Bill Text: IL SB2125 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Creates the Job Creation Zone Pilot Program Act. Sets forth the boundaries of the Job Creation Zone. Provides that applicants that pledge to hire at least 5 new employees at a designated location within the job creation zone are eligible for credits against their obligation to pay over withholding taxes under the Illinois Income Tax Act. Sets forth the amount of the credit, which is based on the incremental income tax attributable to new employees hired by the taxpayer during the calendar year. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.

Spectrum: Partisan Bill (Republican 1-0)

Status: (Failed) 2021-01-13 - Session Sine Die [SB2125 Detail]

Download: Illinois-2019-SB2125-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 SB2125 Introduced 2/15/2019, by Sen. Chapin Rose SYNOPSIS AS INTRODUCED:
New Act
35 ILCS 5/704A
Creates the Job Creation Zone Pilot Program Act. Sets forth the boundaries of the Job Creation Zone. Provides that applicants that pledge to hire at least 5 new employees at a designated location within the job creation zone are eligible for credits against their obligation to pay over withholding taxes under the Illinois Income Tax Act. Sets forth the amount of the credit, which is based on the incremental income tax attributable to new employees hired by the taxpayer during the calendar year. Amends the Illinois Income Tax Act to make conforming changes. Effective immediately.
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FISCAL NOTE ACT MAY APPLY
A BILL FOR
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AN ACT concerning State government.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. Short title. This Act may be cited as the Job
Creation Zone Pilot Program Act.
Section 5. Definitions. As used in this Act:
"Agreement" means an agreement between the taxpayer and the
Department for credit awards under this Act.
"Department" means the Department of Commerce and Economic
Opportunity.
"Incremental income tax" means the total amount withheld
during the reporting period 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 full-time employee who (i) is first
employed by a taxpayer in the project that is the subject of an
agreement under this Act, (ii) is hired after the taxpayer
enters into the tax credit agreement, (iii) receives
compensation from the taxpayer that is at least 125% of the
State minimum wage during the entire time he or she is
considered a new employee, and (iv) is eligible for
employer-sponsored group health insurance benefits and

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retirement benefits as a condition of his or her employment
with the taxpayer. 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;
notwithstanding this paragraph, an employee may be
considered a new employee if the employee performs a job
that was previously performed by an employee who was:
(A) treated under the agreement as a new employee;
and
(B) promoted by the taxpayer to another job;
(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 agreement under this Act; 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.
"Project" means employment in one or more of the following
fields: manufacturing, technology, research, science,
mathematics, engineering, construction, energy, bioprocessing,
or agriculture.
"Related Member" means a person that, with respect to the
taxpayer during any portion of the taxable year, is any one of

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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

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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.
Section 10. Zone created. A job creation zone pilot program
is hereby created. The job creation zone shall have the
following boundaries:
Beginning at the intersection of US-51 and State Route
9; then East to the Indiana State Line; then South along
the border between Illinois and Indiana; then Southwest
along Interstate 70 to US-51; then North along US-51 to the
Point of Beginning; the job creation zone also includes all
of the territory within 15 miles of the North, South, and
West borders set forth in this Section.
Section 15. Tax credit awards; application.
(a) The Department shall make credit awards under this Act
to foster job creation within the job creation zone. To be
eligible for credits under this Act, the applicant must pledge
to hire at least 5 new employees at a designated location

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within the job creation zone.
(b) An applicant may request a credit award by formal
written letter of request or by formal application to the
Department, in which the applicant states its intent to hire at
least 5 new employees at a designated location within the job
creation zone. As circumstances require, the Department may
require a formal application from an applicant and a formal
letter of request for assistance.
(c) The Department may not make a credit award for a
project at a location that was used by a different employer
during the previous year if the applicant will employ the same
number of employees or fewer employees (including new
employees) at that project location.
(d) The Department may make credit awards for withholding
reporting periods beginning on or after July 1, 2019.
Section 25. Tax credit awards; amount. Any taxpayer that
has been issued a certificate of exemption by the Department
under this Act may claim a credit against its obligation to pay
over withholding under Section 704A of the Illinois Income Tax
Act. The amount of the credit may not exceed (i) 50% of the
incremental income tax attributable to each new employee during
calendar year in which the new employee is hired and for the
first 2 calendar years after the new employee is hired and (ii)
25% of the incremental income tax attributable to each new
employee during the third and fourth calendar years after the

