Enterprise Zone

No. Items eligible for the 6.25 percent state sales tax exemption may be purchased anywhere in Illinois.

No. The abatement applies only to taxes on the increase in assessed value attributable to the new construction, renovation, or rehabilitation. Taxes based on the assessed value of land and existing improvements continue to be extended and collected.

The credit may be taken by corporations, trusts, estates, individuals, partners and Subchapter S shareholders who make investments in qualified property and who otherwise meet the terms and conditions established by statute.

What is qualified property?

"Qualified property” is property which:

• is tangible; whether new or used, including buildings and structural components of buildings; is acquired by purchase as defined in Internal Revenue Code (IRC) Section 179( d); is depreciable pursuant to IRC Section 167;
• has a useful life of four or more years as of the date placed in service in an enterprise zone;
• is used in the enterprise zone by that taxpayer;
• has not been previously used in Illinois in such a manner and by such a person as would qualify for the credit;
• is an improvement or addition made on or after the date the zone was designated to the extent that the improvement or addition is of a capital nature, which increases the adjusted basis of the property previously placed in service in an enterprise zone and otherwise meets the requirements of qualified property.

What are examples of “qualified property”

• buildings
• structural components of buildings
• elevators
• materials tanks
• boilers
• major computer installations.​

Non-qualifying property Examples:

• land
• inventories
• small personal computers
• trademarks
• typewriters
• other small, non-depreciable, or intangible assets.

 No. Retailers are not required by law to participate.

The purchaser must ask the retailer for cooperation on this incentive. Retailers have, however, demonstrated good cooperation throughout the history of this program, as this incentive permits them to give customers a "break" without cost to themselves.

To take advantage of the benefits, an owner or developer of property within the Enterprise Zone must simply obtain a building permit  and a "certificate of eligibility" from the City of Mount Carmel's City Clerk.

For more information call The City Administrator: (618) 262-4822 

Yes, however in most cases the effect will be marginal. Tax rates depend on the levy (amount of tax revenue the local government is raising) and the size of the tax base (total equalized assessed valuation of the district less homestead exemptions, plus the value of any State assessed property). Under normal circumstances, the tax rate for a district is calculated by dividing the district's tax levy by its tax base. The greater the tax base, the lower the rate needed to generate the amount of the levy. Under the Enterprise Zone Program, the value of abated property is subtracted from the tax base prior to the calculation of the tax rate. In most cases, the tax base is large enough and the enterprise zone abatements are low enough that the overall effect is negligible.

Yes. The credit is allowed for the tax year in which the property is placed in service, or, if the amount of the credit exceeds the tax liability for that year, the excess may be carried forward and applied to the tax liability of the five taxable years following the excess credit year. The credit must be applied to the earliest year for which there is a liability. If there is credit from more than one tax year that is available to offset a liability, the credit accruing first in time is applied first.

Used property does not qualify if it was previously used in Illinois in such a manner and by such a person as would qualify for either the statewide investment tax credit or the enterprise zone investment tax credit.

Example:

• A corporation purchases a used pick-up truck for use in its manufacturing business in an enterprise zone from an Illinois resident who used the truck for personal purposes in Illinois. If the truck meets the other requirements for the investment tax credit, it will not be disqualified because it was previously used in Illinois for a purpose, which did not qualify for the credit. However, had the corporation purchased the truck from an Illinois taxpayer in whose hands the truck qualified for the credit, the truck would not be qualified for the investment tax credit, even though the party from whom the truck was acquired had never received an investment tax credit for it.

They don't. The multiplier or equalization factor is the application of a percentage increase or decrease, generated by the Illinois Department of Revenue, in order to adjust assessment levels in various counties to the same percentage of full value. Multipliers are not affected by the enterprise zone property tax abatement provision or by county assessment reductions.

To be eligible for this incentive, DCEO must certify that the business has:

• made an investment of at least $5 million in an enterprise zone
• has created a minimum of 200 full-time equivalent jobs in Illinois
• or has made an investment of at least $40 million in an enterprise zone and has retained a minimum of 2,000 full-time jobs in Illinois
• or has made an investment of $40 million in an enterprise zone and retained 90 percent of the jobs in place on date of certification. A majority of the “jobs created” or “retained” must be in the Enterprise Zone in which the eligible investment is made.
• A business must submit an application to DCEO documenting the eligible investment and that the job creation or job retention criteria will be met.

What is an eligible investment?

For purposes of this incentive, eligible investment may be either:

1) investments in qualified property as defined in the Enterprise Zone Investment Tax Credit; or,

2) non-capital and non-routine investments and associated service costs made for the basic construction, renovation or improvement of qualified property including productive capacity, efficiency, product quality or competitive position. Regular maintenance and routine expenditures are not included.

