Bill Text: IL HB4646 | 2023-2024 | 103rd General Assembly | Introduced

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Bill Title: Amends the Small Business Job Creation Tax Credit Act. Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2024 and ending on June 30, 2030. Provides that the basic wage for the second set of incentive periods is $15 per hour. Provides that the credit may not exceed $2,500 per new employee hired, except that, if the new employee is a returning citizen, then the credit for that employee may not exceed $3,500. Provides that the term "returning citizen" means an individual who (i) is a resident of Illinois, (ii) was formerly incarcerated in a federal, State, or local correctional institution, and (iii) is a new employee. Provides that the aggregate amount of credits that may be awarded under the Act is (i) $50,000,000 for new employees other than returning citizens and (ii) $5,000,000 for returning citizens. Adds provisions concerning recapture of the credit if the employee is terminated by the taxpayer within one year after the credit is awarded. Effective immediately.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-02-06 - Referred to Rules Committee [HB4646 Detail]

Download: Illinois-2023-HB4646-Introduced.html

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103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 HB4646 Introduced , by Rep. Curtis J. Tarver, II SYNOPSIS AS INTRODUCED:
35 ILCS 25/10
35 ILCS 25/25
35 ILCS 25/30
35 ILCS 25/35
35 ILCS 25/45
Amends the Small Business Job Creation Tax Credit Act. Amends the Small Business Job Creation Tax Credit Act. Creates a second set of incentive periods beginning on July 1, 2024 and ending on June 30, 2030. Provides that the basic wage for the second set of incentive periods is $15 per hour. Provides that the credit may not exceed $2,500 per new employee hired, except that, if the new employee is a returning citizen, then the credit for that employee may not exceed $3,500. Provides that the term "returning citizen" means an individual who (i) is a resident of Illinois, (ii) was formerly incarcerated in a federal, State, or local correctional institution, and (iii) is a new employee. Provides that the aggregate amount of credits that may be awarded under the Act is (i) $50,000,000 for new employees other than returning citizens and (ii) $5,000,000 for returning citizens. Adds provisions concerning recapture of the credit if the employee is terminated by the taxpayer within one year after the credit is awarded. Effective immediately.
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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 Small Business Job Creation Tax Credit Act
is amended by changing Sections 10, 25, 30, 35, and 45 as
follows:
(35 ILCS 25/10)
Sec. 10. Definitions. In this Act:
"Applicant" means a person that is operating a business
located within the State of Illinois that is engaged in
interstate or intrastate commerce and either:
(1) has no more than 50 full-time employees, without
regard to the location of employment of such employees at
the beginning of the incentive period; or
(2) for incentive periods ending on or before June 30,
2016, hired within the incentive period an employee who
had participated as worker-trainee in the Put Illinois to
Work Program during 2010.
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.
"Certificate" means the tax credit certificate issued by

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the Department under Section 35 of this Act.
"Certificate of eligibility" means the certificate issued
by the Department under Section 20 of this Act.
"Credit" means the amount awarded by the Department to an
applicant by issuance of a certificate under Section 35 of
this Act for each new full-time equivalent employee hired or
job created.
"Department" means the Department of Commerce and Economic
Opportunity.
"Director" means the Director of the Department.
"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 employment. An individual for
whom a W-2 is issued by a Professional Employer Organization
is a full-time employee if he or she is employed in the service
of the applicant for a basic wage for at least 35 hours each
week or renders any other standard of service generally
accepted by industry custom or practice as full-time
employment. For the purposes of this Act, such an individual
shall be considered a full-time employee of the applicant.
"Professional Employer Organization" (PEO) shall have the
same meaning as defined in Section 5-5 of the Economic
Development for a Growing Economy Tax Credit Act. As used in
this Section, "Professional Employer Organization" does not
include a day and temporary labor service agency regulated

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under the Day and Temporary Labor Services Act.
"Incentive period" means the period beginning on July 1
and ending on June 30 of the following year. The first series
of incentive periods period shall begin on July 1, 2010 and the
last incentive period shall end on June 30, 2016. The second
series of incentive periods shall begin on July 1, 2024 and end
on June 30, 2030.
"Basic wage" means compensation for employment that is no
less than (i) $10 per hour for the first set of incentive
periods or (ii) $15 per hour for the second set of incentive
periods, or the equivalent salary for a new employee.
"New employee" means a full-time employee who first became
employed by an applicant with less than 50 full-time employees
within the incentive period whose hire results in a net
increase in the applicant's full-time Illinois employees and
who is receiving a basic wage as compensation. :
(1) who first became employed by an applicant with
less than 50 full-time employees within the incentive
period whose hire results in a net increase in the
applicant's full-time Illinois employees and who is
receiving a basic wage as compensation; or
(2) who participated as a worker-trainee in the Put
Illinois to Work Program during 2010 and who is
subsequently hired during the incentive period by an
applicant and who is receiving a basic wage as
compensation.