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new employee is hired.
Section 30. Rulemaking. The Department may adopt rules to
implement and enforce the provisions of this Act.
Section 900. The Illinois Income Tax Act is amended by
changing Section 704A as follows:
(35 ILCS 5/704A)
Sec. 704A. Employer's return and payment of tax withheld.
(a) In general, every employer who deducts and withholds or
is required to deduct and withhold tax under this Act on or
after January 1, 2008 shall make those payments and returns as
provided in this Section.
(b) Returns. Every employer shall, in the form and manner
required by the Department, make returns with respect to taxes
withheld or required to be withheld under this Article 7 for
each quarter beginning on or after January 1, 2008, on or
before the last day of the first month following the close of
that quarter.
(c) Payments. With respect to amounts withheld or required
to be withheld on or after January 1, 2008:
(1) Semi-weekly payments. For each calendar year, each
employer who withheld or was required to withhold more than
$12,000 during the one-year period ending on June 30 of the
immediately preceding calendar year, payment must be made:

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

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

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person engaged in domestic service employment, as that term is
defined in Section 3510 of the Internal Revenue Code, may
comply with the requirements of this Section with respect to
such employees by filing an annual return and paying the taxes
required to be deducted and withheld on or before the 15th day
of the fourth month following the close of the employer's
taxable year. The Department may allow the employer's return to
be submitted with the employer's individual income tax return
or to be submitted with a return due from the employer under
Section 1400.2 of the Unemployment Insurance Act.
(f) Magnetic media and electronic filing. With respect to
taxes withheld in calendar years prior to 2017, any W-2 Form
that, under the Internal Revenue Code and regulations
promulgated thereunder, is required to be submitted to the
Internal Revenue Service on magnetic media or electronically
must also be submitted to the Department on magnetic media or
electronically for Illinois purposes, if required by the
Department.
With respect to taxes withheld in 2017 and subsequent
calendar years, the Department may, by rule, require that any
return (including any amended return) under this Section and
any W-2 Form that is required to be submitted to the Department
must be submitted on magnetic media or electronically.
The due date for submitting W-2 Forms shall be as
prescribed by the Department by rule.
(g) For amounts deducted or withheld after December 31,

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2009, a taxpayer who makes an election under subsection (f) of
Section 5-15 of the Economic Development for a Growing Economy
Tax Credit Act for a taxable year shall be allowed a credit
against payments due under this Section for amounts withheld
during the first calendar year beginning after the end of that
taxable year equal to the amount of the credit for the
incremental income tax attributable to full-time employees of
the taxpayer awarded to the taxpayer by the Department of
Commerce and Economic Opportunity under the Economic
Development for a Growing Economy Tax Credit Act for the
taxable year and credits not previously claimed and allowed to
be carried forward under Section 211(4) of this Act as provided
in subsection (f) of Section 5-15 of the Economic Development
for a Growing Economy Tax Credit Act. The credit or credits may
not reduce the taxpayer's obligation for any payment due under
this Section to less than zero. If the amount of the credit or
credits exceeds the total payments due under this Section with
respect to amounts withheld during the calendar year, the
excess may be carried forward and applied against the
taxpayer's liability under this Section in the succeeding
calendar years as allowed to be carried forward under paragraph
(4) of Section 211 of this Act. The credit or credits shall be
applied to the earliest year for which there is a tax
liability. If there are credits from more than one taxable year
that are available to offset a liability, the earlier credit
shall be applied first. Each employer who deducts and withholds

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

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forward and applied against the taxpayer's liability under this
Section in the 5 succeeding calendar years. The credit shall be
applied to the earliest year for which there is a tax
liability. If there are credits from more than one calendar
year that are available to offset a liability, the earlier
credit shall be applied first. This Section is exempt from the
provisions of Section 250 of this Act.
(i) An employer may claim a credit against payments due
under this Section for amounts withheld during the first
calendar year ending after the date on which a certificate of
exemption was issued under the Job Creation Zone Pilot Program
Act. The credit shall be equal to the amount shown on the
certificate, but may not reduce the taxpayer's obligation for
any payment due under this Section to less than zero. If the
amount of the credit exceeds the total payments due under this
Section with respect to amounts withheld during the calendar
year, the excess may be carried forward and applied against the
taxpayer's liability under this Section in the 5 succeeding
calendar years. The credit shall be applied to the earliest
year for which there is a tax liability. If there are credits
from more than one calendar year that are available to offset a
liability, the earlier credit shall be applied first. This
Section is exempt from the provisions of Section 250 of this
Act.
(Source: P.A. 100-303, eff. 8-24-17; 100-511, eff. 9-18-17;
100-863, eff. 8-14-18.)

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Section 999. Effective date. This Act takes effect upon
becoming law.