Illinois Circuit Court Dismisses Challenge to Retained Job EDGE Credits

By on May 20, 2015

Corporations with Illinois Economic Development for a Growing Economy (EDGE) credit agreements giving credit for retained jobs can breathe a sigh of relief: The litigation challenging the state’s ability to grant EDGE credits for retained jobs has been dismissed by an Illinois Circuit Court.

Illinois EDGE credits are discretionary income tax credits awarded by the Illinois Department of Commerce and Economic Opportunity (DCEO). The credits are generated as a percentage of employee wage withholding. Sometimes DCEO has awarded credits for retained jobs as well as new jobs.

Back in January 2015, the Liberty Justice Center, acting on behalf of several taxpayers, filed a complaint alleging that it was illegal for Illinois to give credits for retained jobs. Jenner v. Illinois Department of Commerce and Economic Opportunity, No. 15-MR-16 (Cir. Ct. 7th Jud. Cir., Sangamon Cty.). The plaintiffs’ theory was that the EDGE credit statute authorized awards only for new jobs, and thus DCEO’s regulation allowing credits for retained jobs exceeded statutory authorization.

In March 2015, the state moved to dismiss for lack of standing. The plaintiffs claimed that they had standing as taxpayers challenging illegal use of state funds, but the Circuit Court now has agreed with the Attorney General: on May 12, 2015, the motion to dismiss was granted. The plaintiffs plan to appeal the decision.

This ruling is in line with the general trend of rejecting taxpayer standing in challenges to tax credit programs, including economic development tax credits. See, e.g., DaimlerChrysler Corp. v. Cuno, 547 U.S. 332 (2006); Arizona Christian School Tuition Org. v. Winn, 131 S. Ct. 1436 (2011).

Scott M. Susko
Scott M. Susko counsels clients on all aspects of state and local tax matters. He represents individuals and businesses throughout the country at every stage of state and local tax controversies, including audit defense, administrative appeals and litigation. Scott also assists clients through changes in their business that can affect their tax posture, such as entry into new geographic or product markets, merger and acquisition activity, or state legislative developments. Read Scott M. Susko's full bio.

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