Bill Text: IL HB2900 | 2019-2020 | 101st General Assembly | Introduced


Bill Title: Amends the Illinois Income Tax Act if and only if Senate Bill 1 of the 101st General Assembly becomes law. Provides that a withholding tax credit for full-time equivalent employees created in Senate Bill 1 applies for reporting periods that begin on or after January 1, 2020 (in the bill, reporting periods that begin on or after January 1, 2020 and end on or before December 31, 2027). Provides that the maximum credit is determined by the Metropolitan and Nonmetropolitan area of the State that is the base of operations of the employee, as those areas are determined as of May 2017. Makes changes concerning the amount of the credit based on the Metropolitan and Nonmetropolitan area of the State. Effective immediately.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced) 2019-05-16 - Added Co-Sponsor Rep. Diane Pappas [HB2900 Detail]

Download: Illinois-2019-HB2900-Introduced.html


101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2900

Introduced , by Rep. Anthony DeLuca

SYNOPSIS AS INTRODUCED:
35 ILCS 5/704A

Amends the Illinois Income Tax Act if and only if Senate Bill 1 of the 101st General Assembly becomes law. Provides that a withholding tax credit for full-time equivalent employees created in Senate Bill 1 applies for reporting periods that begin on or after January 1, 2020 (in the bill, reporting periods that begin on or after January 1, 2020 and end on or before December 31, 2027). Provides that the maximum credit is determined by the Metropolitan and Nonmetropolitan area of the State that is the base of operations of the employee, as those areas are determined as of May 2017. Makes changes concerning the amount of the credit based on the Metropolitan and Nonmetropolitan area of the State. Effective immediately.
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A BILL FOR

HB2900LRB101 11158 HLH 56395 b
1 AN ACT concerning revenue.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 5. If and only if Senate Bill 1 of the 101st
5General Assembly becomes law, the Illinois Income Tax Act is
6amended by changing Section 704A as follows:
7 (35 ILCS 5/704A)
8 Sec. 704A. Employer's return and payment of tax withheld.
9 (a) In general, every employer who deducts and withholds or
10is required to deduct and withhold tax under this Act on or
11after January 1, 2008 shall make those payments and returns as
12provided in this Section.
13 (b) Returns. Every employer shall, in the form and manner
14required by the Department, make returns with respect to taxes
15withheld or required to be withheld under this Article 7 for
16each quarter beginning on or after January 1, 2008, on or
17before the last day of the first month following the close of
18that quarter.
19 (c) Payments. With respect to amounts withheld or required
20to be withheld on or after January 1, 2008:
21 (1) Semi-weekly payments. For each calendar year, each
22 employer who withheld or was required to withhold more than
23 $12,000 during the one-year period ending on June 30 of the

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1 immediately preceding calendar year, payment must be made:
2 (A) on or before each Friday of the calendar year,
3 for taxes withheld or required to be withheld on the
4 immediately preceding Saturday, Sunday, Monday, or
5 Tuesday;
6 (B) on or before each Wednesday of the calendar
7 year, for taxes withheld or required to be withheld on
8 the immediately preceding Wednesday, Thursday, or
9 Friday.
10 Beginning with calendar year 2011, payments made under
11 this paragraph (1) of subsection (c) must be made by
12 electronic funds transfer.
13 (2) Semi-weekly payments. Any employer who withholds
14 or is required to withhold more than $12,000 in any quarter
15 of a calendar year is required to make payments on the
16 dates set forth under item (1) of this subsection (c) for
17 each remaining quarter of that calendar year and for the
18 subsequent calendar year.
19 (3) Monthly payments. Each employer, other than an
20 employer described in items (1) or (2) of this subsection,
21 shall pay to the Department, on or before the 15th day of
22 each month the taxes withheld or required to be withheld
23 during the immediately preceding month.
24 (4) Payments with returns. Each employer shall pay to
25 the Department, on or before the due date for each return
26 required to be filed under this Section, any tax withheld

