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1		AN ACT concerning revenue.
2		Be it enacted by the People of the State of Illinois,
3		represented in the General Assembly:
4		Section 5. The Economic Development for a Growing Economy
5		Tax Credit Act is amended by changing Sections 5-5, 5-20, 5-25,
6		and 5-50 as follows:
7		(35 ILCS 10/5-5)
8		Sec. 5-5. Definitions. As used in this Act:
9		"Agreement" means the Agreement between a Taxpayer and the
10		Department under the provisions of Section 5-50 of this Act.
11		"Applicant" means a Taxpayer that is operating a business
12		located or that the Taxpayer plans to locate within the State
13		of Illinois and that is engaged in interstate or intrastate
14		commerce for the purpose of manufacturing, processing,
15		assembling, warehousing, or distributing products, conducting
16		research and development, providing tourism services, or
17		providing services in interstate commerce, office industries,
18		or agricultural processing, but excluding retail, retail food,
19		health, or professional services. "Applicant" does not include
20		a Taxpayer who closes or substantially reduces an operation at
21		one location in the State and relocates substantially the same
22		operation to another location in the State. This does not
23		prohibit a Taxpayer from expanding its operations at another

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1		location in the State, provided that existing operations of a
2		similar nature located within the State are not closed or
3		substantially reduced. This also does not prohibit a Taxpayer
4		from moving its operations from one location in the State to
5		another location in the State for the purpose of expanding the
6		operation provided that the Department determines that
7		expansion cannot reasonably be accommodated within the
8		municipality in which the business is located, or in the case
9		of a business located in an incorporated area of the county,
10		within the county in which the business is located, after
11		conferring with the chief elected official of the municipality
12		or county and taking into consideration any evidence offered by
13		the municipality or county regarding the ability to accommodate
14		expansion within the municipality or county.
15		"Committee" means the Illinois Business Investment
16		Committee created under Section 5-25 of this Act within the
17		Illinois Economic Development Board.
18		"Credit" means the amount agreed to between the Department
19		and Applicant under this Act, but not to exceed the Incremental
20		Income Tax attributable to the Applicant's project.
21		"Department" means the Department of Commerce and Economic
22		Opportunity.
23		"Director" means the Director of Commerce and Economic
24		Opportunity.
25		"Full-time Employee" means an individual who is employed
26		for consideration for at least 35 hours each week or who

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1		renders any other standard of service generally accepted by
2		industry custom or practice as full-time employment. An
3		individual for whom a W-2 is issued by a Professional Employer
4		Organization (PEO) is a full-time employee if employed in the
5		service of the Applicant for consideration for at least 35
6		hours each week or who renders any other standard of service
7		generally accepted by industry custom or practice as full-time
8		employment to Applicant.
9		"Incremental Income Tax" means the total amount withheld
10		during the taxable year from the compensation of New Employees
11		under Article 7 of the Illinois Income Tax Act arising from
12		employment at a project that is the subject of an Agreement.
13		"New Employee" means:
14		(a) A Full-time Employee first employed by a Taxpayer
15		in the project that is the subject of an Agreement and who
16		is hired after the Taxpayer enters into the tax credit
17		Agreement.
18		(b) The term "New Employee" does not include:
19		(1) an employee of the Taxpayer who performs a job
20		that was previously performed by another employee, if
21		that job existed for at least 6 months before hiring
22		the employee;
23		(2) an employee of the Taxpayer who was previously
24		employed in Illinois by a Related Member of the
25		Taxpayer and whose employment was shifted to the
26		Taxpayer after the Taxpayer entered into the tax credit

