Section 120.10  Purpose

 

It is the intent of the General Assembly that Illinois should lead the nation in production of semiconductors and microchips as they become even more prevalent in everyday life. The General Assembly finds that, through investments in semiconductors and microchips, Illinois will be on the forefront of reshoring semiconductor and microchip production that fuels modern technologies that are essential to the operation of computers, phones, vehicles and any electric product that have become essential to modern life. This Act will create good paying jobs, and generate long-term economic investment in the Illinois business economy, in addition to ensuring a vital product is made in the United States. Illinois must aggressively adopt new business development investment tools so that Illinois can compete with domestic and foreign competitors for semiconductor and chip manufacturing. [35 ILCS 45/110-5]

 

Section 120.20  Definitions

 

The following definitions are applicable to this Part.

 

"Act" means the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act [35 ILCS 45/110].

 

"Agreement" means the agreement between a taxpayer and the Department under the provisions of the Act.

 

"Applicant" means a taxpayer that:

 

operates a business in Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts; or

 

is planning to locate a business within the State of Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts.

 

"Applicant" does not include a taxpayer who closes or substantially reduces by more than 50% operations at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a Taxpayer from expanding its operations at another location in the State. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation, provided that the Department determines that expansion cannot reasonably be accommodated within the municipality or county in which the business is located, or, in the case of a business located in an incorporated area of the county, within the county in which the business is located, after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within the municipality or county.

 

"Capital improvements" means the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment, and furnishings in an approved project sited in Illinois and expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures, and equipment that are leased, the lease must equal or exceed the term of the agreement, and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments.

 

"Compensation" means compensation as defined in Section 1501(a)(3) of the Income Tax Act. [35 ILCS 5/1501(a)(3)]

 

"Credit" or "MICRO credit" means a credit agreed to between the Department and applicant under the Act.

 

"Department" means the Department of Commerce and Economic Opportunity.

 

"Director" means the Director of Commerce and Economic Opportunity.

 

"Energy Transition Area" means a county with less than 100,000 people or a municipality that contains one or more of the following:

 

a fossil fuel plant that was retired from service or has significant reduced service within 6 years before the time of the application or will be retired or have service significantly reduced within 6 years following the time of the application; or

 

a coal mine that was closed or had operations significantly reduced within 6 years before the time of the application or is anticipated to be closed or have operations significantly reduced within 6 years following the time of the application.

 

"Full-time employee" means an individual who is employed for consideration 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. Annually scheduled periods for inventory or repairs, vacations, holidays and paid time for sick leave, vacation or other leave shall be included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week.

 

"Incremental income tax" means the total amount withheld during the taxable year from the compensation of new employees and, if applicable, retained employees under Article 7 of the Illinois Income Tax Act [35 ILCS 5/70] arising from employment at a project that is the subject of an agreement.

 

"Institution of higher education" or "institution" means any accredited public or private university, college, community college, business, technical, or vocational school, or other accredited educational institution offering degrees and instruction beyond the secondary school level.

 

"Local workforce investment area" means a single county or multiple counties designated by the Governor, which allows for the receipt of an allotment of funds under Sections 127(b) or 132(b) of the Workforce Innovation and Opportunity Act, (P.L. 113 through 128 (2014)) (WIOA), with considerations consisting of the extent to which the areas:

 

are consistent with labor market areas in the State;

 

are consistent with regional economic development areas in the State; and

 

have available the federal and non-federal resources necessary to effectively administer activities under subtitle B and other applicable provisions of WIOA,

 

including whether the areas have the appropriate education and training providers, such as institutions of higher education and area career and technical education schools.

 

"MICRO construction jobs credit" means a credit agreed to between the Department and the applicant under the Act that is based on the incremental income tax attributable to construction wages paid in connection with construction of the project facilities.

 

"MICRO credit" means a credit agreed to between the Department and the applicant under the Act that is based on the incremental income tax attributable to new employees and, if applicable, retained employees, and on training costs for such employees at the applicant's project.

 

"Microchip" means a wafer of semiconducting material that is less than 15 millimeters long and less than 5 millimeters wide and is used to make an integrated circuit.

 

"Microchip manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces microchips or key components that directly support the functions of microchips.

 

"Minority person" means a minority person as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act [30 ILCS 575/0.01].