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1 or required to be withheld during the period for which the
2 return is due and not previously paid to the Department.
3 (d) Regulatory authority. The Department may, by rule:
4 (1) Permit employers, in lieu of the requirements of
5 subsections (b) and (c), to file annual returns due on or
6 before January 31 of the year for taxes withheld or
7 required to be withheld during the previous calendar year
8 and, if the aggregate amounts required to be withheld by
9 the employer under this Article 7 (other than amounts
10 required to be withheld under Section 709.5) do not exceed
11 $1,000 for the previous calendar year, to pay the taxes
12 required to be shown on each such return no later than the
13 due date for such return.
14 (2) Provide that any payment required to be made under
15 subsection (c)(1) or (c)(2) is deemed to be timely to the
16 extent paid by electronic funds transfer on or before the
17 due date for deposit of federal income taxes withheld from,
18 or federal employment taxes due with respect to, the wages
19 from which the Illinois taxes were withheld.
20 (3) Designate one or more depositories to which payment
21 of taxes required to be withheld under this Article 7 must
22 be paid by some or all employers.
23 (4) Increase the threshold dollar amounts at which
24 employers are required to make semi-weekly payments under
25 subsection (c)(1) or (c)(2).
26 (e) Annual return and payment. Every employer who deducts

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1and withholds or is required to deduct and withhold tax from a
2person engaged in domestic service employment, as that term is
3defined in Section 3510 of the Internal Revenue Code, may
4comply with the requirements of this Section with respect to
5such employees by filing an annual return and paying the taxes
6required to be deducted and withheld on or before the 15th day
7of the fourth month following the close of the employer's
8taxable year. The Department may allow the employer's return to
9be submitted with the employer's individual income tax return
10or to be submitted with a return due from the employer under
11Section 1400.2 of the Unemployment Insurance Act.
12 (f) Magnetic media and electronic filing. With respect to
13taxes withheld in calendar years prior to 2017, any W-2 Form
14that, under the Internal Revenue Code and regulations
15promulgated thereunder, is required to be submitted to the
16Internal Revenue Service on magnetic media or electronically
17must also be submitted to the Department on magnetic media or
18electronically for Illinois purposes, if required by the
19Department.
20 With respect to taxes withheld in 2017 and subsequent
21calendar years, the Department may, by rule, require that any
22return (including any amended return) under this Section and
23any W-2 Form that is required to be submitted to the Department
24must be submitted on magnetic media or electronically.
25 The due date for submitting W-2 Forms shall be as
26prescribed by the Department by rule.

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1 (g) For amounts deducted or withheld after December 31,
22009, a taxpayer who makes an election under subsection (f) of
3Section 5-15 of the Economic Development for a Growing Economy
4Tax Credit Act for a taxable year shall be allowed a credit
5against payments due under this Section for amounts withheld
6during the first calendar year beginning after the end of that
7taxable year equal to the amount of the credit for the
8incremental income tax attributable to full-time employees of
9the taxpayer awarded to the taxpayer by the Department of
10Commerce and Economic Opportunity under the Economic
11Development for a Growing Economy Tax Credit Act for the
12taxable year and credits not previously claimed and allowed to
13be carried forward under Section 211(4) of this Act as provided
14in subsection (f) of Section 5-15 of the Economic Development
15for a Growing Economy Tax Credit Act. The credit or credits may
16not reduce the taxpayer's obligation for any payment due under
17this Section to less than zero. If the amount of the credit or
18credits exceeds the total payments due under this Section with
19respect to amounts withheld during the calendar year, the
20excess may be carried forward and applied against the
21taxpayer's liability under this Section in the succeeding
22calendar years as allowed to be carried forward under paragraph
23(4) of Section 211 of this Act. The credit or credits shall be
24applied to the earliest year for which there is a tax
25liability. If there are credits from more than one taxable year
26that are available to offset a liability, the earlier credit

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1shall be applied first. Each employer who deducts and withholds
2or is required to deduct and withhold tax under this Act and
3who retains income tax withholdings under subsection (f) of
4Section 5-15 of the Economic Development for a Growing Economy
5Tax Credit Act must make a return with respect to such taxes
6and retained amounts in the form and manner that the
7Department, by rule, requires and pay to the Department or to a
8depositary designated by the Department those withheld taxes
9not retained by the taxpayer. For purposes of this subsection
10(g), the term taxpayer shall include taxpayer and members of
11the taxpayer's unitary business group as defined under
12paragraph (27) of subsection (a) of Section 1501 of this Act.
13This Section is exempt from the provisions of Section 250 of
14this Act. No credit awarded under the Economic Development for
15a Growing Economy Tax Credit Act for agreements entered into on
16or after January 1, 2015 may be credited against payments due
17under this Section.
18 (h) An employer may claim a credit against payments due
19under this Section for amounts withheld during the first
20calendar year ending after the date on which a tax credit
21certificate was issued under Section 35 of the Small Business
22Job Creation Tax Credit Act. The credit shall be equal to the
23amount shown on the certificate, but may not reduce the
24taxpayer's obligation for any payment due under this Section to
25less than zero. If the amount of the credit exceeds the total
26payments due under this Section with respect to amounts

