by Terry Ahlers
Illinois has provided corporate taxpayers numerous tax credits over the years. Recent political uncertainty in Illinois has resulted in some credits being allowed to expire, and then be reinstated, while other credits have been retroactively re-established after a brief absence. This on-again, off-again approach to corporate tax credits has caused many tax departments to be challenged to verify, with certainty, that all available Illinois credits have been taken.
Because Illinois credits can be generated at the partnership level and become pass-thru credits to their partners, the value of credits in Illinois cannot be overstated. Also, the fact that many of the Illinois tax credits are available to be carried forward for at least five years, taxpayers can realize benefit for future years should credits be identified that would have been otherwise missed.
The computation of a loss return, or a return that has utilized NLDs, can still generate credits. Establishing allowable credits for years without Illinois tax are even more likely to be a worthwhile effort now that the Illinois Law changed effective for years ending on or after December 31, 2017, resulting in the elimination of separate Illinois unitary groups for different apportionment methodologies.
Illinois credits that can be reported on IL-477, provide a credit against the Illinois Replacement Tax. Illinois replacement tax credits are limited to manufacturers, miners, or retailers, but these categories are more applicable than they first appear. This credit can also be doubled for meeting the Illinois employment criteria.
Other Illinois credits can be claimed on IL-1299-D. Although many credits are only available to companies that utilize a DCEO certification, others are available in designated Enterprise Zones or other zones that have been established. In fact, many of the EZs were re-established in 2016. Illinois also provides credits for employing certain veterans or ex-felons within Illinois. Other Illinois credits are available to any Illinois taxpayer for conducting research and development, providing dependent care, or providing student assistance within Illinois.
Compliance deadlines and shortage of tax department personnel have caused many companies to become more aware of the time spent in the return preparation process. However, this time utilization initiative does not always translate into taking full advantage of available credits and increased deductions.
A detailed review of your Illinois state tax returns by an Ashland Single State Specialist could be warranted in many cases. We would be happy to discuss your unique situation, at your convenience.