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Illinois Enacts Changes to Enterprise Zone Program

Illinois Public Act Number 97-905, which was signed into law by Governor Pat Quinn on August 7, 2012, made extensive changes to the state’s enterprise zone program. Incentives were eliminated or modified. Reporting requirements were increased. Administrative procedures were revised.

Enterprise Zone Incentive Changes

Companies operating in an Enterprise Zone or a High Impact Business Zone will no longer be eligible for the $500 per eligible employee jobs credit. The credit was not changed for companies in a River Edge Redevelopment Zone or with regard to employees hired to work in a Foreign Trade Zone (or subzone).

The subtraction from income for dividends received from a business operating primarily in an Enterprise Zone was also repealed. Similarly, the subtraction from income for financial institutions for interest received on loans secured by property eligible for the Enterprise Zone Investment Tax Credit was ended. The provision was not changed with regard to the River Edge Redevelopment Zones.

The River Edge Redevelopment Zones will no longer be renewed or extended. Therefore, existing zones will be allowed to expire. Thereafter, these zones can compete for open Enterprise Zone classifications. However, no preference will be afforded the River Edge Redevelopment Zones in the zone designation process.

Beginning July 1, 2013, the sales tax exemption for building materials used in an Enterprise Zone will require certification by the Department of Commerce and Economic Opportunity.

Reporting Requirements

Any business receiving Enterprise Zone, River Edge Redevelopment Zone, or High Impact Business incentives must annually report to the Department of Revenue by March 30, the benefits received, broken down by incentive category and enterprise zone. The report is a calendar year filing, and the first report due for 2012 must be filed by March 30, 2013. Failure to report results in ineligibility for benefits. In addition, employers must report job creation, retention, and capital investment numbers in each zone annually to the zone administrator. Employers claiming High Impact Business incentives make the report directly to the Department of Revenue. This is also due March 30.

Administrative Changes

The process for selecting zones was changed. Ten criteria of economic distress were enumerated, and applicant communities must meet at least three of these. In addition, each application is given a score for each of the ten criteria, and this rating is provided to the newly-created Enterprise Zone Board. Examples of the criteria are:

  1. Having unemployment of at least 120% of state rate
  2. EZ would result in 1,000 new jobs and $100M in investments
  3. Downsizing and plant closures in the area.

No zone which was in effect on August 7 will expire sooner than July 1, 2016. Hereafter, zones will be designated for 15 years with a possible 10 year renewal based on a review by the Board after 13 years. Other zones that currently exist will continue for the authorized 30-year period.

Learn more about leveraging tax credits and incentives with help from ADP.


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