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1withheld during the calendar year, the excess may be carried
2forward and applied against the taxpayer's liability under this
3Section in the 5 succeeding calendar years. The credit shall be
4applied to the earliest year for which there is a tax
5liability. If there are credits from more than one calendar
6year that are available to offset a liability, the earlier
7credit shall be applied first. This Section is exempt from the
8provisions of Section 250 of this Act.
9 (i) Each employer with 50 or fewer full-time equivalent
10employees during the reporting period may claim a credit
11against the payments due under this Section for each qualified
12employee in an amount equal to the maximum credit allowable.
13The credit may be taken against payments due for reporting
14periods that begin on or after January 1, 2020, and end on or
15before December 31, 2027. An employer may not claim a credit
16for an employee who has been employed worked fewer than 90
17consecutive days immediately preceding the reporting period;
18however, such credits may accrue during that 90-day period and
19be claimed against payments under this Section for future
20reporting periods after the employee has been employed by
21worked for the employer at least 90 consecutive days. In no
22event may the credit exceed the employer's liability for the
23reporting period. Each employer who deducts and withholds or is
24required to deduct and withhold tax under this Act and who
25retains income tax withholdings under this subsection must make
26a return with respect to such taxes and retained amounts in the

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1form and manner that the Department, by rule, requires and pay
2to the Department or to a depositary designated by the
3Department those withheld taxes not retained by the employer.
4 For each reporting period, the employer may not claim a
5credit or credits for more employees than the number of
6employees making less than the minimum or reduced wage for the
7current calendar year during the last reporting period of the
8preceding calendar year. Notwithstanding any other provision
9of this subsection, an employer shall not be eligible for
10credits for a reporting period unless the average wage paid by
11the employer per employee for all employees making less than
12$55,000 during the reporting period is greater than the average
13wage paid by the employer per employee for all employees making
14less than $55,000 during the same reporting period of the prior
15calendar year.
16 For purposes of this subsection (i):
17 "Compensation paid in Illinois" has the meaning ascribed to
18that term under Section 304(a)(2)(B) of this Act.
19 "Employer" and "employee" have the meaning ascribed to
20those terms in the Minimum Wage Law, except that "employee"
21also includes employees who work for an employer with fewer
22than 4 employees. Employers that operate more than one
23establishment pursuant to a franchise agreement or that
24constitute members of a unitary business group shall aggregate
25their employees for purposes of determining eligibility for the
26credit.

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1 "Full-time equivalent employee" means an employee who
2works a full-time equivalent job, as defined in subsection (i)
3of Section 3 of the Illinois Enterprise Zone Act employees"
4means the ratio of the number of paid hours during the
5reporting period and the number of working hours in that
6period.
7 "Maximum credit" means the percentage listed below of the
8difference between the amount of compensation paid in Illinois
9to employees who are paid not more than the required minimum
10wage reduced by the amount of compensation paid in Illinois to
11employees who were paid less than the current required minimum
12wage during the reporting period prior to each increase in the
13required minimum wage on January 1. If an employer pays an
14employee more than the required minimum wage and that employee
15previously earned less than the required minimum wage, the
16employer may include the portion that does not exceed the
17required minimum wage as compensation paid in Illinois to
18employees who are paid not more than the required minimum wage.
19 The maximum credit is determined by the Metropolitan and
20Nonmetropolitan area of the State that is the base of
21operations of the employee. The Metropolitan and
22Nonmetropolitan areas of this State are those areas as defined
23by the United States Bureau of Labor Statistics as of May 2017.
24 The maximum credit for the City of Chicago and Cook County
25portion of the City of Chicago-Naperville-Elgin region is:
26 (1) 30% 25% for reporting periods beginning on or after

