Section 522.20 Definitions
The following definitions are applicable to this Part.
"Act"
or "Illinois Income Tax Act" [35 ILCS 5/101 et seq.]
"Certificate" means
the tax credit certificate issued by the Department under Section 229(c) of the
Act as amended by P.A. 101-207.
"Department" or "DCEO"
means the Department of Commerce and Economic Opportunity. [20 ILCS
605/605-5 and P.A. 101-0207; 35 ILCS 5/229]
"Employer" means an
Illinois income taxpayer who is the employer of the qualifying
apprentice. [P.A. 101-0207; 35 ILCS 5/229(a)]
"Qualifying apprentice"
means an individual who:
is a resident of the State of
Illinois;
is at least 16 years old at the
close of the school year for which a credit is sought;
during the school year for
which a credit is sought, was a full-time apprentice enrolled in an
apprenticeship program which is registered with the United States Department of
Labor, Office of Apprenticeship; and
is employed in Illinois by the
taxpayer who is the employer. [P.A. 101-0207; 35 ILCS 5/229(a)]
"Qualified education
expense" means the amount incurred on behalf of a qualifying apprentice
not to exceed $3,500, or $5,000 for taxpayers qualifying for the underserved
area increase (Section 522.80(c)) for tuition, book fees, and lab
fees at the school or community college in which the apprentice is enrolled
during the regular school year. [P.A. 101-0207; 35 ILCS 5/229(a)] Any amount paid for the purchase or rental cost of items
that would be considered qualified education expenses but for the fact that the
items are not substantially consumed during the school year and will remain the
tangible personal property of a qualifying pupil or a custodian at the
conclusion of the school year, or for items that are not required as part of
the Program, shall not be considered qualified education expenses. Examples of
expenses that are excluded include, but not limited to, computers, tablets, and
tools. For purposes of this Section, an item is substantially consumed when,
during the school year, the item is used to the extent that its fair market
value has been reduced to a de minimis amount. Expenses that are paid,
reimbursed, credited, or otherwise subsidized by other public or private
sources are not qualified education expenses.
Tuition is the amount paid to a
school as a condition of enrollment for a quarter, semester or year term in the
program the qualifying apprentice is enrolled.
Book fees are amounts paid for the
use of books (print or digital) that are essential to a qualifying apprentice's
participation in the education program of the school. A book is essential when
the school or instructor of the school requires its use by the qualifying pupil
in order to participate in and complete a course of the education program.
Lab fees are amounts paid for the
use of supplies, equipment, materials or instruments that are essential to a
qualifying pupil's participation in a lab course of the school's education
program. Supplies, equipment, materials or instruments are essential when the
school or instructor of the school requires their use by the qualifying
apprentice in order to participate in and complete a lab course of the
education program. Lab courses include those courses
that, in addition to classroom instruction by a teacher, provide an environment
of organized activity involving observation, experimentation or practice in a
course of study. Lab courses of study include those courses with a scientific,
musical, artistic, technical or language skill content. Lab fees may be in the
nature of a rental fee for supplies, equipment, materials or instruments that
are used in the lab course. Fees incurred for the purchase of supplies,
equipment, materials or instruments used in a lab course and which are
substantially consumed by the assignments and activities of the lab are also
considered qualifying lab fees.
"School" means any
public or nonpublic secondary or post-secondary school in Illinois that is:
an institution of higher
education that provides a program that leads to an industry-recognized
postsecondary credential or degree;
an entity that carries out
programs registered under the federal National Apprenticeship Act; or
another public or private
provider of a program of training services, which may include a joint
labor-management organization that provides an apprenticeship school
curriculum and courses. [P.A. 101-0207; 35 ILCS 5/229(a)]
"School Year" shall
mean the customary annual schedule of courses at a school during which
students, including qualifying apprentice(s) attend school as distinguished
from the calendar year.
"Underserved area"
shall have the same meaning as provided in the Economic Development for a
Growing Economy Tax Credit (35 ILCS 10/5-5), as amended.
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TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.30 MAXIMUM AMOUNT OF AVAILABLE CREDITS
Section 522.30 Maximum Amount of Available Credits
For taxable years beginning on or after January 1, 2020,
and beginning on or before January 1, 2025, subject to appropriation the
aggregate amount of the tax credits that may be claimed under this Section for
qualified education expenses incurred by an employer on behalf of a qualifying
apprentice, shall be limited to $5,000,000 per calendar year. If applications
for a greater amount are received per year, credits shall be allowed on a
first-come first-served basis, based on the date on which each properly
completed application for a certificate of eligibility is received by the
Department. If more than one certificate is received on the same day, the
credits will be awarded based on the time of submission for that particular
day. [P.A. 101-0207; 35 ILCS 5/229(b)] The aggregate amount will be
determined based on the date the qualified education expenses were incurred by
the employer. Employers must submit a claim for a credit by March 31 of the
current calendar year to receive a credit for expenses incurred during the
previous calendar year.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.40 ELIGIBILITY REQUIREMENTS
Section 522.40 Eligibility Requirements
a) In order to qualify for credits under the Act, an applicant
must adhere to the requirements established by the Department in this Section and
Section 522.50. The Department shall require that any application must be
submitted via the Department's web-based application process.