Yes. By law, every time property is improved, it is reassessed.

Qualified property is "placed in service" on the earlier of :

• 1) the date the property is placed in a condition of readiness and availability for use, or
• 2) the date on which the depreciation period of that property begins.

To qualify for the enterprise zone investment tax credit, the property must be placed in service on or after the date the zone was certified by the Department of Commerce and Economic Opportunity, and on or before the last day of the firm's taxable year.

Businesses located or expanding in an Illinois enterprise zone may be eligible for the following incentives:

• an exemption on the retailers’ occupation tax paid on building materials
• an investment tax credit of .5 percent of qualified property.
• an expanded state sales tax exemption on purchases of personal property used or consumed in the manufacturing process or in the operation of a pollution control facility
• an exemption on the state utility tax for electricity, natural gas and the Illinois Commerce Commission’s administrative charge
• telecommunication excise tax are available for companies that make the minimum statutory investment that either creates or retains the necessary number of jobs.  These exemptions require a business to make application to, and be certified by, the Department. 
• In addition to the state incentives, each zone offers distinctive local incentives to enhance business development projects.  
• Each enterprise zone has a designated zone administrator who is responsible for zone compliance and is available to answer questions regarding the zone. 

To receive a Certificate of Eligibility for Sales Tax Exemption, you must contact the local zone administrator of the zone into which the purchased building material will be incorporated. In Mount Carmel that is the City Administrator

The Illinois Enterprise Zone Program is designed to stimulate economic growth and neighborhood revitalization in economically depressed areas of the state.  This is accomplished through state and local tax incentives, regulatory relief, and improved governmental services, thus providing an economic stimulus to an area that would otherwise be neglected. 

The Illinois Enterprise Zone Act was signed into law December 7, 1982. 

The Revenue Act 35 ILCS 200/18- 170, as amended provides that any taxing district may order the county clerk to abate (that is, to give up) any portion of its taxes on real property, or on any particular class thereof, located within a zone and upon which new improvements have been constructed or upon which existing improvements have been renovated or rehabilitated.

The Revenue Act 35 ILCS 120/1d-1f, as amended allows a business enterprise that is certified by DCEO, that either creates a minimum of 200 full-time equivalent jobs in Illinois;

or retains a minimum of 2,000 full-time jobs in Illinois; or which retains 90% of the existing jobs, a 6.25 percent state sales tax exemption on all tangible personal property which is used or consumed within an enterprise zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease.

This exemption includes repair and replacement parts for machinery and equipment used primarily in the wholesale or retail sale or lease, and equipment, manufacturing fuels, material and supplies for the maintenance, repair or operation of manufacturing, or assembling machinery or equipment.

For tax abatement, contact local zone administrator City Administrator to find out if abatements are available in our zone.

Property tax abatements require taxpayers to apply or give some formal notice before beginning construction.

Contact the local zone administrator as early as possible to assure that eligibility is not denied due to tardy notice.

Each retailer who makes a qualified sale of building materials to be incorporated into real estate in an enterprise zone established by a county or municipality under the Illinois Enterprise Zone Act by remodeling, rehabilitation or new construction, may deduct receipts from such sales when calculating the tax imposed by this Act.

For purposes of this Section, "qualified sale" means a sale of building materials that will be incorporated into real estate as part of a building project for which a Certificate of Eligibility for Sales Tax Exemption has been issued by the Illinois Department of Revenue (IDOR). To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by IDOR. 

 The "basis" value of property, for the purposes of this credit, is defined the same way it is defined for purposes of federal depreciation calculations. Essentially, the basis is the cost of the property, as well as related capital costs.

Property must be depreciable pursuant to Internal Revenue Code Section 167.

• Depreciable property is used in the taxpayer's trade
• or business
• or held for the production of income (but not inventory), which is subject to wear and tear, exhaustion or obsolescence.

There are some types of assets that may not be depreciable, even though they are used in the taxpayer's business or trade or are held for the production of income. Good will and land are examples. Other examples of tangible property, which are not depreciable, are inventories, natural resources and currency.

 Building materials that are eligible for the enterprise zone sales tax deduction include items that are permanently affixed to real property such as lumber, mortar, glued-down carpets, paint, wallpaper and similar affixed items.

 To be eligible for this exemption the tangible personal property must be directly used or consumed in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease.

Examples of this include:

• repair and replacement parts;
• hand tools;
• materials and supplies such as abrasives, acids or lubricants;
• protective clothing and safety equipment;
• any fuel used for machinery and equipment.

NOTE: The above examples are only exempt to the extent they are used with machinery and equipment that qualifies for the statewide Manufacturing Machinery and Equipment Sales Tax Exemption.