 

"New employee" means a newly-hired full-time employee employed to work at the project site and whose work is directly related to the project.

 

The term "New Employee" does not include:

 

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;

 

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 tax credit agreement or;

 

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or 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, equity, capital, or value of the taxpayer.

 

"Noncompliance date" means, in the case of a taxpayer that is not complying with the requirements of the agreement or the provisions of the Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the agreement and the provisions of the Act, as determined by the Director.

 

"Pass-through entity" means an entity that is exempt from the tax under subsection (b) or (c) of Section 205 of the Illinois Income Tax Act [35 ILCS 5/205].

 

"Placed in service" means the state or condition of readiness, availability for a specifically assigned function, and the facility is constructed and ready to conduct its facility operations to manufacture goods.

 

"Professional employer organization" or "PEO" means an employee leasing company that is an individual or entity contracting with a client to supply or assume responsibility for personnel management of one or more workers to perform services for the client on an on-going basis rather than under a temporary help arrangement, as defined in Section 206.1 of the Illinois Unemployment Insurance Act.

 

"Program" means the Manufacturing Illinois Chips for Real Opportunity (MICRO) program established in the Act.

 

"Project" means a for-profit economic development activity for the manufacture of semiconductors and microchips.

 

"Project costs" includes cost of the project incurred or to be incurred by the taxpayer including:  capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans.

 

"Related member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following:

 

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.

 

Partnership, estate, 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.

 

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 Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

 

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 value of the taxpayer.

 

A person to or from whom there is an 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.

 

"Retained employee" means a full-time employee employed by the taxpayer prior to the term of the Agreement who continues to be employed during the term of the agreement whose job duties are directly and substantially related to the project. For purposes of this definition, "directly and substantially related to the project" means at least two-thirds of the employee's job duties must be directly related to the project and the employee must devote at least two-thirds of his or her time to the project. The term "retained employee" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or 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 indirect ownership of at least 5% in the profits, equity, capital, or value of the taxpayer.

 

"Semiconductor" means any class of crystalline solids intermediate in electrical conductivity between a conductor and an insulator.

 

"Semiconductor manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces semiconductors or key components that directly support the functions of semiconductors.

 

"Statewide baseline" means the total number of full-time employees of the applicant and any related member employed by such entities at the time of application for incentives under the Act.

 

"Taxpayer" means an individual, corporation, partnership, or other entity that has a legal obligation to pay Illinois income taxes and file an Illinois income tax return.

 

"Training costs" means costs incurred to upgrade the technological skills of full-time employees in Illinois and includes: curriculum development; training materials (including scrap product costs); trainee domestic travel expenses; instructor costs (including wages, fringe benefits, tuition and domestic travel expenses); rent, purchase or lease of training equipment; and other usual and customary training costs. "Training costs" do not include costs associated with travel outside the United States (unless the taxpayer receives prior written approval for the travel by the Director based on a showing of substantial need or other proof the training is not reasonably available within the United States), wages and fringe benefits of employees during periods of training, or administrative cost related to full-time employees of the taxpayer.

 

"Underserved area" means any geographic areas as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10/5-5].

 

Section 120.30  Eligibility Determination

 

a)         Any taxpayer that:

 

1)         operates a business in Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts; or

 

2)         is planning to locate a business within the State of Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts. [35 ILCS 45/110-10]

 

b)         In order to qualify for credits under the MICRO Program, an applicant must:

 

1)         for a semiconductor manufacturer or microchip manufacturer:

 

A)        make an investment of at least $1,500,000,000 in capital improvements at the project site;

 

B)        to be placed in service within the State within a 60-month period after approval of the application; and

 

C)        create at least 500 new full-time employee jobs; or

 

2)         for a semiconductor or microchip component parts manufacturer:

 

A)        make an investment of at least $300,000,000 in capital improvements at the project site;

 

B)        manufacture one or more parts that are primarily used for the manufacture of semiconductors or microchips;

 

C)        to be placed in service within the State within a 60-month period after approval of the application; and

 

D)        create at least 150 new full-time employee jobs; or

 

3)         for a semiconductor manufacturer or microchip manufacturer or a semiconductor or microchip component parts manufacturer that does not qualify under subsection (b)(2):

 

A)        make an investment of at least $20,000,000 in capital improvements at the project site;

