§ 77-10 — Definitions

Illinois § 77-10

• Jurisdiction: Illinois
• Topic: GOVERNMENT
• Ch. 35: REVENUE
• Act 35 ILCS 65/: Advancing Innovative Manufacturing for Illinois Tax Credit Act.

Text

In this Act: "Advanced manufacturing" means the practice of using innovative technologies and methods to improve a company's ability to be competitive in the manufacturing sector by optimizing all aspects of the value chain, from concept to end-of-life considerations. "Advanced manufacturing" includes, but is not limited to, advanced manufacturing practices adopted by the following industries: clean energy ecosystem businesses; life science businesses; food manufacturing; automotive and aerospace manufacturing; machinery manufacturing; fabricated metal manufacturing; chemical manufacturing; robotics; and advanced materials manufacturing, including nanomaterial manufacturing. "Advancing Innovative Manufacturing for Illinois Tax Credit" or "Credit" means a credit agreed to between the Department and the applicant under this Act that is based on capital improvements made to a new or existing facility for the purpose of modernizing, upgrading, automating, or streamlining a manufacturing or production process. "Agreement" means the agreement between a taxpayer and the Department under the provisions of this Act. "Applicant" means a taxpayer that: (1) operates a business in Illinois as a manufacturer of critically needed goods; (2) operates a business in Illinois that primarily engages in research and development that will result in the manufacturing of critically needed goods; or (3) is planning to locate a business within the State of Illinois as a manufacturer of critically needed goods or a business in Illinois that primarily engages in research and development that will result in the manufacturing of critically needed goods. For the purposes of this definition, a business primarily engages in research and development if at least 50% of its business activities involve research and development in the manufacturing of critically needed goods. "Applicant" does not include a taxpayer that closes or substantially reduces, by more than 50%, operations at one location in the State and relocates substantially the same operation to another location in the State. This exclusion does not prohibit a taxpayer from expanding its operations at another location in the State. This exclusion also does not prohibit a taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation of the business if the Department determines that expansion cannot reasonably be accommodated within the municipality or county in which the business is located, or, in the case of a business located in an incorporated area of the county, within the county in which the business is located. "Capital improvement" means (i) the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment, and furnishings at an approved project site in Illinois and (ii) expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures, and equipment that are leased, the term of the lease must equal or exceed the term of the agreement, and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments. "Department" means the Department of Commerce and Economic Opportunity. "Director" means the Director of Commerce and Economic Opportunity. "Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week. "Incremental income tax" means the total amount withheld during the taxable year from the compensation of new employees and, if applicable, retained employees under Article 7 of the Illinois Income Tax Act arising from employment at a project that is the subject of an agreement. "New employee" means a newly-hired full-time employee employed to work at the project site and whose work is directly related to the project. "Noncompliance date" means, in the case of a taxpayer that is not complying with the requirements of the agreement or the provisions of this Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the agreement and the provisions of this Act, as determined by the Director. "Pass-through entity" means an entity that is exempt from the tax under subsection (b) or (c) of Section 205 of the Illinois Income Tax Act. "Placed in service" means that the facility is in a state or condition of readiness, is available for a specifically assigned function, and is constructed and ready to conduct manufacturing operations. "Professional employer organization" (PEO) means an employee leasing company, as defined in Section 206.1 of the Illinois Unemployment Insurance Act. "Program" means the Advancing Innovative Manufacturing for Illinois Tax Credit program established in this Act. "Project" means a for-profit economic development activity involving advanced manufacturing. "Related member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following: (1) An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer's outstanding stock. (2) A partnership, estate, trust and any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the taxpayer. (3) A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock. (4) A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, capital, stock, or value of the taxpayer. (5) A person to or from whom there is an attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a related member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code. "Research and development" means work directed toward the innovation, introduction, and improvement of products and processes in the space of advanced manufacturing. "Retained employee" means a full-time employee who is employed by the taxpayer before the first day of the term of the agreement, who continues to be employed by the taxpayer during the term of the agreement, and whose job duties are directly and substantially related to the project. For purposes of this definition, "directly and substantially related to the project" means that at least two-thirds of the employee's job duties must be directly related to the project and the employee must devote at least two-thirds of his or her time to the project. The term "retained employee" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership of at least 5% in the profits, equity, capital, or value of the taxpayer. "Statewide baseline" means the total number of full-time employees of the applicant and any related member employed by such entities in Illinois at the time of application for incentives under this Act. "Taxpayer" means an individual, corporation, partnership, or other entity that has a legal obligation to pay Illinois income taxes and file an Illinois income tax return. "Underserved area" means any geographic area as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act.

Legislative History

(Source: P.A. 104-6, eff. 6-16-25.)