What does Illinois General Information Letter IT 19-0006-GIL conclude about Credits – Other?

Plain-English summary

This General Information Letter answers a taxpayer's question about how to claim Illinois's River Edge Redevelopment Zone remediation tax credit under Section 201(n) of the Illinois Income Tax Act (35 ILCS 5/201(n)). The taxpayer's company had remediated a property within a River Edge Redevelopment Zone between 2014 and 2016, obtained a "No Further Remediation" letter from the Illinois EPA, and received a March 6, 2019 letter from the Illinois EPA determining that a certain amount of the remediation costs were eligible for the credit. The taxpayer had gotten conflicting information from Department agents about which forms to use and asked for clarification.

The Department walked through the mechanics of the credit: it equals 25% of unreimbursed eligible remediation costs above $100,000 per site, approved by the Illinois EPA, at a site with a recorded No Further Remediation letter; unused credit carries forward five years and can even be sold along with the remediation site. Taxpayers claim it on Schedule 1299-D attached to Form IL-1120, IL-1041, or IL-990-T.

Critically, though, the Department explained that this credit sunset by operation of Section 250 of the Illinois Income Tax Act: it does not apply for tax years beginning on or after July 12, 2016. The taxpayer had said they intended to amend their 2016 return to claim the credit, so the credit must have been approved by the Illinois EPA before July 12, 2016, to be claimed on that amended return. The Illinois EPA letter the taxpayer submitted was dated March 6, 2019 — well after the cutoff — and the credit statute requires the credit to be "claimed for the taxable year in which Agency approval of the eligible remediation costs is granted." The Department told the taxpayer that unless they had other proof the Illinois EPA approved the costs before July 12, 2016, they could not claim the credit; if they did have such proof, they should file an amended 2016 return and 2016 Schedule 1299-D.

As a GIL, this letter is explicitly not a statement of Department policy and is not binding — the Department noted that a taxpayer wanting a binding answer on their specific facts should request a Private Letter Ruling under 86 Ill. Adm. Code 1200.110(b).

What this means for you

Businesses with River Edge Redevelopment Zone remediation costs

If your company remediated property in a River Edge Redevelopment Zone, the credit under Section 201(n) is only available for costs approved by the Illinois EPA, and — per this letter — the credit no longer applies for tax years beginning on or after July 12, 2016. The date that matters is when the Illinois EPA actually granted approval of your eligible remediation costs, not when you incurred the costs or received your No Further Remediation letter.

Taxpayers considering an amended return to claim this credit

If you plan to amend a pre-2016 return to claim this credit, you need documented proof that the Illinois EPA approved your eligible remediation costs before July 12, 2016. A later EPA determination letter — even one confirming your site's eligibility — will not support the claim if it postdates the sunset. You would need to attach that proof, along with the 2016 version of Schedule 1299-D, to the amended return.

Accountants and tax professionals

Note that the current (2018 and later) Schedule 1299-D no longer contains instructions for this credit, so practitioners must reference the 2016 version of the form and instructions when helping a client claim it on an older or amended return. Also remember this credit cannot pass through from a partnership to partners or from an S corporation to shareholders, and it can be sold along with the remediation site if unused.

Common questions

Q: Can a taxpayer still claim the River Edge Redevelopment Zone remediation credit today?
A: Only for tax years beginning before July 12, 2016. The credit sunset under Section 250 of the Illinois Income Tax Act and does not apply to later tax years.

Q: What determines which tax year the credit belongs to?
A: The credit "must be claimed for the taxable year in which Agency approval of the eligible remediation costs is granted" by the Illinois EPA — not the year the remediation work was performed.

Q: Does an Illinois EPA approval letter dated after the sunset date help support an amended pre-2016 return?
A: Based on this letter, no. The Department told the taxpayer that a March 6, 2019 Illinois EPA approval letter did not appear to meet the requirement of approval before July 12, 2016, so it would not support claiming the credit on an amended 2016 return absent other proof of earlier approval.