 

B)        to be placed in service within the State within a 48-month period after approval of the application; and

 

C)        create at least 50 new full-time employee jobs; or

 

4)         for a semiconductor manufacturer or microchip manufacturer or a semiconductor or microchip component parts manufacturer with existing operations within Illinois that intends to convert or expand, in whole or in part, the existing facility from traditional manufacturing to a semiconductor manufacturing or microchip manufacturing or semiconductor or microchip component parts manufacturing:

 

A)        make an investment of at least $100,000,000 in capital improvements at the project site;

 

B)        to be placed in service within the State within a 60-month period after approval of the application; and

 

C)        create the lesser of 75 new full-time employee jobs or new full-time employee jobs equivalent to 10% of the statewide baseline applicable to the taxpayer and any related member at the time of application. [35 ILCS 45/110-20(c)]

 

c)         For any applicant creating the full-time employee jobs noted in subsection (b), applicants shall receive credit for those jobs with compensation equal to or greater than 120% of the average wage paid to full-time employees in a similar position within an occupational group in the county where the project is located, and the Department shall utilize the occupational group data provided by the U.S. Bureau of Labor Statistics, the Illinois Department of Employment Security, or other reliable date source. [35 ILCS 45/110-20(d)]

 

d)         Not have entered into another agreement under the Act with respect to a single address or location for the same period of time. Also, a taxpayer may not enter into an agreement under the Act with respect to a single address or location for the same period of time for which the taxpayer currently holds an active agreement under the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10/5-1] unless:

 

1)         The previous agreement under this Act or EDGE expired or was voluntarily terminated to the extent that the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

 

2)         The provision in subsection (d) does not preclude the applicant from entering into an additional agreement after the expiration or voluntary termination of an earlier agreement under the Act or under the Economic Development for a Growing Economy Tax Credit Act to the extent that the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department. An applicant with an existing agreement under the Economic Development for a Growing Economy Tax Credit Act may submit an application for an agreement under the Act after it terminates any existing agreement under the Economic Development for Growing Economy Tax Credit Act with respect to the same addresses or location. [35 ILCS 45/110-20(f)]

 

e)         A taxpayer is not entitled to claim a credit provided by the Act with respect to any jobs that the taxpayer relocates from one site in Illinois to another site in Illinois. Any full-time employee relocated to Illinois in connection with a qualifying project is deemed to be a new employee for purposes of the Act. Determinations under Section 35 of the Act shall be made by the Department. [35 ILCS 45/110-35]

 

Section 120.40  Form of Application

 

a)         Applications will be accepted at any time during the year.  An application should be submitted on the standard application form provided by the Department and posted to the Department's website. (https://dceo.illinois.gov/content/dam/soi/en/web/dceo/businesshelp/micro/micro-application.pdf) Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

 

b)         Any taxpayer planning a project to be located in Illinois may request consideration for designation of its project as a MICRO project, by application to the Department, in which the applicant states its intent to make at least a specified level of investment and intends to hire a specified number of full-time employees at a designated location in Illinois. [35 ILCS 45/110-20]

 

c)         Written applications will be required and must be submitted on the standard application form provided by the Department.  Applications shall be submitted to the designated Department email address specified on the Department website (CEO.MICRO@illinois.gov) and also identified on the application form.  There is no application fee and the application shall include:

 

1)         Application Cover Page – containing name, address, and telephone number of applicant; key contact and title; total number of new employees to be hired, and when applicable, the number of full-time employees to be retained; company Federal Employer Identification Number (F.E.I.N.); Standard Industrial Code (S.I.C.); if available, Illinois Unemployment Insurance Account Code; State Senate District number; State Representative District number; authorized signatures; and related information.

 

2)         Project Summary – a detailed description of the project that is to be the subject of the agreement. [35 ILCS 45/110-45(a)(1)]

 

3)         Site Map – an outline of the general location of the project on a site map, including the location of any flood plain areas and wetland areas.

