Illinois General Assembly - Full Text of SB0135

LRB104 03839 HLH 13863 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB0135

Introduced 1/17/2025, by Sen. Sally J. Turner

SYNOPSIS AS INTRODUCED:

35 ILCS 5/211
35 ILCS 10/5-45

Amends the Economic Development for a Growing Economy Tax Credit Act. Provides that the recipient of a credit under the Act may apply for a certificate of transferability of credit from the Department of Commerce and Economic Opportunity for the amount of the credit not previously claimed. Provides that the transferability certificate may be transferred or sold by the recipient to another Illinois taxpayer. Provides that unused Economic Development for a Growing Economy tax credits may be carried forward for a period of 10 years (currently, 5 years). Makes other changes.

A BILL FOR

AN ACT concerning revenue.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Income Tax Act is amended by changing Section 211 as follows:

(35 ILCS 5/211)

Sec. 211. Economic Development for a Growing Economy Tax Credit. For tax years beginning on or after January 1, 1999, a Taxpayer who has entered into an Agreement (including a New Construction EDGE Agreement) under the Economic Development for a Growing Economy Tax Credit Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of this Act in an amount to be determined in the Agreement. If the Taxpayer is a partnership or Subchapter S corporation, the credit shall be allowed to the partners or shareholders in accordance with the determination of income and distributive share of income under Sections 702 and 704 and subchapter S of the Internal Revenue Code. The Department, in cooperation with the Department of Commerce and Economic Opportunity, shall prescribe rules to enforce and administer the provisions of this Section. This Section is exempt from the provisions of Section 250 of this Act.

The credit shall be subject to the conditions set forth in the Agreement and the following limitations:

(1) The tax credit shall not exceed the Incremental Income Tax (as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act) with respect to the project; additionally, the New Construction EDGE Credit shall not exceed the New Construction EDGE Incremental Income Tax (as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act).

(2) The amount of the credit allowed during the tax year plus the sum of all amounts allowed in prior years shall not exceed 100% of the aggregate amount expended by the Taxpayer during all prior tax years on approved costs defined by Agreement.

(3) The amount of the credit shall be determined on an annual basis. Except as applied in a carryover year pursuant to Section 211(4) of this Act, the credit may not be applied against any State income tax liability in more than 10 taxable years; provided, however, that (i) an eligible business certified by the Department of Commerce and Economic Opportunity under the Corporate Headquarters Relocation Act may not apply the credit against any of its State income tax liability in more than 15 taxable years and (ii) credits allowed to that eligible business are subject to the conditions and requirements set forth in Sections 5-35 and 5-45 of the Economic Development for a Growing Economy Tax Credit Act and Section 5-51 as applicable to New Construction EDGE Credits.

(4) The credit may not exceed the amount of taxes imposed pursuant to subsections (a) and (b) of Section 201 of this Act. Any credit that is unused in the year the credit is computed may be carried forward and applied to the tax liability of the 10 5 taxable years following the excess credit year, except as otherwise provided under paragraph (4.5) of this Section. It is the intent of the General Assembly that the carry forward period for all credits that have not expired as of the effective date of this amendatory Act of the 104th General Assembly shall be extended to 10 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 tax year that are available to offset a liability, the earlier credit shall be applied first.

(4.5) The Department of Commerce and Economic Opportunity, in consultation with the Department of Revenue, shall adopt rules to extend the sunset of any earned, existing, or unused credit as provided for in Section 605-1055 of the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois.

(5) No credit shall be allowed with respect to any Agreement for any taxable year ending after the Noncompliance Date. Upon receiving notification by the Department of Commerce and Economic Opportunity of the noncompliance of a Taxpayer with an Agreement, the Department shall notify the Taxpayer that no credit is allowed with respect to that Agreement for any taxable year ending after the Noncompliance Date, as stated in such notification. If any credit has been allowed with respect to an Agreement for a taxable year ending after the Noncompliance Date for that Agreement, any refund paid to the Taxpayer for that taxable year shall, to the extent of that credit allowed, be an erroneous refund within the meaning of Section 912 of this Act.

