Executive Director
Tax Institute

(217) 522-5512 ext. 231

All Key Chamber Legislation

Upcoming Events
July 15: The next meeting of the Tax Institute featuring Illinois Department of Revenue Director David Harris. RSVP to me at 

August 13:  
The spring session of the Illinois General Assembly resulted in the most significant tax law changes in many years. All Illinois businesses will be affected. In this seminar, veteran state and local tax practitioners Joe Bigane and Paul Bogdanski will go beneath the surface of the new legislation and discuss the subtleties of the changes to the sales tax and income tax laws that you need to know. Register here

October 28:
Illinois General Assembly returns to Springfield for the first day of the fall veto session.
July 5, 2019
State and Local Tax  
This Week 

Illinois General Assembly
The House and Senate have adjourned until the fall veto session.  The first day of the veto session is scheduled for October 28.

This week I continue working through the details of the recent tax-related legislation.  P.A. 101-0009,  SB 689,

I've received clarification of a couple of items from the Department of Revenue.  

The Department has confirmed that the expansion of the manufacturing machinery and equipment exemption to include production-related tangible personal property (items formerly covered by the expired Manufacturers' Purchase Credit) includes production-related tangible personal property utilized in graphic arts production.  

I received a question from a member as to whether the expansion included graphic arts production. My reading of the legislation is that it does include graphic arts production by virtue of the expansion of the manufacturing machinery and equipment exemption in 2017 to include graphic arts production.  The Department confirmed that graphic arts production is included.

The Department also confirmed that the exemption for production-related tangible personal property applies to stand-alone research and development facilities.  You may recall that Section 130.331(b)(3)(C) of the Department's rules for the Manufacturers' Purchase Credit provided eligibility for MPC for  "All tangible personal property used or consumed by a manufacturer or graphic arts producer in research and development regardless of use within or without a manufacturing or graphic arts production facility."  The Department confirmed that stand-alone research and development facilities will qualify for the exemption for production-related tangible personal property under the new manufacturing machinery and equipment exemption.

I also spent some reviewing the portion of SB 689 that contains various provisions authorizing construction jobs income tax credits, the "Blue Collar Jobs Act."

The credit is for 50% of the amount of the incremental income tax attributable to qualifying construction jobs or 75% in the case of projects located in an "underserved" area.  The term "underserved area" has the same meaning as the term is used in the existing EDGE credit.

High impact businesses can qualify for the construction jobs credit.  It doesn't appear that there are any new categories of High Impact businesses established by the legislation, so it appears a taxpayer must comply with the existing investment and job creation requirements to be a high impact business in order to qualify for the High Impact Business construction jobs credit.,
Businesses that make a $10,000,000 capital investment in an Enterprise Zone can receive the Enterprise Zone construction jobs credit, There do not appear to be any job creation requirements under the Enterprise Zone construction jobs credit.

The new enterprise zone construction jobs credit provides that a taxpayer considering a project in an Enterprise Zone must meet the $10,000,000 capital investment requirement, and "receive approval from the designating city or county, and make application to DCEO and receive approval from DCEO." The legislation also requires that "The application must describe the nature and benefit of the project to the certified Enterprise Zone and its potential contributors."
There is also a New Construction EDGE Credit that requires a capital investment of at least $10,000,000.  This credit incorporates Section 5-20 of the existing EDGE credit into the requirements for the New Construction EDGE Credit.  For example, in the case of an applicant with more than 100 employees it requires the lesser of 10% of the number of full-time employees employed by the applicant world-wide or 50 new employees. From my initial review, it does not appear there is any prohibition against combining/stacking the existing EDGE credit and the New Construction EDGE Credit.
SB 689 establishes a River Edge Construction Jobs credit that requires a capital investment of only $1,000,000. There do not appear to be any job creation requirements for the River Edge Construction Jobs Credit.
The credits are 4 independent credits. A taxpayer may qualify as, (1) a High Impact business (it seems to allow existing high impact businesses to enter into a project and unless I missed it there is no particular capital investment required for a High Impact Business), or (2) a business in an Enterprise Zone that makes a $10,000,000 capital investment, or (3) a New construction EDGE agreement - if you qualify for an EDGE credit under the investment and job creation criteria you can also get the New Construction EDGE credit, or (4) a River Edge construction jobs credit which only has a $1,000,000 capital investment requirement.
There is a $20,000,000 annual cap for these new construction jobs tax income tax credits.  I'm not sure how the cap will be implemented.  It could be done on a "first come, first served" basis.  But, then what happens if you do a project and are shut out of the credit for a particular tax year?  Do you lose the credit? 
I'll also follow up with the folks at DCEO to make sure I'm not missing anything.
The July 5 edition of the Illinois Register was not published by the time I finished the newsletter, likely because of folks taking time off for the July 4 holiday.  I'll report on any rulemaking of consequence next week. 
Court cases
No tax-related cases this week

Tax Tribunal 
No new decisions were posted this week.  None of the new cases filed with the Tribunal raise unique or noteworthy issues.

The Illinois General Assembly's bipartisan Commission on Government Forecasting and Accountability has issued its  Monthly Briefing for the Month Ended: June 2019.  It is reported that state tax revenues continued to exceed expectations in June.

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