 

4)         Jobs Impact – a detailed description of the number of new employees to be hired, and the occupation and payroll of the full-time jobs to be created or retained as a result of the project, and a schedule of anticipated starting dates of the new hires.  In addition, the applicant must provide the total number of full-time employees employed by the applicant and any related member, subsidiary, parent, or sister company in the State of Illinois at the time of the application. If the applicant seeks a credit with respect to retained employees, the application shall include the occupation and payroll of the full-time employees to be retained because of the project. [35 ILCS 45/110-45(a)(9)]

 

5)         Capital Improvements Planned – a detailed description of the minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.  This shall include but not be limited to a description (or specifications or lists) of the planned capital improvements demonstrating the investment is qualified; documentation to substantiate the value of the investment (value of capital improvements as provided by appraisers, vendors, contractors and/or architects and engineers); and a schedule regarding when the eligible investment will be placed in service. [35 ILCS 45/110-(a)(10)]

 

6)         Total Project Costs – a detailed description of the total project cost.

 

7)         Statewide Baseline – a detailed description of full-time employees of the applicant and any related members employed by such entities at the time of the application.  The information provided for the current full-time employees shall include the following:  name, position title, occupation code, date of hire, and facility address.

 

8)         Hiring plan – a detailed description of applicant's hiring plan and commitment to recruit and hire full-time employee positions at the project site. The hiring plan may include a partnership with an institution of higher education to provide internships, including, but not limited to, internships supported by the Clean Jobs Workforce Network Program, or full-time permanent employment for students at the project site. Additionally, the applicant may create or utilize participants from apprenticeship programs that are approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training. The Applicant may apply for apprenticeship education expense credits in accordance with the provisions set forth in 14 Ill. Admin. Code 522. Each applicant is required to report annually, on or before April 15, on the diversity of its workforce in accordance with Section 110-50 of the Act [35 ILCS 45/110-50]. For existing facilities of applicants under Section 120.30(b)(3), if the taxpayer expects a reduction in force due to its transition to manufacturing semiconductors, microchips, or semiconductor or microchip component parts, the plan submitted under this Section must outline the taxpayer's plan to assist with retraining its workforce aligned with the taxpayer's adoption of new technologies and anticipated efforts to retrain employees through employment opportunities within the taxpayer's workforce. [35 ILCS 45/110-20(e)]

 

9)         Financial Statement – a balance sheet and a profit and loss statement of the taxpayer for the last two years.

 

10)       Other Provisions – any other provisions or information the Department determines is necessary to evaluate the applicant's eligibility under the Act and if the criteria established in Section 120.30 are met.

 

d)         The applicant is responsible for the accuracy of all data, information and documentation included in its application.  Once submitted, applications shall become the property of the Department and subject to the provisions and exemptions of the Freedom of Information Act [5 ILCS 140].

 

Section 120.50  Application Review

 

a)         Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package, as described in Section 120.40, have been addressed.  Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

 

b)         In evaluating applications, the Department shall evaluate and confirm if all of the criteria in subsections (b)(1) through (4) of this Section are met.  If the applicant demonstrates that all criteria are met, the Department will notify the applicant by electronic mail that the application was accepted. If the applicant cannot demonstrate that all four conditions exist, the application will be denied and notification to the applicant provided in accordance with Section 120.60.

 

1)         the applicant intends to make the required investment in the State and intends to hire the required number of full-time employees;

 

2)         the applicant's project is economically sound and will benefit the people of the State by increasing opportunities for employment and strengthen the economy of the State;

 

3)         awarding the credit will result in an overall positive fiscal impact to the State, as certified by the Department using the best available data; and

 

4)         the credit is not prohibited under the Act. [35 ILCS 45/110-25]

 

Section 120.60  Application Denial/Approval

 

a)         Applicants shall be notified in writing as to the Department's evaluation of all completed applications.  If the Department denies an application for the credit, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation.  If the applicant disagrees with the Department's decision it may seek relief through the process afforded in the Department's Administrative Hearing Rules set forth at 56 Ill. Adm. Code 2605.

 

b)         For applications accepted by the Department, the Department will send a notification by e-mail to the applicant.  The Department will proceed to negotiate a formal agreement with the applicants determined to be eligible for award of a credit.

 

Section 120.70  Tax Credit Award

 

Subject to the conditions set forth in the Act, a taxpayer is entitled to a credit against the tax imposed pursuant to subsections (a) and (b) of Section 201 of the Illinois Income Tax Act [35 ILCS 5/201] for a taxable year beginning on or after January 1, 2025 if the taxpayer is awarded a credit by the Department in accordance with an agreement under the Act.  The Department has authority to award credits under the Act on and after January 1, 2023. [35 ILCS 45/110-30]

 

a)         MICRO Illinois Credit

 

1)                     A taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act, not to exceed the sum of:

 

A)        75% of the incremental income tax attributable to new employees at the applicant's project; and

 

B)        10% of training costs of the new employees.

