is
not entitled to claim the credit provided by this Act with
respect to any jobs that the taxpayer relocates from one site
in Illinois to another site in Illinois. A taxpayer with
respect to a qualifying project certified under the Corporate
Headquarters Relocation Act, however, is not subject to the
requirements of this Section but is nevertheless considered an
applicant for purposes of this Act. Moreover, any full-time
employee of an eligible business relocated to Illinois in
connection with that qualifying project is deemed to be a new
employee for purposes of this Act. Determinations under this
Section shall be made by the Department.
(Source: P.A. 91-476, eff. 8-11-99; 92-207, eff. 8-1-01.)
Section 99. Effective date. This Act takes effect upon

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becoming law.