86 Ill. Adm. Code 100.2110 — Economic Development for a Growing Economy Credit (IITA Section 211)

# Economic Development for a Growing Economy Credit (IITA Section 211)

TITLE 86: REVENUE CHAPTER I: DEPARTMENT OF REVENUE PART 100 INCOME TAX SECTION 100.2110 ECONOMIC DEVELOPMENT FOR A GROWING ECONOMY CREDIT (IITA SECTION 211)

Section 100.2110 Economic Development for a Growing Economy Credit (IITA Section 211)

a) For tax years beginning on or after January 1, 1999, a taxpayer who has entered into an Agreement (including for tax years beginning on or after January 1, 2021, a New Construction EDGE Agreement) with the Department of Commerce and Economic Opportunity (DCEO) under the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10] (EDGETCA), shall be allowed a credit against the tax imposed by the Illinois Income Tax Act (IITA) Section 201(a) and (b) in an amount to be determined in the Agreement. (IITA Section 211)

b) The credit shall be computed as follows: 1) The credit allowed shall not exceed the Incremental Income Tax with respect to the project. Additionally, the New Construction EDGE Credit shall not exceed the New Construction EDGE Incremental Income Tax. (IITA Section 211(1)) EDGETCA Section 5-5 defines Incremental Income Tax as the total amount withheld during the taxable year from the compensation of new employees, and if applicable, retained employees under Article 7 of the IITA arising from employment at a project that is the subject of an Agreement. EDGETCA Section 5-5 also defines New Construction EDGE Incremental Income Tax as the total amount withheld during the taxable year from the compensation of New Construction EDGE Employees. [35 ILCS 10/5-5] 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. (IITA Section 211(2))

3) Pursuant to IITA Section 211(3), the amount of credit shall be determined on an annual basis; provided, however, that: A) except in the case of a taxpayer described in subsection (b)(3)(B), the credit against any State income tax liability may not be applied in more than 10 taxable years; B) in the case of a taxpayer certified by DCEO under the Corporate Headquarters Relocation Act, the credit may not extend beyond 15 taxable years; provided, that the taxpayer may not claim for any tax year during that period more than 60% of the credit otherwise allowed for that tax year under the EDGETCA (see EDGETCA Section 5-45); and C) a credit earned within the applicable period specified in subsection (b)(3)(A) or (B) may be carried forward beyond that period pursuant to IITA Section 211(4).

4) The credit may not exceed the amount of taxes imposed pursuant to IITA Section 201(a) and (b). (IITA Section 211(4))

5) In the case of an election under Section 100.7380(a), no credit shall be allowed under IITA Section 211 or this Section for the taxable year of the election.

c) Any credit in excess of the tax liability for the taxable year may be carried forward to offset the income tax liability of the taxpayer for the next five years or until it has been fully utilized, whichever occurs first. 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. (IITA Section 211(4)) In the case of an election under Section 100.7380(a), no credit to which the election applies may be carried forward under IITA Section 211(4) and this Section.

d) 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 IITA Section 912. (IITA Section 211(5)) 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 IITA Section 201 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. (IITA Section 211(5))

e) In the case of a credit earned by a partnership or Subchapter S corporation, the credit passes through to the owners for use against their regular income tax liabilities in the same proportion as other items of the taxpayer are passed through to the taxpayer's owners for federal income tax purposes. (See IITA Section 211.) 1) The credit earned by a partnership or a Subchapter S corporation will be treated as earned by its owners as of the last day of the taxable year of the partnership or Subchapter S corporation in which the tax credit certificate is issued by DCEO under Section 5-55 of the EDGETCA. 2) The credit shall be allowed to each owner in the taxable year of the owner in which the taxable year of the partnership or Subchapter S corporation ends and may be carried forward to the 5 succeeding taxable years of the owner until used.

f) To claim the credit, a taxpayer shall attach to its Illinois income tax return: 1) a copy of the tax credit certificate and annual certification (if any) issued by DCEO; and 2) in the case of a partner in a partnership or shareholder of a Subchapter S corporation that earned the credit, a Schedule K-1-P or other written statement from the partnership or Subchapter S corporation stating: A) the portion of the total credit shown on the tax credit certificate that is allowed to that partner or shareholder and B) the taxable year of the partnership or Subchapter S corporation in which the tax credit certificate was issued.

g) For purposes of this credit, the terms "Agreement", "Incremental Income Tax", "new employees", "New Construction EDGE Incremental Income Tax", "New Construction EDGE Employee", "Noncompliance Date", and "retained employees" shall have the same meaning as when used in EDGETCA Section 5-5. (IITA Section 211(6))

h) This credit is exempt from the sunset provisions of IITA Section 250. (IITA Section 211) (Source: Former Section 100.2110 renumbered to Section 100.2131; New Section 100.2110 renumbered from Section 100.2198 and amended at 49 Ill. Reg. 3115, effective February 26, 2025)