 

2)          If the project is in an underserved area or an energy transition area, then the amount of the credit may not exceed the sum of:

 

A)        100% of the incremental income tax attributable to new employees at the applicant's project; and

 

B)        10% of the training costs of the new employees.

 

3)         The percentage of training costs includable in the calculation may be increased by an additional 15% for training costs associated with new employees that are recent (2 years or less) graduates, certificate holders, or credential recipients from any of the following:

 

A)        an institution of higher education in Illinois;

 

B)        Clean Jobs Workforce Network Program; or

 

C)          apprenticeship and training program located in Illinois and approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training.

 

4)          An applicant is also eligible for a training credit that shall not exceed 10% of the training costs of retained employees for the purpose of upskilling to meet the operational needs of the applicant or the project.

 

5)          The percentage of training costs includable in the calculation shall not exceed a total of 25%.

 

6)          If an applicant agrees to hire the required number of new employees, then the maximum amount of the credit for that applicant may be increased by an amount not to exceed 75% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must, if applicable, meet or exceed the statewide baseline that is specified in the agreement.  If the project is an underserved area or an energy transition area, the maximum amount of the credit attributable to retained employees for the applicant may be increased to an amount not to exceed 100% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must meet or exceed the statewide baseline that is specified in the agreement.

 

7)          Credits awarded may include credit earned for incremental income tax withheld and training costs incurred by the taxpayer beginning on or after January 1, 2023. Credits so earned and certified by the Department may be applied against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act for taxable years beginning on or after January 1, 2025. [35 ILCS 45/110-30(b)]

 

b)         MICRO Construction Jobs Credit:

 

1)                     For construction wages associated with a project that qualified for a credit under subsection (b) of Section 110-30 of the Act, the taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount equal to 50% of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities, as a jobs credit for workers hired to construct the project.

 

2)                     The MICRO Construction Jobs Credit may not exceed 75% of the amount of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities if the project is in an underserved area or an energy transition area. [35 ILCS 45/110-30(c)]

 

3)                     The applicant seeking certification for a MICRO construction jobs credit shall require the contractor to enter into a project labor agreement that conforms with the Project Labor Agreements Act. [35 ILCS 45/110-30(e)]

 

c)         Tax Credit Certification to the Department of Revenue. The Department shall certify to the Department of Revenue the following information regarding the tax credit award for each taxpayer outlined in subsections (a) and (b) of Section 120.70:

 

1)         The identity of taxpayers that are eligible for the MICRO Illinois credit and MICRO construction jobs credit;

 

2)         The amount of the MICRO Illinois credit and MICRO construction jobs credit awarded in each calendar year; and

 

3)         The amount of the MICRO Illinois credit and MICRO construction jobs credit claimed in each calendar year as detailed in Section 30(d) of the Act). [35 ILCS 45/110-30(d)]

 

Section 120.80  Determination of Amount and Term of the Credit

 

a)         The Department shall determine the amount and duration of the MICRO Illinois credit awarded under the Act.

 

b)         The credit may be stated as a percentage of the incremental income tax and training costs attributable to the applicant's project and may include a fixed dollar limitation.

 

c)         For the credit term, a project that qualified under paragraph (1), (2), or (4) of subsection (c) of Section 110-20 of the Act, the duration of the credit may not exceed 15 taxable years, unless the agreement is renewed.

 

d)         For project that qualified under paragraph (3) of subsection (c) of Section 110-20 of the Act, the duration of the credit may not exceed 10 taxable years, unless the agreement is renewed. [35 ILCS 45/110-40]

 

Section 120.90  Tax Credit Agreement

 

The Department and each taxpayer whom the Department determines qualifies for a credit under the Act shall enter into an agreement that specifies terms and conditions regarding the provision of the credit and defines the rights and responsibilities of the taxpayer and the Department.  Provisions that the taxpayer will be contractually bound to comply with include, but are not limited to, the following:

 

a)         A detailed description of the project that is the subject of the agreement, including the location and amount of the investment and jobs created or retained.