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1		Agreement; or
2		(3) a child, grandchild, parent, or spouse, other
3		than a spouse who is legally separated from the
4		individual, of any individual who has a direct or an
5		indirect ownership interest of at least 5% in the
6		profits, capital, or value of the Taxpayer; or .
7		(4) an employee of the Taxpayer who was previously
8		employed in Illinois by the Taxpayer and whose
9		employment was shifted to the project after the
10		Taxpayer entered into the Agreement.
11		(c) Notwithstanding paragraph (1) of subsection (b),
12		an employee may be considered a New Employee under the
13		Agreement if the employee performs a job that was
14		previously performed by an employee who was:
15		(1) treated under the Agreement as a New Employee;
16		and
17		(2) promoted by the Taxpayer to another job.
18		(d) Notwithstanding subsection (a), the Department may
19		award Credit to an Applicant with respect to an employee
20		hired prior to the date of the Agreement if:
21		(1) the Applicant is in receipt of a letter from
22		the Department stating an intent to enter into a credit
23		Agreement;
24		(2) the letter described in paragraph (1) is issued
25		by the Department not later than 15 days after the
26		effective date of this Act; and

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1		(3) the employee was hired after the date the
2		letter described in paragraph (1) was issued.
3		"Noncompliance Date" means, in the case of a Taxpayer that
4		is not complying with the requirements of the Agreement or the
5		provisions of this Act, the day following the last date upon
6		which the Taxpayer was in compliance with the requirements of
7		the Agreement and the provisions of this Act, as determined by
8		the Director, pursuant to Section 5-65.
9		"Pass Through Entity" means an entity that is exempt from
10		the tax under subsection (b) or (c) of Section 205 of the
11		Illinois Income Tax Act.
12		"Project" means a for-profit economic development activity
13		or activities at a single site, or of one or more taxpayers at
14		multiple sites if the economic activities are vertically
15		integrated.
16		"Professional Employer Organization" (PEO) means an
17		employee leasing company, as defined in Section 206.1(A)(2) of
18		the Illinois Unemployment Insurance Act.
19		"Related Member" means a person that, with respect to the
20		Taxpayer during any portion of the taxable year, is any one of
21		the following:
22		(1) An individual stockholder, if the stockholder and
23		the members of the stockholder's family (as defined in
24		Section 318 of the Internal Revenue Code) own directly,
25		indirectly, beneficially, or constructively, in the
26		aggregate, at least 50% of the value of the Taxpayer's

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1		outstanding stock.
2		(2) A partnership, estate, or trust and any partner or
3		beneficiary, if the partnership, estate, or trust, and its
4		partners or beneficiaries own directly, indirectly,
5		beneficially, or constructively, in the aggregate, at
6		least 50% of the profits, capital, stock, or value of the
7		Taxpayer.
8		(3) A corporation, and any party related to the
9		corporation in a manner that would require an attribution
10		of stock from the corporation to the party or from the
11		party to the corporation under the attribution rules of
12		Section 318 of the Internal Revenue Code, if the Taxpayer
13		owns directly, indirectly, beneficially, or constructively
14		at least 50% of the value of the corporation's outstanding
15		stock.
16		(4) A corporation and any party related to that
17		corporation in a manner that would require an attribution
18		of stock from the corporation to the party or from the
19		party to the corporation under the attribution rules of
20		Section 318 of the Internal Revenue Code, if the
21		corporation and all such related parties own in the
22		aggregate at least 50% of the profits, capital, stock, or
23		value of the Taxpayer.
24		(5) A person to or from whom there is attribution of
25		stock ownership in accordance with Section 1563(e) of the
26		Internal Revenue Code, except, for purposes of determining

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1		whether a person is a Related Member under this paragraph,
2		20% shall be substituted for 5% wherever 5% appears in
3		Section 1563(e) of the Internal Revenue Code.
4		"Retained Employee" means a full-time employee employed by
5		a taxpayer during the term of the Agreement whose job duties
6		are directly and substantially related to the project. The term
7		"Retained Employee" does not include a child, grandchild,
8		parent, or spouse, other than a spouse who is legally separated
9		from the individual, of any individual who has direct or
10		indirect ownership interest of at least 5% in the profits,
11		capital, or value of the taxpayer. For purposes of this
12		definition, "directly and substantially related to the
13		project" means at least two-thirds of the employee's job duties
14		must be directly related to the project and the employee must
15		devote at least two-thirds of his or her time to the project.
16		"Taxpayer" means an individual, corporation, partnership,
17		or other entity that has any Illinois Income Tax liability.
18		(Source: P.A. 94-793, eff. 5-19-06; 95-375, eff. 8-23-07.)
19		(35 ILCS 10/5-20)
20		Sec. 5-20. Application for a project to create and retain
21		new jobs.
22		(a) Any Taxpayer proposing a project located or planned to
23		be located in Illinois may request consideration for
24		designation of its project, by formal written letter of request
25		or by formal application to the Department, in which the