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1 January 1, 2020 and ending on or before December 31, 2020;
2 (2) 30% 21% for reporting periods beginning on or after
3 January 1, 2021 and ending on or before December 31, 2021;
4 (3) 35% 17% for reporting periods beginning on or after
5 January 1, 2022 and ending on or before December 31, 2022;
6 (4) 35% 13% for reporting periods beginning on or after
7 January 1, 2023 and ending on or before December 31, 2023;
8 (5) 40% 9% for reporting periods beginning on or after
9 January 1, 2024 and ending on or before December 31, 2024;
10 (6) 40% 5% for reporting periods beginning on or after
11 January 1, 2025 and thereafter ending on or before December
12 31, 2025.
13 The maximum credit for the City of
14Chicago-Naperville-Elgin region excluding Chicago and Cook
15County is:
16 (1) 30% for reporting periods beginning on or after
17 January 1, 2020 and ending on or before December 31, 2020;
18 (2) 35% for reporting periods beginning on or after
19 January 1, 2021 and ending on or before December 31, 2021;
20 (3) 35% for reporting periods beginning on or after
21 January 1, 2022 and ending on or before December 31, 2022;
22 (4) 40% for reporting periods beginning on or after
23 January 1, 2023;
24 The maximum credit for the Bloomington, Champaign-Urbana,
25and Springfield regions is:
26 (1) 35% for reporting periods beginning on or after

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1 January 1, 2020 and ending on or before December 31, 2020;
2 (2) 35% for reporting periods beginning on or after
3 January 1, 2021 and ending on or before December 31, 2021;
4 (3) 40% for reporting periods beginning on or after
5 January 1, 2022 and ending on or before December 31, 2022;
6 (4) 45% for reporting periods beginning on or after
7 January 1, 2023;
8 The maximum credit for the Cape Girardeau,
9Carbondale-Marion, Davenport-Moline-Rock Island, Peoria, and
10St. Louis MO-IL regions is:
11 (1) 40% for reporting periods beginning on or after
12 January 1, 2020 and ending on or before December 31, 2020;
13 (2) 40% for reporting periods beginning on or after
14 January 1, 2021 and ending on or before December 31, 2021;
15 (3) 45% for reporting periods beginning on or after
16 January 1, 2022 and ending on or before December 31, 2022;
17 (4) 50% for reporting periods beginning on or after
18 January 1, 2023;
19 The maximum credit for the Danville, Decatur, Kankakee, and
20Rockford regions is:
21 (1) 40% for reporting periods beginning on or after
22 January 1, 2020 and ending on or before December 31, 2020;
23 (2) 40% for reporting periods beginning on or after
24 January 1, 2021 and ending on or before December 31, 2021;
25 (3) 45% for reporting periods beginning on or after
26 January 1, 2022 and ending on or before December 31, 2022;

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1 (4) 50% for reporting periods beginning on or after
2 January 1, 2023;
3 The maximum credit for the Northwest Illinois, West Central
4Illinois, East Central Illinois, and South Illinois
5nonmetropolitan areas is;
6 (1) 45% for reporting periods beginning on or after
7 January 1, 2020 and ending on or before December 31, 2020;
8 (2) 45% for reporting periods beginning on or after
9 January 1, 2021 and ending on or before December 31, 2021;
10 (3) 55% for reporting periods beginning on or after
11 January 1, 2022 and ending on or before December 31, 2022;
12 (4) 60% for reporting periods beginning on or after
13 January 1, 2023;
14 The amount computed under this subsection may continue to
15be claimed for reporting periods beginning on or after January
161, 2026 and:
17 (A) ending on or before December 31, 2026 for employers
18 with more than 5 employees; or
19 (B) ending on or before December 31, 2027 for employers
20 with no more than 5 employees.
21 "Qualified employee" means an employee who is paid not more
22than the required minimum wage and has an average wage paid per
23hour by the employer during the reporting period equal to or
24greater than his or her average wage paid per hour by the
25employer during each reporting period for the immediately
26preceding 12 months. A new qualified employee is deemed to have

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1earned the required minimum wage in the preceding reporting
2period.
3 "Reporting period" means the quarter for which a return is
4required to be filed under subsection (b) of this Section.
5(Source: 101SB0001eng.)
6 Section 99. Effective date. This Act takes effect upon
7becoming law.
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