 

b)         The duration of the credit, the first taxable year for which the credit may be awarded, and the first taxable year in which the credit may be used by the taxpayer.

 

c)         The credit amount that will be allowed for each taxable year.

 

d)         For a project qualified under paragraphs (1), (2), or (4) of subsection (c) of Section 110-20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 15. For project qualified under paragraph (3) of subsection (c) of Section 110-20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 10.

 

e)         A specific method for determining the number of new employees and if applicable, retained employees, employed during a taxable year. The agreement will specify that an employee of the taxpayer who was previously employed in Illinois by the taxpayer and whose employment was shifted to the project after the taxpayer entered into the tax credit agreement are not considered new employees. 

 

1)         An employee may be considered a new employee under the agreement 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)         The agreement will specify that the Department may award a credit to the taxpayer with respect to an employee hired prior to the date of the agreement if:

 

A)        the applicant is in receipt of a letter from the Department stating an intent to enter into a credit agreement;

 

B)        the letter described in subsection (e)(2)(1) under the employees that are not included in the term "new employees" is issued by the Department not later than 15 days after the effective date of the Act; and

 

C)        the employee was hired after the date the letter described in subsection (e)(2)(1) under the employees that are not included in the term "new employees" was issued.

 

3)         The agreement will address that an employee shall be considered a new employee under the agreement if the employee fills a job vacancy that had been continuously vacant for the 184 day period immediately preceding the date of the agreement. A job vacancy whose incumbent is on approved leave, is locked out or is on strike is not a vacancy.

 

f)         A requirement that the taxpayer shall annually report to the Department the number of new employees, the incremental income tax withheld in connection with the new employees, and any other information the Department deems necessary and appropriate to perform its duties under the Act.

 

g)         A requirement that the Director is authorized to verify with the appropriate State agencies the amounts reported under subsection (f), and after doing so shall issue a certificate to the taxpayer stating that the amounts have been verified.

 

h)         A requirement that the taxpayer shall provide written notification to the Director not more than 30 days after the taxpayer makes or receives a proposal that would transfer the taxpayer's State tax liability obligations to a successor taxpayer.

 

i)          A detailed description of the number of new employees to be hired, and the occupation and payroll of full-time jobs to be created or retained because of the project.

 

j)          The minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.

 

k)         A requirement that the taxpayer shall provide written notification to the Director and the Director's designee not more than 30 days after the taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is or will be achieved or maintained as set forth in the terms and conditions of the agreement. Additionally, the notification should outline to the Department the number of layoffs, date of the layoffs, and detail taxpayer's efforts to provide career and training counseling for the impacted workers with industry-related certifications and trainings.

 

l)          A provision that, if the total number of new employees falls below a specified level, the allowance of credit shall be suspended until the number of new employees equals or exceeds the agreement amount.

 

m)        If applicable, a provision that specifies the statewide baseline at the time of application for retained employees. Additionally, the agreement must have a provision addressing if the total number retained employees falls below the statewide baseline, the allowance of the credit shall be suspended until the number of retained employees equals or exceeds the agreement amount.

 

n)         A detailed description of the items for which the costs incurred by the taxpayer will be included in the limitation on the Credit provided in Section 40 of the Act.

 

o)         A provision stating that if the taxpayer fails to meet either the investment or job creation and retention requirements specified in the agreement during the entire 5-year period beginning on the first day of the first taxable year in which the agreement is executed and ending on the last day of the fifth taxable year after the agreement is executed, then the agreement is automatically terminated on the last day of the fifth taxable year after the agreement is executed, and the taxpayer is not entitled to the award of any credits for any of that 5-year period. [35 ILCS 45/110-45(a)(15)]

 

p)         A requirement that the taxpayer shall annually report to the Department the number of new employees, if applicable, the number of retained employees, and the incremental income tax withheld in connection with the new employees.

 

q)         A provision stating that the taxpayer must provide the reports outlined in Sections 110-50(a) and (b) and 110-55 of the Act on or before April 15 each year.  The agreement shall state that any taxpayer seeking to claim a credit under the Act that fails to timely submit the report required under Section 110-50(a) of the Act shall not receive a credit for that taxable year unless and until such report is finalized and submitted to the Department.