Q: Is this letter binding on the Department?
A: No. It is a General Information Letter under 86 Ill. Adm. Code 1200.120(b) and (c), which is general information only and not a statement of Department policy. A taxpayer wanting a binding answer must request a Private Letter Ruling under 86 Ill. Adm. Code 1200.110(b).

Citations and references

• 35 ILCS 5/201(n) (River Edge Redevelopment Zone site remediation tax credit: eligibility, 25% rate, $100,000 threshold, 5-year carryforward, transferability)
• 35 ILCS 5/250 (sunset provision ending the Section 201(n) credit for tax years beginning on or after July 12, 2016)
• 86 Ill. Adm. Code 1200.120(b), (c) (General Information Letters are general information only, not binding on the Department)
• 86 Ill. Adm. Code 1200.110(b) (procedure for requesting a binding Private Letter Ruling)
• Schedule 1299-D (2016 version) and instructions, Illinois Department of Revenue

Source

• Landing page: https://taxarchive.illinois.gov/research/legal/letter-rulings/income-tax/2019.html
• Original PDF: https://tax.illinois.gov/content/dam/soi/en/web/taxarchive/research/legal/letter-rulings/income-tax/2019/it19-0006-gil.pdf

Original ruling text

IT 19-0006-GIL 05/01/2019 CREDITS – OTHER
Various issues related to the credits for costs of remediating properties in a River Edge
Redevelopment Zone addressed. (This is a GIL.)

May 1, 2019

Re: Illinois income tax
Dear Xxxx:
This is in response to your letter received March 21, 2019, in which you request information regarding
Illinois income tax. The nature of your request and the information you have provided require that we
respond with a General Information Letter, which is designed to provide general information, is not a
statement of Department policy and is not binding on the Department. See 86 Ill. Adm. Code
1200.120(b) and (c), which may be found on the Department's web site at www.tax.illinois.gov.
Your letter states as follows:
I am writing this letter to obtain clarification from the Illinois Department of Revenue concerning
the procedure and forms required to claim the NAME - Remediation Tax Credit. I have received
conflicting information from agents of the Department of Revenue as to which forms must be
used to claim the credit, I am requesting specific direction from your office.
I have attached hereto a letter from the Illinois Environmental Protection Agency providing a
determination that our Company is eligible for a tax credit for certain remedial expenses incurred
under the PROPERTY Zone program. Our property is located within the PROPERTY Zone,
and, from 2014 to 2016, our Company took the property though the State of Illinois’ voluntary
site remediation program, eventually obtaining a no further remediation letter on the property.
After reviewing our application, the Illinois Environmental Protection Agency Determined that
$$$ of remedial expenses are eligible for the tax credit.
After reviewing our application, the Illinois Environmental Protection Agency determined that $$$
of remedial expenses are eligible for the tax credit.
Our Company is an Illinois limited liability company. The expenses incurred relate back to 20XX,
so we will be amending our 20XX return to reflect the credit.
I would welcome the opportunity to discuss this in more detail, at your earlies convenience.
RULING
The legal description of the PROPERTY Zone site remediation tax credit can be found in Section 201(n)
of the Illinois Income Tax Act (“IITA”; 35 ILCS 5/1-1 et seq.). That statute provides as follows:
(n) PROPERTY Zone site remediation tax credit.
(i) For tax years ending on or after December 31, 2006, a taxpayer shall be allowed a
credit against the tax imposed by subsections (a) and (b) of this Section for certain amounts paid
for unreimbursed eligible remediation costs, as specified in this subsection. For purposes of this