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The term "new employee" does not include:
(1) a person who was previously employed in Illinois
by the applicant or a related member prior to the onset of
the incentive period; or
(2) any individual who has a direct or indirect
ownership interest of at least 5% in the profits, capital,
or value of the applicant or a related member.
"Noncompliance date" means, in the case of an applicant
that is not complying with the requirements of the provisions
of this Act, the day following the last date upon which the
taxpayer was in compliance with the requirements of the
provisions of this Act, as determined by the Director,
pursuant to Section 45 of this Act.
"Put Illinois to Work Program" means a worker training and
employment program that was established by the State of
Illinois with funding from the United States Department of
Health and Human Services of Emergency Temporary Assistance
for Needy Families funds authorized by the American Recovery
and Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA
TANF funds were in turn used by the State of Illinois to fund
the Put Illinois to Work Program.
"Related member" means a person that, with respect to the
applicant during any portion of the incentive period, is any
one of the following,
(1) An individual, if the individual and the members
of the individual's family (as defined in Section 318 of

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the Internal Revenue Code) own directly, indirectly,
beneficially, or constructively, in the aggregate, at
least 50% of the value of the outstanding profits,
capital, stock, or other ownership interest in the
applicant.
(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 other
ownership interest in the applicant.
(3) 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.
(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

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other ownership interest in the applicant.
(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 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.
"Returning citizen" means an individual who (i) is a
resident of Illinois, (ii) was formerly incarcerated in a
federal, State, or local correctional institution, and (iii)
is a new employee.
(Source: P.A. 100-863, eff. 8-14-18.)
(35 ILCS 25/25)
Sec. 25. Tax credit.
(a) Subject to the conditions set forth in this Act, an
applicant is entitled to a credit against payment of taxes
withheld under Section 704A of the Illinois Income Tax Act:
(1) for new employees who participated as
worker-trainees in the Put Illinois to Work Program during
2010, for incentive periods ending on or before June 30,
2016:
(A) in the first calendar year ending on or after
the date that is 6 months after December 31, 2010, or
the date of hire, whichever is later. Under this

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subparagraph, the applicant is entitled to one-half of
the credit allowable for each new employee who is
employed for at least 6 months after the date of hire;
and
(B) in the first calendar year ending on or after
the date that is 12 months after December 31, 2010, or
the date of hire, whichever is later. Under this
subparagraph, the applicant is entitled to one-half of
the credit allowable for each new employee who is
employed for at least 12 months after the date of hire;
(2) for all other new employees, in the first
calendar year 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, where the
net increase in the employer's full-time Illinois
employees is maintained for at least 12 months.
(b) The Department shall make credit awards under this Act
to further job creation.
(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.
(d) The credit shall not exceed $2,500 per new employee
hired, except that, for the second set of incentive periods,
if the new employee is a returning citizen, then the credit for

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that employee may not exceed $3,500.
(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 the final day of the incentive period, minus the number of
full-time Illinois employees employed by the employer on the
first day of that same incentive period. 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 the first day of the incentive period.
(f) The net increase in the number of full-time Illinois
employees of the applicant under subsection (e) 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 within 8 weeks after the position becomes vacant.
(g) The Department shall promulgate rules to enable an
applicant for which a PEO has been contracted to issue W-2s and
make payment of taxes withheld under Section 704A of the

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Illinois Income Tax Act for new employees to retain the
benefit of tax credits to which the applicant is otherwise
entitled under this Act.
(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11;
97-636, eff. 6-1-12; 97-1052, eff. 8-23-12.)
(35 ILCS 25/30)
Sec. 30. Maximum amount of credits allowed. The Department
shall limit the monetary amount of credits awarded under this
Act to no more than (i) $50,000,000 for new employees other
than returning citizens and (ii) $5,000,000 for returning
citizens. If a new employee is a returning citizen, but the
$5,000,000 limit under this Section has been reached, then the
applicant may request a credit for that employee under the
$50,000,000 limit; however, the credit awarded for that new
employee may not exceed $2,500. 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.
(Source: P.A. 96-888, eff. 4-13-10.)
(35 ILCS 25/35)

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Sec. 35. Application for award of tax credit; tax credit
certificate.
(a) On or after the conclusion of the 12-month period (or
6-month period, for purposes of subparagraph (A) of item (1)
of subsection (a) of Section 25) after a new employee has been
hired, an applicant shall file with the Department an
application for award of a credit. The application shall
include 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, and an indication of whether each new employee
listed participated as a worker-trainee in the Put
Illinois to Work Program.
(2) A certification that each new employee listed has
been retained on the job for one year (or 6 months, for
purposes of subparagraph (A) of item (1) of subsection (a)
of Section 25) 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. This
requirement does not apply for tax credits the applicant

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is seeking because the new employee had participated as a
worker-trainee in the Put Illinois to Work Program.
(5) An agreement 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.
(6) Any other information the Department determines to
be appropriate.
(b) Although an application may be filed at any time after
the conclusion of the 12-month period (or 6-month period, for
purposes of subparagraph (A) of item (1) of subsection (a) of
Section 25) 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 credits totaling more than
$50,000,000.
(c) The Department shall issue a certificate to each
applicant awarded a credit under this Act. 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 that will be allowed.
(4) Any other information the Department determines to
be appropriate.

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(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
(35 ILCS 25/45)
Sec. 45. Noncompliance with Act; recapture.
(a) If the Director determines that an applicant who has
received a credit under this Act is not complying with the
requirements of the provisions of this Act, the Director shall
provide notice to the applicant of the alleged noncompliance,
and allow the taxpayer a hearing under the provisions of the
Illinois Administrative Procedure Act. If, after such 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.
(b) For tax credits awarded during the second set of
incentive periods, if an employee for whom a tax credit was
awarded under this Act is terminated by the taxpayer within
one year after the credit is awarded, then the Department
shall recapture the amount of the credit awarded for that
employee. This subsection (b) does not apply if the person is
terminated for cause or if the person voluntarily resigns.
(Source: P.A. 96-888, eff. 4-13-10.)