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Illinois Circuit Court Dismisses Challenge to Retained Job EDGE Credits

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).

© 2023 McDermott Will & EmeryNational Law Review, Volume V, Number 140
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About this Author

In 1934 E.H. McDermott opened a law practice that focused exclusively on taxes. As chief counsel to the Joint Committee on Taxation of the United States Congress, McDermott observed firsthand how the rapidly expanding federal tax laws were affecting businesses and individuals. He recognized the need for a law firm to assist people and their businesses to understand and comply with their changing tax obligations.

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