a) For taxable years ending on or after
December 31, 2009 and on or before December 31, 2029, each taxpayer is allowed
a credit against the taxes imposed under IITA Section 201(a) and (b) in an
amount equal to 25% of each matching contribution made by the taxpayer during
the taxable year. (See IITA Section 218(a).)
b) Matching Contribution. For purposes of
this Section, the term "matching contribution" means the total amount paid by
the taxpayer during the taxable year to an individual Illinois College Savings
Pool account or Illinois Prepaid Tuition Trust Fund account for the benefit of
a designated beneficiary, to the extent the amount paid does not exceed the
total contributions made by an employee of the taxpayer during the taxpayer's
taxable year to the same account for the benefit of the same designated
beneficiary.
c) Limitation. The
maximum credit allowed under IITA Section 218 and this Section with respect to
any contributing employee shall not exceed $500 per taxable year.
EXAMPLE: Taxpayer is a calendar year taxpayer. Employee A is
an employee of Taxpayer for the entire 2009 calendar year. During 2009,
Employee A makes contributions totaling $6,000 each to three separate College
Savings Pool accounts established for the benefit of each of Employee A's three
children. During 2009, Taxpayer makes payments totaling $2,000 each to the same
three accounts. Under subsection (a) of this Section, Taxpayer would be allowed
a $500 credit for each of the three $2,000 matching contributions made during
the taxable year, for a total credit of $1,500. However, under this subsection
(c), Taxpayer may claim a maximum credit of only $500 in respect of the total
of its contributions that match contributions made by Employee A. Therefore,
the allowable credit is reduced from $1,500 to $500.
d) In the case of a partnership or subchapter
S corporation, the credit passes through to the owners as provided in the
partnership agreement under IRC Section 704(a) or in proportion to their
ownership of the stock of the subchapter S corporation under IRC Section
1366(a). (See IITA Section 218(b).) The credit earned by a partnership or
subchapter S corporation shall be treated as earned by its owners as of the
last day of the taxable year of the partnership or subchapter S corporation in
which the matching contribution is made, and shall be allowed to the owner in
the taxable year of the owner in which the taxable year of the partnership or
subchapter S corporation ends.
e)
In no event shall a credit under this Section reduce the taxpayer's liability
to less than zero. If the amount of the credit exceeds the tax
liability for the year, the excess may be carried forward and applied to the
tax liability of the 5 taxable years following the excess credit year. The tax
credit shall be applied to the earliest year for which there is a tax
liability. If there are credits for more than one year that are available to
offset a liability, the earlier credit shall be applied first. (IITA
Section 218(c))
f) Documentation of
the Credit. A taxpayer claiming the credit allowed under IITA Section 218 and
this Section must maintain records sufficient to document the date and amount
of each payment made to an individual College Savings Pool account or Illinois
Prepaid Tuition Trust Fund account, as well as documentation regarding the
contribution the payment matches. (See IITA Section 218(d).) Documentation
regarding the contribution the payment matches must include the employee's
name, the account, and the amount and date of the employee's
contribution.