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1		Applicant states its intent to make at least a specified level
2		of investment and intends to hire or retain a specified number
3		of full-time employees at a designated location in Illinois. As
4		circumstances require, the Department may require a formal
5		application from an Applicant and a formal letter of request
6		for assistance.
7		(b) In order to qualify for Credits under this Act, an
8		Applicant's project must:
9		(1) involve an investment of at least $5,000,000 in
10		capital improvements to be placed in service and to employ
11		at least 25 New Employees within the State as a direct
12		result of the project;
13		(2) involve an investment in capital improvements to be
14		placed in service in the State at a level of at least an
15		amount (to be expressly specified by the Department and the
16		Committee) in capital improvements to be placed in service
17		and will employ at least an amount (to be expressly
18		specified by the Department and the Committee) of New
19		Employees or Retained Employees within the State as
20		specified by the Department, provided that the Department
21		has and the Committee have determined that the project will
22		provide a substantial economic benefit to the State; or
23		(3) if the applicant has 100 or fewer employees,
24		involve an investment of at least $1,000,000 in capital
25		improvements to be placed in service and to employ at least
26		5 New Employees within the State as a direct result of the

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1		project.
2		The Director may approve projects that do not meet the
3		specified minimum job creation and investment thresholds set
4		forth in this subsection (b) for an applicant meeting all other
5		requirements of this Act provided that one or more of the
6		following conditions are met:
7		(A) approval would support a business with potential to
8		generate additional growth by attracting companion
9		businesses; or
10		(B) approval would avert loss of one of the area's
11		major sources of employment.
12		(c) After receipt of an application, the Department may
13		enter into an Agreement with the Applicant if the application
14		is accepted in accordance with Section 5-25.
15		(Source: P.A. 93-882, eff. 1-1-05.)
16		(35 ILCS 10/5-25)
17		Sec. 5-25. Review of Application.
18		(a) In addition to those duties granted under the Illinois
19		Economic Development Board Act, the Illinois Economic
20		Development Board shall form a Business Investment Committee
21		for the purpose of making recommendations for applications. At
22		the request of the Board, the Director of Commerce and Economic
23		Opportunity or his or her designee, the Director of the
24		Governor's Office of Management and Budget or his or her
25		designee, the Director of Revenue or his or her designee, the

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1		Director of Employment Security or his or her designee, and an
2		elected official of the affected locality, such as the chair of
3		the county board or the mayor, may serve as members of the
4		Committee to assist with its analysis and deliberations.
5		(b) At the Department's request, the Committee shall
6		convene, make inquiries, and conduct studies in the manner and
7		by the methods as it deems desirable, review information with
8		respect to Applicants, and make recommendations for projects to
9		benefit the State. In making its recommendation that an
10		Applicant's application for Credit should or should not be
11		accepted, which shall occur within a reasonable time frame as
12		determined by the nature of the application, the Committee
13		shall determine that all the following conditions exist:
14		(1) The Applicant's project intends, as required by
15		subsection (b) of Section 5-20 to make the required
16		investment in the State and intends to hire or retain the
17		required number of New Employees or Retained Employees in
18		Illinois as a result of that project.
19		(2) The Applicant's project is economically sound and
20		will benefit the people of the State of Illinois by
21		increasing opportunities for employment and strengthen the
22		economy of Illinois.
23		(3) That, if not for the Credit, the project would not
24		occur in Illinois, which may be demonstrated by any means
25		including, but not limited to, evidence the Applicant has
26		multi-state location options and could reasonably and