If, during any taxable year, a taxpayer ceases operations at a project location that is the subject of that Agreement with the intent to terminate operations in the State, the tax imposed under subsections (a) and (b) of Section 201 of this Act for such taxable year shall be increased by the amount of any credit allowed under the Agreement for that project location prior to the date the taxpayer ceases operations.

(6) For purposes of this Section, the terms "Agreement", "Incremental Income Tax", "New Construction EDGE Agreement", "New Construction EDGE Credit", "New Construction EDGE Incremental Income Tax", and "Noncompliance Date" have the same meaning as when used in the Economic Development for a Growing Economy Tax Credit Act.

(Source: P.A. 101-9, eff. 6-5-19; 102-16, eff. 6-17-21; 102-40, eff. 6-25-21; 102-687, eff. 12-17-21.)

Section 10. The Economic Development for a Growing Economy Tax Credit Act is amended by changing Section 5-45 as follows:

(35 ILCS 10/5-45)

Sec. 5-45. Amount and duration of the credit.

(a) The Department shall determine the amount and duration of the credit awarded under this Act. The duration of the credit may not exceed 10 taxable years for projects qualified under paragraph (1), (1.5), or (1.6) of subsection (b) of Section 5-20 or 15 taxable years for projects qualified under paragraph (1.7) of subsection (b) of Section 5-20. The credit may be stated as a percentage of the Incremental Income Tax attributable to the applicant's project and may include a fixed dollar limitation.

(b) Notwithstanding subsection (a), and except as the credit may be applied in a carryover year pursuant to Section 211(4) of the Illinois Income Tax Act, the credit may be applied against the State income tax liability in more than 10 taxable years but not in more than 15 taxable years for an eligible business that (i) qualifies under this Act and the Corporate Headquarters Relocation Act and has in fact undertaken a qualifying project within the time frame specified by the Department of Commerce and Economic Opportunity under that Act, and (ii) applies against its State income tax liability, during the entire 15-year period, no more than 60% of the maximum credit per year that would otherwise be available under this Act.

(b-5) Notwithstanding subsection (a) or (b), a recipient of a credit may request a certificate of transferability of credit from the Department for the amount of credit not previously claimed. A transferability certificate so issued may be transferred or sold by the recipient to another Illinois taxpayer. Transferors and sellers shall submit to the Department of Revenue a notification of any transfer or sale of tax credits within 30 days after the transfer or sale of those tax credits. The notification, which shall be in the form prescribed by the Department, shall include the transferor's tax credit balance prior to transfer, the credit certificate number, the identifying number of the EDGE agreement, the transferor's remaining tax credit balance after transfer, all tax identification numbers for both transferor and transferee, the date of transfer, the amount transferred, a copy of the credit certificate, and any other information required by the Department of Revenue. The transfer or sale of the credit does not extend the time in which the credit can be used. The carry forward period for a credit that is transferred or sold begins on the date on which the credit was originally granted by the Department. To the extent the transferor did not have rights to claim or use the credit at the time of the transfer or sale, the Department of Revenue shall either disallow the credit claimed by the transferee or recapture the credit from the transferee through any collection method authorized by statute. In such case, the transferee's recourse is against the transferor.

(c) Nothing in this Section shall prevent the Department, in consultation with the Department of Revenue, from adopting rules to extend the sunset of any earned, existing, and unused tax credit or credits a taxpayer may be in possession of, as provided for in Section 605-1070 of the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois, notwithstanding the carry-forward provisions pursuant to paragraph (4) of Section 211 of the Illinois Income Tax Act.

(Source: P.A. 102-16, eff. 6-17-21; 102-813, eff. 5-13-22; 103-595, eff. 6-26-24.)