b) The
applicant shall be an Illinois taxpayer registered as a business entity with
the Illinois Secretary of State's Office.
c) In
order to qualify for a credit, the applicant must provide support, including
but not limited to:
1) receipts
obtained from the school in which the qualifying apprentices was enrolled;
2) a
qualifying enrollment of apprentices in a program at a school that meets the
definition under the Act; and
3) incurred
or is incurring qualified education expenses on behalf of the qualifying
apprentice.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.50 FORM OF APPLICATION
Section 522.50 Form of Application
a) The
application submitted by the employer shall at a minimum include the following
information about the employer submitting the application:
1) The
applicant name, address, email, and telephone number;
2) key
contact name and title;
3) total
number of qualifying apprentices employed;
4) employer
industry by the North American Industry Classification System;
5) Federal
Employer Identification Number (FEIN); and
6) Any
other provisions or information the Department determines necessary to
facilitate the Department's evaluation.
b) The
application submitted by the employer shall also include the following
information about the qualifying apprentices:
1) The
name, age, residence address, and taxpayer identification number of each
qualifying apprentice employed by the taxpayer during the taxable year;
2) the
name of the school at which the qualifying apprentice is enrolled; [P.A.
101-0207; 35 ILCS 5/229(g)]
3) The
total amount of education expenses incurred on behalf of the qualifying
apprentices by the applicant, including expenses incurred that do not qualify
as education expenses to be reimbursed;
4) The
total amount of qualified education expenses incurred with respect to each
qualifying apprentice; [P.A. 101-0207; 35 ILCS 5/229(g)] and
5) Any
other provisions or information the Department determines necessary to
facilitate the Department's evaluation.
c) The
applicant is responsible for the accuracy of all data, information and documentation
submitted to the Department.
d) Any
materials or data made available or received by any agent or employee of the
Department from an applicant for, or a recipient of a tax credit under Section
229(c) of the Act as amended by P.A. 101-207, that contain information that is
exempt from disclosure under Section 7 of the Freedom of Information Act [5
ILCS 140/7] shall not be disclosed.
e) To
aid an employer in claiming the apprenticeship education expense credit, a
school should provide to the employer a written receipt documenting the
apprenticeship education expenses paid to the school by the employer on behalf
of qualifying apprentices during the school year. The written receipt should be
provided to the employer on upon request. When a school provides a written
receipt to an employer, it should use the form prescribed by the Department and
include the following information:
1) the
designated school year during which the qualifying education expenses were
paid;
2) the name and address of
the school;
3) the name and address of
the employer;
4) the
name and social security number of the qualifying apprentice or apprentices;
5) a
list of education expense amounts paid for tuition, book fees and lab fees
during the school year; and
6) the total
of all such education expenses paid during the school year. All information
contained on the written receipt provided by a school is deemed confidential
information for use as supporting documentation of the apprenticeship education
expense credit claimed and shall not be used for any other purpose.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.60 APPLICATION REVIEW
Section 522.60 Application Review
a) Applications
will be accepted at any time during the year. The Department will provide
interested applicants with an application package upon request. Submission of
an application does not commit the Department to award a credit. All applications shall be submitted electronically to the
Department.
b) The
Department shall review the information submitted by the applicant under
Section 522.50. The Department shall review all applications to determine that
all required information and documentation has been provided. Applicants will
be notified, electronically, of any application deficiencies and will be
allowed 30 days to correct the deficiencies through submission of additional
documentation. The Department has the discretion to extend the cure the period
in extenuating circumstances, provided the applicant submits a written request
outlining the circumstances for which it needs an extension.
c) In
evaluating an application, the Department shall determine if the following are true:
1) The
employer enrolled the qualifying apprentices in a school;
2) The
school accepted payment and the period of time in which the employer can
receive a refund has expired; and
3) The
employer is incurring or incurred qualified education expenses on behalf of
qualifying apprentices.
d) Upon
satisfactory review, the Department shall issue a tax credit certificate to an
employer incurring or who has incurred costs on behalf of a qualifying
apprentice stating the amount of the tax credit to which the employer is entitled.