 

r)          A provision requiring the taxpayer to report annually its contractual obligations or otherwise with a recycling facility for its operations.

 

s)         Any other performance conditions or contract provisions the Department determines are necessary or appropriate.

 

t)          Each taxpayer under Section 120.30(b)(1) shall maintain labor neutrality toward any union organizing campaign for any employees of the taxpayer assigned to work on the premises of the project. This paragraph shall not apply to a manufacturer who is subject to collective bargaining agreement entered into prior to the taxpayer filing an application pursuant to the Act. [35 ILCS 45/110-45(a)]

 

u)         A provision that the taxpayer must annually report to the Department the total project tax benefits received to date.  The report is due no later than May 31 of each year and shall cover the previous calendar year. For applicants issued a certificate of exemption under Section 110-105 of the Act, the report shall be the same as required for a High Impact Business under subsection (a-5) of Section 8.1 of the Illinois Enterprise Zone Act. Each person required to file a return under the Gas Revenue Tax Act, the Electricity Excise Tax Act, or the Telecommunications Excise Tax Act shall file a report on customers issued an exemption certificate under Section 110-95 of the Act in the same manner and form as they are required to report under subsection (b) of Section 8.1 of the Illinois Enterprise Zone Act. [35 ILCS 45/110-30(f)]

 

v)         A provision that the taxpayer shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the agreement in the custody or control of the taxpayer open for reasonable Department inspection and audits, and including without limitation, the making of copies of the books, records, or papers, and inspection or appraisal of any the taxpayer or project assets. [35 ILCS 45/110-15]

 

w)        A provision that the taxpayer claiming a credit under the Act shall, prior to April 15 of each taxable year for which the taxpayer claims a credit under the Act, submit to the Department a report detailing that taxpayer's sexual harassment policy, which contains, at a minimum, the following information:

 

1)         the illegality of sexual harassment;

 

2)         the definition of sexual harassment under State law;

 

3)         a description of sexual harassment, utilizing examples;

 

4)         the vendor's internal complaint process, including penalties;

 

5)         the legal recourse and investigative and complaint processes available through the Department;

 

6)         directions on how to contact the Department; and

 

7)         protection against retaliation as provided by Section 6-101 of the Illinois Human Rights Act [775 ILCS 5/6-101].  A copy of the policy shall be provided to the Department upon request. The reports required under this Section shall be submitted in a form and manner determined by the Department. [35 ILCS 45/110-55]

 

Section 120.100  Certification of Verification

 

a)         The taxpayer shall notify the Department on forms provided by the Department when the minimum eligible capital improvement investments have been placed in service and the minimum new full-time employee jobs have been created and that retained employees remain employed by the taxpayer.

 

b)         The taxpayer shall provide, for land and/or building acquisition, a copy of the purchase agreement; for building construction or renovation, a contractor's or architect's cost certification; for space rental, a rental/lease agreement.

 

c)         For a taxpayer to be eligible for a certificate of verification, the taxpayer shall provide proof as required by the Department prior to the end of each calendar year, including, but not limited to, attestation by that project:

 

1)         has achieved the level of new employee jobs specified in the agreement;

 

2)         has achieved the level of annual payroll in Illinois specified in the agreement;

 

3)         has achieved the level of capital investment in Illinois specified in the agreement;

 

4)         has maintained the statewide baseline employment specified in the agreement; and

 

5)         the taxpayer has materially complied with the terms of the agreement and is not otherwise in violation of any provision of the Act.

 

d)         Upon receipt of valid proof from the taxpayer, the Department shall provide the taxpayer with a certificate of verification.

 

e)         A taxpayer claiming a credit under the Act shall submit to the Department of Revenue a copy of the Director's certificate of verification under the Act for the taxable year. However, failure to submit a copy of the certificate with the taxpayer's tax return shall not invalidate a claim for a credit.  [35 ILCS 45/110-60]

 

Section 120.110  Noncompliance with the Agreement

 

a)         If the Director determines that a taxpayer who has received a credit under the Act is not complying with the requirements of the agreement or all of the provisions of the Act, the Director shall provide notice to the taxpayer of the alleged noncompliance and allow the taxpayer a hearing under the provisions of the Illinois Administrative Procedure Act.  If, after 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.  [35 ILCS 45/110-70] Alleged noncompliance shall include, but not be limited to:

 

1)         a demonstration that the taxpayer failed materially to comply with the terms and conditions of the agreement;

 

2)         a determination upon investigation that the taxpayer or any of its agents or representative provided false or misleading information to the Department; or

 

3)         a failure to submit the annual report required by Section 30(f) of the Act.

