Enterprise Zone Update

Illinois Department of Revenue10/3/2014

We administer Illinois’ tax system:

� Processing returns

� Taxpayer assistance

� Regulation

� Enforcement

EZ renewal law gave us new roles:

� Incentive Reporting

� Building Materials Exemption Certificates

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Department of Revenue –Enterprise Zone Involvement

Senate Bill 20:

� Administrators don’t have to report

� Exemption certificate holders do have to report

Also:

�We asked businesses for new information about their tax returns

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Enterprise Zone Reporting –Recap from 2013 report

Tax Incentives:

� 636 businesses filed 1,364 reports for 2013

� Cost: $106M (up from $103M)

� Highest cost: Riverbend ~ $18M, Decatur ~ $14M

� Western Illinois region had $36.8M cost

� 6 zones had no costs reported

Jobs:

� Net jobs: 4,189

� Most net jobs: Hoffman Estates, +1,106

� Most total jobs: Quad Cities, +8,835

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Reporting Results

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Reporting Results, Continued

Incentive Amount

Electricity $22.6M

Expanded Machinery Sales Tax $21.1M

Investment Credit $19.9M

Building Materials Sales Tax $18.7M

Natural Gas $17.2M

All Other $6.5M

What numbers mean:� Based on business reports� Checked against other information� Costs are costs to state (except Property Tax)� Jobs based on FTE

Actual results may vary:� Businesses may fail to report - reports down from 2012 � Many businesses failed to report and were contacted� Many businesses filed late� Businesses may not follow instructions

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Reporting Caveats

System changes:

� Only certificate holders will report on building materials exemptions starting for 2014 report

� Property tax reporting changes

� Capital investment reporting

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Reporting Changes – Coming Up

Regulation drafting:� DOR will file draft regulations enforcement and penalties� JCAR = Joint Committee on Administrative Rules � First notice: 45 days for comment on draft regs� Hearing can be called by JCAR, Governor, a local government, or an association with >100 members

� Second notice: 45 days for comment on revised regs� After 2nd notice, JCAR holds hearing and votes on reg� Two-thirds majority of JCAR can reject regulation

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Reporting Changes – Coming Up

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Reporting Questions?

� System went live in June 2013

� Issued 1,108 certificates to 820 businesses by July 31, 2013

� Certificate holders have to report value of purchases

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Building Materials Exemption Certificates - Recap

� 3,461 active certificates on December 31, 2013

� Only 2,013 BMEC reports despite outreach efforts

� All should report, even if they spend $0

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Exemption Certificates - Results

� Enforcement regulations (see previous slides)

And that’s about it…

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Exemption Certificates - Coming Up

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Exemption Certificate Questions?