IT 19-0006-GIL
Page 2
Section, "unreimbursed eligible remediation costs" means costs approved by the Illinois
Environmental Protection Agency ("Agency") under Section 58.14a of the Environmental
Protection Act that were paid in performing environmental remediation at a site within a
PROPERTY Zone for which a No Further Remediation Letter was issued by the Agency and
recorded under Section 58.10 of the Environmental Protection Act. The credit must be claimed
for the taxable year in which Agency approval of the eligible remediation costs is granted. The
credit is not available to any taxpayer if the taxpayer or any related party caused or contributed
to, in any material respect, a release of regulated substances on, in, or under the site that was
identified and addressed by the remedial action pursuant to the Site Remediation Program of
the Environmental Protection Act. Determinations as to credit availability for purposes of this
Section shall be made consistent with rules adopted by the Pollution Control Board pursuant to
the Illinois Administrative Procedure Act for the administration and enforcement of Section 58.9
of the Environmental Protection Act. For purposes of this Section, "taxpayer" includes a person
whose tax attributes the taxpayer has succeeded to under Section 381 of the Internal Revenue
Code and "related party" includes the persons disallowed a deduction for losses by paragraphs
(b), (c), and (f)(1) of Section 267 of the Internal Revenue Code by virtue of being a related
taxpayer, as well as any of its partners. The credit allowed against the tax imposed by
subsections (a) and (b) shall be equal to 25% of the unreimbursed eligible remediation costs in
excess of $100,000 per site.
(ii) A credit allowed under this subsection that is unused in the year the credit is earned
may be carried forward to each of the 5 taxable years following the year for which the credit is
first earned until it is used. This credit shall be applied first to the earliest year for which there is
a liability. If there is a credit under this subsection from more than one tax year that is available
to offset a liability, the earliest credit arising under this subsection shall be applied first. A credit
allowed under this subsection may be sold to a buyer as part of a sale of all or part of the
remediation site for which the credit was granted. The purchaser of a remediation site and the
tax credit shall succeed to the unused credit and remaining carry-forward period of the seller. To
perfect the transfer, the assignor shall record the transfer in the chain of title for the site and
provide written notice to the Director of the Illinois Department of Revenue of the assignor's
intent to sell the remediation site and the amount of the tax credit to be transferred as a portion
of the sale. In no event may a credit be transferred to any taxpayer if the taxpayer or a related
party would not be eligible under the provisions of subsection (i).
(iii) For purposes of this Section, the term "site" shall have the same meaning as under
Section 58.2 of the Environmental Protection Act.
Underlined emphasis added.
In order to claim an income tax credit, taxpayers filing a Form IL-1120, Corporation Income and
Replacement Tax Return, Form IL-1041, Fiduciary Income and Replacement Tax Return, or Form IL990-T, Exempt Organization Income and Replacement Tax Return must complete Schedule 1299-D.
Please be aware that by operation of the sunset provisions found in Section 250 of the IITA, the P Zone
site remediation tax credit has expired for tax years beginning on or after July 12, 2016. If the tax year
for which you wish to claim the credit begins on or after July 12, 2016, you cannot claim the credit.
As a result, the current Schedule 1299-D for 2018 does not include instructions for applying for the
PROPERTY Zone site remediation tax credit. The last set of Schedule-D instructions to refer to this