If the employer is seeking a tax credit for multiple qualifying apprentices,
the Department may issue a single tax credit certificate that encompasses the
aggregate total of tax credits for qualifying apprentices for a single
employer. [P.A. 101-0207; 35 ILCS 5/229(c)]
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.70 APPLICATION DENIAL/APPROVAL OF CERTIFICATION
Section 522.70 Application Denial/Approval of
Certification
Applicants shall be notified in writing as to the Department's
evaluation of all completed applications. If approved, the Department will
issue a certification to the employer. If the Department denies an application,
it will specify the reasons for the denial in writing and allow the applicant
30 days to amend and resubmit its application for evaluation.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.80 DETERMINATION OF AMOUNT OF TAX CREDIT
Section 522.80 Determination of Amount of Tax Credit
a) The
credit shall be equal to 100% of the qualified education expenses, but in no
event may the total credit amount awarded to a single taxpayer in a single
taxable year exceed $3,500 per qualifying apprentice. [P.A. 101-0207; 35
ILCS 5/229(b)]
b) Underserved
Area Increase. A taxpayer shall be entitled to an additional $1,500 credit (for
a total credit up to $5,000 per qualifying apprentice) against the tax imposed
by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act if (i)
the qualifying apprentice resides in an Underserved Area during the school year
for which a credit is sought by an employer or (ii) the employer's Principal
Place of Business is located in an Underserved Area. [P.A. 101-0207; 35
ILCS 5/229(b)]
c) In
no event shall a credit under this Section reduce the taxpayer's liability
under this Act to less than zero. If a taxpayer received a grant for
qualifying education expenses to be paid by a grantor, only the qualifying
education expenses not paid for with grant funds can be claimed. [P.A.
101-0207; 35 ILCS 5/229(b)]
d) For
partners, shareholders of Subchapter S corporations, and owners of limited
liability companies, if the liability company is treated as a partnership for
purposes of federal and State income taxation, there shall be allowed a credit
under this Section to be determined 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. [P.A. 101-0207; 35 ILCS 5/229(b)]
e) The tax credit for qualified education expenses incurred
must be claimed for the tax year in which the qualified education expenses are
actually paid by the employer. Any part of the apprenticeship education expense
credit not claimed or allowed in a given tax year shall not be carried forward
or backward to any other tax year. Likewise, where qualified education
expenses are incurred in excess of the allowable education expense credit for
any given tax year, the excess of qualified education expenses shall not be
used in claiming the education expense credit for any other tax year.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.90 RECORD RETENTION
Section 522.90 Record Retention
An employer filing a return
claiming the apprenticeship education expense credit shall maintain records of
proof as to the education expenses paid for by the employer. The employer shall
maintain the records for a period of not less than 3 years after the date the
return on which the employer claimed the apprenticeship education expense
credit was filed. Records maintained by the employer shall be subject to
inspection by the Department and its duly authorized agents and employees.
| TITLE 14: COMMERCE
SUBTITLE C: ECONOMIC DEVELOPMENT
CHAPTER I: DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY
PART 522
APPRENTICESHIP EDUCATION EXPENSE CREDIT PROGRAM
SECTION 522.100 NONCOMPLIANCE
Section 522.100 Noncompliance
a) If
the Department determines that a tax credit certificate for credits under the Act
is not in compliance with the requirements of the certification or any
provisions of this Part or the Act, the Director shall provide notice to the employer
of the alleged noncompliance, and allow the employer a hearing under Article 10
of the Illinois Administrative Procedure Act [5 ILCS 100/10]. The notice shall
include the reason for noncompliance and the date and location of a hearing to
be held (see 56 Ill. Adm. Code 2605 (Administrative Hearing Rules)). If, after
notice and any hearing, the Director determines that a noncompliance event
exists and determines that the certification shall be revoked, the Director
shall issue to the Illinois Department of Revenue notice to that effect,
stating the employer name, noncompliance date and the employer credits subject
to recapture by the Illinois Department of Revenue. Alleged noncompliance shall
include, but is not limited to, the following:
1) a
demonstration that the employer failed materially to comply with the terms and
conditions of the certification; or
2) a
determination upon investigation that the employer provided false or misleading
information to the Department.
b) If
the Department's determination of noncompliance is confirmed after any hearing
described in Section 522.100(a) or remains uncontested, the Department will
notify the employer in writing, that its credit certification is revoked, and
any credits issued to the employer prior to the revocation are subject to recapture
by the Illinois Department of Revenue. The Department shall refer the
revocation to the Department of Revenue and request proceedings be initiated to
recover wrongfully issued credits.
AUTHORITY: Implementing P.A. 101-0207 creating Section 35 ILCS 5/229, and authorized by Sections 605-95 and 605-55, of the Department of Commerce and Economic Opportunity Law [20 ILCS 605].
SOURCE: Adopted at 46 Ill. Reg. 8872, effective May 11, 2022.
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