by Krista A. Cohane
On February 3, 2023, Illinois Governor JB Pritzker signed legislation approving the creation of a sustainable aviation fuel purchase credit and authorizing emergency rule making under the Illinois Administrative Procedure Act to implement the Invest in Illinois Act. The bill also makes numerous other amendments to incentives and credits, including the Illinois Enterprise Zone Act, Economic Development for a Growing Economy Tax Credit Act, High Impact Business, Reimagining Electric Vehicles in Illinois Act, Film Product Services Tax Credit Act of 2008, and the Manufacturing Illinois Chips for Real Opportunity Program. (L. 2023, S2951 (P.A. 102-1125), effective 02/03/2023.)
Illinois Administrative Procedure Act.
Illinois adopted emergency rulemaking to provide for expeditious and timely implementation of the Invest in Illinois Act. Emergency rules may be adopted by the Department of Commerce and Economic Opportunity, which are deemed to be necessary for public interest, safety, and welfare. The emergency rulemaking power is repealed February 3, 2024.
Sustainable aviation fuel purchase credit.
From June 1, 2023 through January 1, 2033, sustainable aviation fuel sold to or used by an air carrier, certified by the carrier to the Department to be used in Illinois, earns a credit in the amount of $1.50 per gallon of sustainable aviation fuel purchased. The purchaser must certify to the seller of the aviation fuel that the purchaser is satisfying all or part of its liability under the Use Tax Act or the Service Use Tax Act that is due on the purchase of aviation fuel by use of the sustainable aviation fuel purchase credit.
Until July 1, 2033, on an annual basis, no credit may be earned by an air carrier for soybean oil-derived sustainable aviation fuel once air carriers in Illinois have collectively purchased sustainable aviation fuel containing 10 million gallons of soybean oil feedstock. A certification provided by the air carrier may be used to satisfy the retailer’s or serviceman’s liability on aviation fuel under the Retailers’ Occupation Tax Act or Service Occupation Tax Act for the credit claimed.
Reimagining Electric Vehicles in Illinois Act.
The Reimagining Electric Vehicles in Illinois Act named has been changed to Reimagining Energy and Vehicles (REV) in Illinois Act to clarify that renewable energy manufacturers and other products essential to the growth of the renewable energy sector are also eligible for credits. Additionally, agreements under the REV Act may be renewed for an additional 15-year term. Certified business enterprises will be exempt from the Telecommunications Infrastructure Maintenance Fee Act and the Simplified Municipal Telecommunications Tax Act. For applications of credits submitted after February 3, 2023, “applicant” also includes a taxpayer that operates a business in Illinois or is planning to locate a business within Illinois and is engaged in interstate or intrastate commerce as a renewable energy manufacturer.
A “renewable energy manufacturer” means a manufacturer whose primary function is to manufacture or assemble: (1) equipment, systems, or products used to produce renewable or nuclear energy; (2) products used for energy conservation, storage, or grid efficiency purposes; or (3) component parts for that equipment or those systems or products.
If a REV Illinois Act agreement is entered into on or after February 3, 2023, and the applicant is an electric vehicle manufacturer, an electric vehicle power supply equipment manufacturer, an electric vehicle component part manufacturer that does not qualify as an electric vehicle component parts manufacturer or a renewable energy manufacturer, a renewable energy manufacturer that does not qualify under an electric vehicle component parts manufacturer or a renewable energy manufacturer, a battery recycling and reuse manufacturer, or a battery raw materials refining service provider then they must: (1) make an investment of at least $2.5 million in capital improvements at the project site; (2) in the case of electric vehicle component part manufacturers, manufacture one or more parts that are used for electric vehicle manufacturing; (3) to be placed in service in Illinois within 48-month period after application approval; and (4) create the lesser of 50 new full-time employee jobs or new full-time employee jobs equivalent to 10% of the Illinois baseline applicable to the taxpayer and any related member at the time of application.
If an agreement is entered into on or after February 3, 2023, and the applicant is an electric vehicle manufacturer, an electric vehicle component parts manufacturer, or a renewable energy manufacturer and has existing operations within Illinois that the applicant intends to convert or expand from traditional manufacturing to electric vehicle manufacturing then they must: (1) make an investment of at least $100 million in capital improvements at the project site; (2) be placed in service in Illinois within a 60-month period after application approval; and (3) create the lesser of 50 new full-time employee jobs or new full-time employee jobs equivalent to 10% of the Illinois baseline applicable to the taxpayer and any related member at the time of application.
Illinois Enterprise Zone Act.
The Illinois Enterprise Zone Act is amended to increase the geographic area to qualify as an enterprise zone.
An area is qualified to become an enterprise zone if it comprises a minimum of one-half square mile and not more than 14 (previously 12) square miles, or 20 (previously 15) square miles if the zone is located within the jurisdiction of four or more counties or municipalities, in total area, exclusive of lakes and waterways. In cases where the zone is a joint effort of three or more units of government, or two or more units of government if situated in a township which is divided by a municipality of 1 million or more inhabitants, and where the certification has been in effect at least one year, the total area will comprise a minimum of one-half square mile and not more than 16 (previously 13) square miles.
Economic Development for a Growing Economy.
The Economic Development for a Growing Economy (EDGE) Tax Credit Act is amended so that if a project is located in an underserved area, and the applicant agrees to hire the required number of new employees, then the maximum amount of credit may be increased by an amount not to exceed 50% of the incremental income tax attributable to retained employees. Additionally, an applicant is required to certify that, if not for the credit, the project would not occur in Illinois. The bill removes language about how to demonstrate evidence of this certification.
High Impact Businesses.
The Department is authorized to receive and approve applications for the designation of “High Impact Businesses” in Illinois for an initial term of 20 years with an option for renewal for a term not to exceed 20 years. The bill removes the requirement for businesses to certify in writing that investments would not be placed in service without the credit. Finally, the Department has the powers and duties to determine the conditions and processes for renewal of high impact business designations, and any incentives associated with that awarded designation.
Film Product Services Tax Credit Act of 2008.
The Film Production Services Tax Credit Act of 2008 is amended to change conditions under which nonresident wages are considered Illinois labor expenditures. If a production is accredited by the Department on or after February 3, 2023, wages paid to nonresidents will qualify as Illinois labor expenditures only under the following conditions: (1) the nonresident must be employed in a qualified position; (2) for each of those accredited productions, the wages of not more than nine nonresidents who are employed in a qualified position other than actor will qualify as Illinois labor expenditures; (3) for an accredited production with Illinois production spending of $25 million or less, no more than two nonresident actors’ wages will qualify as Illinois labor expenditures; and (4) for an accredited production with Illinois production spending of more than $25 million, no more than four nonresident actors’ wages will qualify as Illinois labor expenditures. A “qualified position” is defined to mean writer, director, director of photography, production designer, costumer designer, production accountant, VFX supervisor, editor, composer, or actor. The film credit will sunset on January 1, 2033 (previously January 1, 2027).
Manufacturing Illinois Chips for Real Opportunity (MICRO) Program.
The bill amends the MICRO program so that the average wage requirement is determined by the Department instead of the U.S. Bureau of Labor Statistics. The maximum amount of credit that an applicant may be increased cannot exceed 75% (previously 25%) of the incremental income tax attributable to retained employees at applicant’s project. In an underserved area, the maximum amount of credit increase cannot exceed 100% (previously 50%). For applicants issued a certificate of exemption, the report will be the same as required for a High Impact Business.
Charges to a business certified under MICRO Act are exempt from the Telecommunications Infrastructure Maintenance Fee Act and Simplified Municipal Telecommunications Tax Act.
Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.