IT 19-0006-GIL
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tax credit is the 2016 version which can currently be found on the Department’s website at:
https://www2.illinois.gov/rev/forms/incometax/Documents/2016/business/miscellaneous/schedule1299-d-instr.pdf
Page 6 of the 2016 Schedule 1299-D Instructions, states as follows:
PROPERTY Zone Remediation Credit
Note→If your tax year begins on or after July 12, 2016, you cannot
claim this credit on Schedule 1299-D, Lines 26a through 28.
The PROPERTY Zone Remediation Credit allows a credit for tax years ending on or after
December 31, 2006, for unreimbursed eligible remediation costs incurred in a Site Remediation
Program under the Environmental Protection Act in
a river edge development zone. You may claim the credit for costs deducted on your federal
income tax return.
The credit cannot be taken by any taxpayer if the taxpayer or any related party caused or
contributed to a release of regulated substances on, in, or under the site at which the otherwise
eligible remediation costs were incurred.
To qualify for this credit, you must have received approval of the eligible remediation costs from
the Illinois Environmental Protection Agency (IEPA) on forms IEPA provides. The credit is 25
percent (.25) of the amount of unreimbursed eligible remediation costs that were:
• in excess of $100,000;
• approved by IEPA; and
• incurred in performing environmental remediation at a Site Remediation Program site located
within a river edge redevelopment zone for which a “No Further Remediation” (NFR) letter
was issued by IEPA during the taxable year and recorded by the recipient.
The credit cannot be passed through by a partnership to its partners or by a subchapter S
corporation to its shareholders.
You may carry any excess credit forward for five years. Any unused credit and remaining
carryforward period may be sold to a buyer as part of a sale of all or part of the remediation site
for which the credit was granted. The seller must record the transfer of the credit in the chain of
title of the site and notify the director of the Illinois Department of Revenue, in writing, of the
intent to sell the remediation site and of the amount of credit to be transferred.
Line 26 –
Column A – Enter the name of the PROPERTY zone
in which the remediation site is located.
Column B – Enter the total unreimbursed remediation costs approved by IEPA for the site,
minus $100,000. If the total unreimbursed remediation costs approved by IEPA for the site is
$100,000 or less, you are not entitled to a credit for the site.
Column D – Multiply the amount in Column B by 25 percent (.25).
Line 27 – Enter the total of any PROPERTY Zone Remediation Credit that was transferred to
you.
Note→If you report an amount on Line 27, include a copy of the written notice of the transfer that
the seller sent to the Illinois Department of Revenue.
Line 28 – Add the amounts in Column D, Lines 26a through 26c, (including the amounts on any
additional schedules you have attached) and Line 27. This is your total PROPERTY Zone
Remediation Credit.
Line 29 – Add Lines 14, 17, 19, 22, 25, and 28. Enter the total here

IT 19-0006-GIL
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and on Page 3, Line 30.
According to page 2 of the 2016 Schedule 1299-D Instructions: “If you claim the PROPERTY Zone
Remediation Credit, you must attach a copy of proof of the approval form issued by the Illinois
Environmental Protection Agency.”
Underlined emphasis added.
To your letter, you attached a letter from the Illinois Environmental Protection Agency (“Illinois EPA”)
dated March 6, 2019. In this letter, Illinois EPA states: “…The Illinois EPA concurs the site is located
within the PROPERTY Zone and eligible for a tax credit and has received a No Further Remediation
letter dated November 13, 2015 from the Illinois EPA…The Illinois EPA…has determined $$$ would
be considered eligible remediation costs under Section 201(n) of the Illinois Income Tax Act [35 ILCS
5/201(n)].” Under Section 201(n)(i) of the IITA, as highlighted above, the PROPERTY Zone site
remediation tax credit “must be claimed for the taxable year in which Agency approval of the eligible
remediation costs is granted.” From the attached letter, it appears as if the Illinois EPA “granted
approval of the eligible remediation costs” on March 6, 2019.
In your letter, you state that you intend to amend your 2016 return to reflect the PROPERTY Zone site
remediation tax credit. In order to claim this credit, you must have received Illinois EPA approval of the
remediation costs prior to July 12, 2016. If you intend to claim the credit on an amended 2016 tax
return, you will be required to file an amended 2016 Schedule 1299-D and attach a copy of proof of an
approval form issued by the Illinois EPA issued during that tax year. The March 6, 2019 Illinois EPA
letter does not appear to meet this requirement. If you do not have other proof that the eligible
remediation costs were approved by the Illinois EPA during the 2016 tax year, prior to July 12, 2016,
or do not meet any of the other requirements outlined above, then you cannot claim the PROPERTY
Zone site remediation tax credit found in Section 201(n) of the IITA. If you do have such proof and
meet all of the other applicable requirements, then please file an amended 2016 tax return and 2016
Schedule 1299-D according to the 2016 instructions.
As stated above, this is a general information letter which does not constitute a statement of policy that
applies, interprets or prescribes the tax laws, and it is not binding on the Department. If you are not
under audit and you wish to obtain a binding Private Letter Ruling regarding your factual situation,
please submit all of the information set out in items 1 through 8 of Section 1200.110(b). If you have any
further questions regarding this letter, you may contact me at (217) 782-2844.

Sincerely,

Michael D. Mankowski
Associate Counsel - Income Tax