 

b)         The Department shall notify a taxpayer in writing that its certification of verification subject to revocation. Such notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605.

 

c)         Following revocation of the certification of verification the Department will contact the Director of the Illinois Department of Revenue who may begin proceedings to recover wrongfully exempted State taxes.

 

Section 120.120  Recapture and Reallocation of Recaptured Amounts

 

a)         If, during the term of an agreement, the taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Department and the Department of Revenue shall recapture from the taxpayer the entire credit amount awarded under the agreement prior to the date the taxpayer ceases operations. [35 ILCS 45/110-70]

 

1)         If the Department determines that a taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Director shall provide notice to the taxpayer of that determination and allow the taxpayer a hearing under the Illinois Administrative Procedure Act [5 ILCS 100]. Example of activities that evidence a cessation of operation at a project location with an intent to terminate operations in the State include, but are not limited to, WARN (Worker Adjustment and Retraining Notification) notices reflecting layoffs in excess of 65% of the full-time employees located at the project site, and public announcements or other media reflecting an intent to relocate operations outside the State.

 

2)         The Department shall notify a taxpayer in writing that the MICRO construction jobs credit and/or the MICRO credit is subject to recapture. The notice shall include the reason for revocation of the certification of verification and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

 

3)         Following a determination that credits received pursuant to an agreement are subject to recapture, the Department will contact the Director of the Illinois Department of Revenue requesting proceedings begin to determine the amounts to be reallocated by the Department pursuant to Section 110-70 of the Act.

 

b)         The Department shall, subject to appropriation, reallocate the recaptured amount within 6 months to the local workforce investment area, through competitive grants opportunities in accordance with the Grant Accountability and Transparency Act, in which the project was located for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce. Grant funds shall be distributed in accordance with GATA. [35 ILCS 45/110-70]

 

Section 120.130  Eligibility

 

a)         A taxpayer with a credit for a project that meets the qualifications under paragraphs (1), (2), and (4) of subsection (c) of Section 110-20 [35 ILCS 45/110-95], subject to an agreement under the Act, may be certified by the Department to receive an exemption from:

 

1)         the tax imposed at the project site by Section 2-4 of the Electricity Excise Tax Law, and/or

 

2)         any additional charges added to the taxpayer's utility bills at the project site as a pass-on of State utility taxes under Section 9-222 of the Public Utilities Act. [35 ILCS 45/110-95]

 

b)         To receive a certification for the utility tax exemption, the taxpayer must be registered to self-assess that tax.

 

Section 120.140  Form of Application

 

An application for the Utilities Tax Exemption shall be submitted on the standard application form provided by the Department.  An application shall include:

 

a)         Taxpayer's fully executed MICRO Illinois credit agreement with the Department;

 

b)         Name, address, and Federal Employer Identification Number of the taxpayer; and

 

c)         The applicant will attest that it is registered to self-assess the utility tax. [35 ILCS 45/110-95]

 

Section 120.150  Application Approval Process

 

a)         Application Approval Requirements. Applications shall be submitted to the Department and approved or denied in writing within 90 days after receipt. The Department will issue a certification of exemption to the Illinois Department of Revenue for approved applicants, with a copy to the approved applicant.  The application shall be approved if it meets the following requirements:

 

1)         The applicant has an executed MICRO Illinois agreement; and

 

2)         The applicant eligibility criteria outlined in Section 120.130 are met. 

 

b)         10-Year Exemption Period.  All certified businesses shall receive a ten-year exemption from Section 2-4 of the Electricity Excise Tax Law, and Section 9-222 of the Public Utilities Act.

 

c)         Use of Exemption and Failure to Comply.  Applicant may utilize the exemption prior to achieving the capital investment and job creation requirements set forth in the MICRO Illinois agreement.  However, the Applicant shall repay the exempted amount if the applicant fails to comply with the terms and conditions of the executed MICRO Illinois agreement. [35 ILCS 45/110-95]