Current through Register Vol. 48, No. 38, September 20, 2024
a) A taxpayer conducting a trade or business
in an enterprise zone, or a High Impact Business designated by the Department
of Commerce and Economic Opportunity conducting a trade or business in a
federally designated foreign trade zone or sub-zone, or in a river edge
redevelopment zone established pursuant to the River Edge Redevelopment Zone
Act [65 ILCS 115 ] shall be allowed a credit against the tax imposed by Section
201(a) and (b) of the Illinois Income Tax Act in the amount of $500 per
eligible employee hired to work in the zone during the taxable year.
1) In general, the credit is available for
eligible employees hired on or after January 1, 1986, or for taxable years
ending prior to July 25, 2013, the effective date of PA 98-109, which repealed
IITA Section 201(g).
2) The credit
is not allowed for an eligible employee hired to work in an enterprise zone in
a taxable year ending on or after August 7, 2012, the effective date of PA
97-905, which repealed the credit as it relates to enterprise zones.
b) To qualify for the credit:
1) The taxpayer must hire 5 or more eligible
employees to work in an enterprise zone or federally designated foreign trade
zone or sub-zone or a river edge redevelopment zone during the taxable
year.
2) The taxpayer's total
employment within the enterprise zone or federally designated foreign trade
zone or sub-zone or a river edge redevelopment zone must increase by 5 or more
full-time employees beyond the total employed in that zone at the end of the
previous tax year for which a jobs tax credit under this Section was taken, or
beyond the total employed by the taxpayer as of December 31, 1985, whichever is
later.
A) If a taxpayer was in business in
1985 at a location, has never before taken the credit, and is located in an
enterprise zone created before or during 1985, the taxpayer would use 1985 as
the base year.
B) If a taxpayer was
in business in 1985 at a location, has never before taken the credit, and is
located in an enterprise zone created after 1985, the taxpayer's base year for
calculating the increase in employment is the total employed at the end of the
calendar year in which the enterprise zone was created. The law is clear that
the credit is a reward for increasing employment in enterprise zones. To use
1985 as a base year, even if no enterprise zone was then in existence, is not
consistent with this clear goal of the law. In such a situation, a taxpayer
would not always be able to show that there was job creation in the enterprise
zone. For example, while employment may have increased over 1985 levels, there
may not have been an increase in employment from the end of the calendar year
in which the zone was created. Therefore, to accept 1985 as the base year no
matter whether there was an enterprise zone in existence at that time, could
result in providing a credit for job creation that did not occur in an
enterprise zone. Such a result would be contrary to law.
3) The eligible employees must be employed
180 consecutive days in order to be deemed hired for purposes of this
subsection (b)(3).
EXAMPLE: An otherwise eligible employee is hired to work in
an enterprise zone on August 1, 1987. The employer's tax year ends on December
31, 1987. The employee would have worked 153 days during the 1987 tax year and,
therefore, would not be considered to be "deemed hired" in 1987. Even if all
other requirements were met, the employer would not be eligible for the jobs
tax credit for 1987. Once the employee has been employed for 180 consecutive
days, the employee is deemed hired. Therefore, in this instance the employee
would be "deemed hired" in 1988. If all other requirements were met, the
employer could claim the Jobs Tax Credit for this employee for the 1989 tax
year.
c) An
"eligible employee" means an employee who is:
1) certified by the Department of Commerce
and Economic Opportunity (DCEO) as "eligible for services" pursuant to
regulations promulgated in accordance with Title II of the Job Training
Partnership Act, Training Services for the Disadvantaged or Title III of the
Job Training Partnership Act, Employment and Training Assistance for Dislocated
Workers Program. Whenever an employee is certified, a voucher is completed by
the applicant and approved by DCEO. The vouchers are entitled "Illinois
Department of Commerce and Community Affairs, Enterprise Zone Program, Jobs Tax
Credit Certification Voucher." Taxpayers should request a copy of the voucher
to verify that the employee is DCEO certified. Taxpayers should maintain a copy
of the voucher in their files to document eligibility status of employees in
the event of an audit;
2) hired
after the enterprise zone, federally designated foreign trade zone or sub-zone,
or a river edge redevelopment zone was designated or the trade or business was
located in that zone, whichever is later. The term "hired" means hired by the
particular employer claiming the credit. Employees transferred from another
facility of the employer to a facility located in an enterprise zone, federally
designated foreign trade zone or sub-zone, or a river edge redevelopment zone
are not deemed "hired" upon transfer to a facility located in the enterprise
zone, federally designated foreign trade zone or sub-zone, or a river edge
redevelopment zone;
3) employed in
the enterprise zone, foreign trade zone or sub-zone, or a river edge
redevelopment zone. An employee is employed in an enterprise zone, federally
designated foreign trade zone or sub-zone, or a river edge redevelopment zone
if his or her services are rendered there or the zone is the base of operations
for the services performed; and
4)
a full-time employee working 30 or more hours per week.
d) For tax years ending on or after December
31, 1985, and prior to December 31, 1988, the credit shall be allowed for the
tax year in which the eligible employees are hired. For tax years ending on or
after December 31, 1988, the credit shall be allowed for the tax year
immediately following the tax year in which the eligible employees are hired.
If the amount of the credit exceeds the tax liability for that year, whether it
exceeds the original liability or the liability as later amended, such excess
may be carried forward and applied to the tax liability of the 5 taxable years
following the excess credit year. The credit shall be applied to the earliest
year for which there is a liability. If there is credit from more than one tax
year that is available to offset a liability, earlier credit shall be applied
first.
