Section 820 ILCS 405/1507.1 - Transfer of trade or business; contribution rateNotwithstanding any other provision of this Act:
A.(1) If an individual or entity transfers its trade or business, or a portion thereof, to another individual or entity and, at the time of the transfer, there is any substantial common ownership, management, or control of the transferor and transferee, then the experience rating record attributable to the transferred trade or business shall be transferred to the transferee . For purposes of this subsection, a transfer of trade or business includes but is not limited to the transfer of some or all of the transferor's workforce. For purposes of calculating the contribution rates of the transferor and transferee pursuant to this paragraph, within 30 days of the date of a transfer to which this paragraph applies, the transferor and transferee shall provide to the Department such information, as the Director by rule prescribes, which will show the portion of the transferor's experience rating record that is attributable to the transferred trade or business.(1.5) If, following a transfer of experience rating records under paragraph (1), the Director determines that a substantial purpose of the transfer of trade or business was to obtain a reduced liability for contributions, the experience rating accounts of the employers involved shall be combined into a single account and a single rate shall be assigned to the account.(2) For the calendar year in which there occurs a transfer to which paragraph (1) or (1.5) applies: (a) If the transferor or transferee had a contribution rate applicable to it for the calendar year, it shall continue with that contribution rate for the remainder of the calendar year.(b) If the transferee had no contribution rate applicable to it for the calendar year, then the contribution rate of the transferee shall be computed for the calendar year based on the experience rating record of the transferor or, where there is more than one transferor, the combined experience rating records of the transferors, subject to the 5.4% rate ceiling established pursuant to subsection G of Section 1506.1 and subsection A of Section 1506.3.B. If any individual or entity that is not an employer under this Act at the time of the acquisition acquires the trade or business of an employing unit, the experience rating record of the acquired business shall not be transferred to the individual or entity if the Director finds that the individual or entity acquired the business solely or primarily for the purpose of obtaining a lower rate of contributions. Evidence that a business was acquired solely or primarily for the purpose of obtaining a lower rate of contributions includes but is not necessarily limited to the following: the cost of acquiring the business is low in relation to the individual's or entity's overall operating costs subsequent to the acquisition; the individual or entity discontinued the business enterprise of the acquired business immediately or shortly after the acquisition; or the individual or entity hired a significant number of individuals for performance of duties unrelated to the business activity conducted prior to acquisition.C. An individual or entity to which subsection A applies shall pay contributions with respect to each calendar year at a rate consistent with that subsection, and an individual or entity to which subsection B applies shall pay contributions with respect to each calendar year at a rate consistent with that subsection. If an individual or entity knowingly violates or attempts to violate this subsection, the individual or entity shall be subject to the following penalties: (1) If the individual or entity is an employer, then, in addition to the contribution rate that would otherwise be calculated (including any fund building rate provided for pursuant to Section 1506.3), the employer shall be assigned a penalty contribution rate equivalent to 50% of the contribution rate (including any fund building rate provided for pursuant to Section 1506.3), as calculated without regard to this subsection for the calendar year with respect to which the violation or attempted violation occurred and the immediately following calendar year. In the case of an employer whose contribution rate, as calculated without regard to this subsection or Section 1506.3, equals or exceeds the maximum rate established pursuant to paragraph 2 of subsection E of Section 1506.1, the penalty rate shall equal 50% of the sum of that maximum rate and the fund building rate provided for pursuant to Section 1506.3. In the case of an employer whose contribution rate is subject to the 5.4% rate ceiling established pursuant to subsection G of Section 1506.1 and subsection A of Section 1506.3, the penalty rate shall equal 2.7%. If any product obtained pursuant to this subsection is not an exact multiple of one-tenth of 1%, it shall be increased or reduced, as the case may be, to the nearer multiple of one-tenth of 1%. If such product is equally near to 2 multiples of one-tenth of 1%, it shall be increased to the higher multiple of one-tenth of 1%. Any payment attributable to the penalty contribution rate shall be deposited into the clearing account.(2) If the individual or entity is not an employer, the individual or entity shall be subject to a penalty of $10,000 for each violation. Any penalty attributable to this paragraph (2) shall be deposited into the Special Administrative Account.D. An individual or entity shall not knowingly advise another in a way that results in a violation of subsection C. An individual or entity that violates this subsection shall be subject to a penalty of $10,000 for each violation. Any such penalty shall be deposited into the Special Administrative Account.E. Any individual or entity that knowingly violates subsection C or D shall be guilty of a Class B misdemeanor. In the case of a corporation, the president, the secretary, and the treasurer, and any other officer exercising corresponding functions, shall each be subject to the aforesaid penalty for knowingly violating subsection C or D.F. The Director shall establish procedures to identify the transfer or acquisition of a trade or business for purposes of this Section.G. For purposes of this Section: "Experience rating record" shall consist of years during which liability for the payment of contributions was incurred, all benefit charges incurred, and all wages paid for insured work, including but not limited to years, benefit charges, and wages attributed to an individual or entity pursuant to Section 1507 or subsection A.
"Knowingly" means having actual knowledge of or acting with deliberate ignorance of or reckless disregard for the statutory provision involved.
"Transferee" means any individual or entity to which the transferor transfers its trade or business or any portion thereof.
"Transferor" means the individual or entity that transfers its trade or business or any portion thereof.
H. This Section shall be interpreted and applied in such a manner as to meet the minimum requirements contained in any guidance or regulations issued by the United States Department of Labor. Insofar as it applies to the interpretation and application of the term "substantial", as used in subsection A, this subsection H is not intended to alter the meaning of "substantially", as used in Section 1507 and construed by precedential judicial opinion, or any comparable term as elsewhere used in this Act.Amended by P.A. 100-0484,§ 5, eff. 9/8/2017.Added by P.A. 094-0301, § 5, eff. 1/1/2006.