Section 100.2110 Economic Development for a Growing Economy Credit (IITA Section 211)

a) For tax years beginning on or after January 1, 1999, a taxpayer who has entered into an Agreement (including for tax years beginning on or after January 1, 2021, a New Construction EDGE Agreement) with the Department of Commerce and Economic Opportunity (DCEO) under the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10] (EDGETCA), shall be allowed a credit against the tax imposed by the Illinois Income Tax Act (IITA) Section 201(a) and (b) in an amount to be determined in the Agreement. (IITA Section 211)

b) The credit shall be computed as follows:

1) The credit allowed shall not exceed the Incremental Income Tax with respect to the project. Additionally, the New Construction EDGE Credit shall not exceed the New Construction EDGE Incremental Income Tax. (IITA Section 211(1)) EDGETCA Section 5-5 defines Incremental Income Tax as the total amount withheld during the taxable year from the compensation of new employees, and if applicable, retained employees under Article 7 of the IITA arising from employment at a project that is the subject of an Agreement. EDGETCA Section 5-5 also defines New Construction EDGE Incremental Income Tax as the total amount withheld during the taxable year from the compensation of New Construction EDGE Employees. [35 ILCS 10/5-5]

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. (IITA Section 211(2))

3) Pursuant to IITA Section 211(3), the amount of credit shall be determined on an annual basis; provided, however, that:

A) except in the case of a taxpayer described in subsection (b)(3)(B), the credit against any State income tax liability may not be applied in more than 10 taxable years;

B) in the case of a taxpayer certified by DCEO under the Corporate Headquarters Relocation Act, the credit may not extend beyond 15 taxable years; provided, that the taxpayer may not claim for any tax year during that period more than 60% of the credit otherwise allowed for that tax year under the EDGETCA (see EDGETCA Section 5-45); and

C) a credit earned within the applicable period specified in subsection (b)(3)(A) or (B) may be carried forward beyond that period pursuant to IITA Section 211(4).

4) The credit may not exceed the amount of taxes imposed pursuant to IITA Section 201(a) and (b). (IITA Section 211(4))

5) In the case of an election under Section 100.7380(a), no credit shall be allowed under IITA Section 211 or this Section for the taxable year of the election.

c) Any credit in excess of the tax liability for the taxable year may be carried forward to offset the income tax liability of the taxpayer for the next five years or until it has been fully utilized, whichever occurs first. 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. (IITA Section 211(4)) In the case of an election under Section 100.7380(a), no credit to which the election applies may be carried forward under IITA Section 211(4) and this Section.

d) 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 IITA Section 912. (IITA Section 211(5)) 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 IITA Section 201 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. (IITA Section 211(5))

e) In the case of a credit earned by a partnership or Subchapter S corporation, the credit passes through to the owners for use against their regular income tax liabilities in the same proportion as other items of the taxpayer are passed through to the taxpayer's owners for federal income tax purposes. (See IITA Section 211.)

1) The credit earned by a partnership or a Subchapter S corporation will be treated as earned by its owners as of the last day of the taxable year of the partnership or Subchapter S corporation in which the tax credit certificate is issued by DCEO under Section 5-55 of the EDGETCA.

2) The credit shall be allowed to each owner in the taxable year of the owner in which the taxable year of the partnership or Subchapter S corporation ends and may be carried forward to the 5 succeeding taxable years of the owner until used.

f) To claim the credit, a taxpayer shall attach to its Illinois income tax return:

1) a copy of the tax credit certificate and annual certification (if any) issued by DCEO; and

2) in the case of a partner in a partnership or shareholder of a Subchapter S corporation that earned the credit, a Schedule K-1-P or other written statement from the partnership or Subchapter S corporation stating:

A) the portion of the total credit shown on the tax credit certificate that is allowed to that partner or shareholder and

B) the taxable year of the partnership or Subchapter S corporation in which the tax credit certificate was issued.

g) For purposes of this credit, the terms "Agreement", "Incremental Income Tax", "new employees", "New Construction EDGE Incremental Income Tax", "New Construction EDGE Employee", "Noncompliance Date", and "retained employees" shall have the same meaning as when used in EDGETCA Section 5-5. (IITA Section 211(6))

h) This credit is exempt from the sunset provisions of IITA Section 250. (IITA Section 211)

(Source: Former Section 100.2110 renumbered to Section 100.2131; New Section 100.2110 renumbered from Section 100.2198 and amended at 49 Ill. Reg. 3115, effective February 26, 2025)