Who is eligible for this tax credit?
Eligible employers must have 50 or fewer total employees on June 30, 2010.
95% of Illinois businesses have fewer than 50 employees.
The credit is available to qualifying employers for each new, full-time Illinois job created and sustained for at least one year. They can hire these new, full-time Illinois employees during the 12-month period beginning July 1, 2010.
Calculation of the net increase in the number of Illinois employees is based on the employer’s number of Illinois employees as of June 30, 2010. If they hire 10 new people and lay off 12, they wouldn’t receive any credits.
How much is the tax credit worth?
This creates a $2,500 per job tax credit (that can be carried forward) on withholding tax for employers with 50 or fewer total employees who hire new, full-time Illinois employees during the 12-month period beginning July 1, 2010. It will have a cap of $50 million on the total amount of credits issued.
A credit can be taken against a company’s withholding tax liability.
How will companies apply for the tax credit and how will it work?
Eligible companies will apply for the credit online and ultimately will be issued a tax credit certificate.
Application for the credit may be made as soon as a new, full-time Illinois employee is hired and begins providing services.
The credits will be issued beginning July 1, 2011.
The determination of whether an employer has 50 or fewer employees on June 30, 2010 will include all employees in every location, which includes both in Illinois and out of state employment totals.
Eligibility for the credit does not require that a particular individual employee be retained for one year, only that a new, full-time Illinois job be created and sustained for one year.
New small businesses hiring their first Illinois employee(s) may qualify for the credit.
The credit may be claimed for an hourly employee working an average of at least 35 hours per week or for a full-time salaried employee, but not for a partner or an independent contractor.
Tax credits granted will not change the recognition of withholding tax paid for either employer or employee.
What will be the impact of the credit?
These small businesses are the backbone of the Illinois economy, and this tax credit will help create up to 20,000 jobs.
Who will manage the program? Will it require more money or employees?
DCEO will work with the Department of Revenue as it does with the various other tax credits already in place. An analysis of the cost to administer this tax credit by DCEO is underway and has yet to be completed.
Are any small businesses been exempted?
Is the tax credit limited to a particular industry? Does it exclude retail or restaurants?
No, as long as the position created is FT and the wages are at least $25,025, the company is eligible.
Are there any salary requirements?
These jobs must pay at least $25,025 annually.
The legislation says "at least $25,025" salary. Will the State offer the tax credit on a sliding scale, meaning that wages far above $25,025 a year will earn a larger tax credit than $2500?
No, the $2500 tax credit is a fixed amount. The tax incentive is the same for a $25,025 job as it is for a $100,000 job. There is no "sliding scale" based on wage.
Does a person need to have been previously unemployed for the company to receive the credit?
How will you verify these jobs have actually been created?
These will be verified based on tax and employee information companies must submit when they apply for the credit after the jobs were created and after July 1, 2011 when they claim the credit. Audits will also be completed just as with other tax credit programs.
Does it matter how the company is structured legally?
Since the relief is credited against the company's withholding tax, any company that pays payroll is eligible and it does not matter what their legal classification is.
IL has reciprocal agreements with other border states, such as Indiana and Kentucky. Can I create a FT position and fill it with an out-of-state employee and still receive the tax credit?
No, that goes against the intent of the legislation.
If my company has 50 FT jobs, but a few more part-time jobs, do I fit the criteria for "small business"?
Yes. The statute refers to eligible companies having no more than 50 "full-time positions" at the beginning of the incentive period on July 1, 2010.
How does this credit apply if I hire a new waitress whose wage comes primarily from tips?
When reporting the position, the restaurant will have to report the position's tips to ensure it reaches the $25,025 threshold.
Will the State review the applications for "quality" of jobs and make its decisions based on "better" jobs?
This program is first-come, first-served. As long as the position meets the criteria of 1) FT position lasting for at least a year; 2) making at least $25,025 a year; 3) withholding taxes going to Illinois, then the company getting in their application before the funds run out will receive their credit.