EDGE FAQ

• Incorporated no more than 10 years before filing an application
• The company has never had any Illinois income tax liability, excluding any Illinois income tax liability of a Related Member
• Startup companies claim the credit against their obligation to pay withholding tax whereas Tier I EDGE companies claim the credit against their obligation to pay the corporate income tax.  Tier II EDGE companies can also take the credit against their withholding tax.

Eligible:

• Manufacturing, Processing, Assembling, Warehousing and Distribution, and Agricultural Processing
• Office-based Industries, Research & Development, and Tourism Services

Ineligible:       

• Retail and Retail Food Services
• Health, Professional Services and Services Delivered to Business Customer Sites (Other than Headquarters or Distribution Facilities)

You receive the tax credit for up to 10 years for Tier I or up to 15 years for Tier II.

(# new full-time jobs created) x (average annual gross salary of newly-created full-time jobs) x (State of Illinois individual income tax rate) x (length of EDGE agreement in # years)

Example: 250 x $75,000 x 0.0495 x 10 x 0.50 = $4,640,625

(estimated minimum value of certificates issued over the 10-year life of EDGE agreement)

You must certify within the application that without this credit, the project wouldn't happen in Illinois.

Examples of activities which violate the “but for” requirement include but are not limited to:

• an announcement, including a groundbreaking or ribbon-cutting ceremony, that the applicant plans to locate or expand at the project site, or anywhere in Illinois if the applicant is not already located in Illinois; or
• celebration of a groundbreaking or ribbon-cutting ceremony for the proposed project; or
• the applicant’s execution of a lease related to the proposed project; or
• the applicant’s execution of a land or building purchase agreement related to the proposed project.

"Capital improvements" shall include the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment and furnishings in an approved project sited in Illinois and in 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 lease must equal or exceed the term of the 10-year Tax Credit 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.

“Project costs” must exceed tax credits to be received and include all costs of the project incurred or to be incurred by the taxpayer including: capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; and lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans.

Wages do not count. Educational expenses do not count if they are included in the 10 percent training costs benefit.

Yes, companies are required to submit an Agreed-Upon Procedures Audit (AUP) to claim their first tax credit certificate to show investments and job creation commitments have been met.

Initially, two years.

“Full-Time Employee” means an individual who is employed by the Company for consideration for at least 35 hours each week or who renders any other services 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 Company for consideration for at least 35 hours each week or who renders any other services generally accepted by industry custom or practice as full-time employment to the Company. In the event that the Company intends to include any individual as a Full-Time Employee based upon that individual providing services generally accepted by industry custom or practice rather than a minimum 35-hour work week for purposes of the Agreement, the Company must receive written approval from the Department prior to the first day of the Taxable Year for which such Credit is sought. A person not employed by the Company on the last day of the Taxable Year is not a Full-Time Employee. Employees must be scheduled to be present at the Project location a minimum of 14 hours per week.

• Failure to meet job creation and investment commitments.
• Not adhering to the "but for" clause.
• Failure to submit required reports like the Vendor Diversity/Sexual Harassment Policy Report.

For Tier I companies, only Illinois corporate income taxes.  Tier II companies can elect to take the credit as an offset to their corporate income taxes or their withholding taxes.

Tax credits cannot be sold or transferred.

Yes! Depending on the size of the project, there may be other programs available that can be used in addition to EDGE. If a company is considering multiple programs, EDGE should be the first application submitted. For more information, contact CEO.EDGE@Illinois.gov or find your Team RED contact.