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1		efficiently locate outside of the State, or demonstration
2		that at least one other state is being considered for the
3		project, or evidence the receipt of the Credit is a major
4		factor in the Applicant's decision and that without the
5		Credit, the Applicant likely would not create new jobs in
6		Illinois, or demonstration that receiving the Credit is
7		essential to the Applicant's decision to create or retain
8		new jobs in the State.
9		(4) A cost differential is identified, using best
10		available data, in the projected costs for the Applicant's
11		project compared to the costs in the competing state,
12		including the impact of the competing state's incentive
13		programs. The competing state's incentive programs shall
14		include state, local, private, and federal funds
15		available.
16		(5) The political subdivisions affected by the project
17		have committed local incentives with respect to the
18		project, considering local ability to assist.
19		(6) Awarding the Credit will result in an overall
20		positive fiscal impact to the State, as certified by the
21		Committee using the best available data.
22		(7) The Credit is not prohibited by Section 5-35 of
23		this Act.
24		(Source: P.A. 94-793, eff. 5-19-06.)
25		(35 ILCS 10/5-50)

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1		Sec. 5-50. Contents of Agreements with Applicants. The
2		Department shall enter into an Agreement with an Applicant that
3		is awarded a Credit under this Act. The Agreement must include
4		all of the following:
5		(1) A detailed description of the project that is the
6		subject of the Agreement, including the location and amount
7		of the investment and jobs created or retained.
8		(2) The duration of the Credit and the first taxable
9		year for which the Credit may be claimed.
10		(3) The Credit amount that will be allowed for each
11		taxable year.
12		(4) A requirement that the Taxpayer shall maintain
13		operations at the project location that shall be stated as
14		a minimum number of years not to exceed 10.
15		(5) A specific method for determining the number of New
16		Employees employed during a taxable year.
17		(6) A requirement that the Taxpayer shall annually
18		report to the Department the number of New Employees and
19		Retained Employees, the Incremental Income Tax withheld in
20		connection with the New Employees and Retained Employees,
21		and any other information the Director needs to perform the
22		Director's duties under this Act.
23		(7) A requirement that the Director is authorized to
24		verify with the appropriate State agencies the amounts
25		reported under paragraph (6), and after doing so shall
26		issue a certificate to the Taxpayer stating that the

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1		amounts have been verified.
2		(8) A requirement that the Taxpayer shall provide
3		written notification to the Director not more than 30 days
4		after the Taxpayer makes or receives a proposal that would
5		transfer the Taxpayer's State tax liability obligations to
6		a successor Taxpayer.
7		(9) A detailed description of the number of New
8		Employees to be hired, Retained Employees to be retained,
9		and the occupation and payroll of the full-time jobs to be
10		created or retained as a result of the project.
11		(10) The minimum investment the business enterprise
12		will make in capital improvements, the time period for
13		placing the property in service, and the designated
14		location in Illinois for the investment.
15		(11) A requirement that the Taxpayer shall provide
16		written notification to the Director and the Committee not
17		more than 30 days after the Taxpayer determines that the
18		minimum job creation or retention, employment payroll, or
19		investment no longer is being or will be achieved or
20		maintained as set forth in the terms and conditions of the
21		Agreement.
22		(12) A provision that, if the total number of New
23		Employees or Retained Employees falls below a specified
24		level, the allowance of Credit shall be suspended until the
25		number of New Employees and Retained Employees equals or
26		exceeds the Agreement amount.

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1		(13) A detailed description of the items for which the
2		costs incurred by the Taxpayer will be included in the
3		limitation on the Credit provided in Section 5-30.
4		(13.5) A provision that, if the Taxpayer never meets
5		either the investment or job creation and retention
6		requirements specified in the Agreement during the entire
7		5-year period beginning on the first day of the first
8		taxable year in which the Agreement is executed and ending
9		on the last day of the fifth taxable year after the
10		Agreement is executed, then the Agreement is automatically
11		terminated on the last day of the fifth taxable year after
12		the Agreement is executed and the Taxpayer is not entitled
13		to the award of any credits for any of that 5-year period.
14		(14) Any other performance conditions or contract
15		provisions as the Department determines are appropriate.
16		The Department shall post on its website the terms of each
17		Agreement entered into under this Act on or after the effective
18		date of this amendatory Act of the 97th General Assembly.
19		(Source: P.A. 97-2, eff. 5-6-11; 97-749, eff. 7-6-12.)
20		Section 99. Effective date. This Act takes effect upon
21		becoming law.