Sen. Terry Link

Filed: 5/18/2004

 

 


 

 


 
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1
AMENDMENT TO HOUSE BILL 855

2     AMENDMENT NO. ______. Amend House Bill 855 by replacing
3 everything after the enacting clause with the following:
 
4     "Section 5. The Illinois Income Tax Act is amended by
5 changing Sections 303, 701, and 710 as follows:
 
6     (35 ILCS 5/303)  (from Ch. 120, par. 3-303)
7     Sec. 303. (a) In general. Any item of capital gain or loss
8 ; , and any item of income from rents or royalties from real or
9 tangible personal property, interest, dividends, and patent or
10 copyright royalties ; , and prizes awarded under the Illinois
11 Lottery Law; and, for taxable years ending on or after December
12 31, 2004, any item of income from wagering and gambling
13 winnings from Illinois sources, to the extent such item
14 constitutes nonbusiness income, together with any item of
15 deduction directly allocable thereto, shall be allocated by any
16 person other than a resident as provided in this Section.
17     (b) Capital gains and losses. (1) Real property. Capital
18 gains and losses from sales or exchanges of real property are
19 allocable to this State if the property is located in this
20 State.
21     (2) Tangible personal property. Capital gains and losses
22 from sales or exchanges of tangible personal property are
23 allocable to this State if, at the time of such sale or
24 exchange:

 

 

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1     (A) The property had its situs in this State; or
2     (B) The taxpayer had its commercial domicile in this State
3 and was not taxable in the state in which the property had its
4 situs.
5     (3) Intangibles. Capital gains and losses from sales or
6 exchanges of intangible personal property are allocable to this
7 State if the taxpayer had its commercial domicile in this State
8 at the time of such sale or exchange.
9     (c) Rents and royalties. (1) Real property. Rents and
10 royalties from real property are allocable to this State if the
11 property is located in this State.
12     (2) Tangible personal property. Rents and royalties from
13 tangible personal property are allocable to this State:
14     (A) If and to the extent that the property is utilized in
15 this State; or
16     (B) In their entirety if, at the time such rents or
17 royalties were paid or accrued, the taxpayer had its commercial
18 domicile in this State and was not organized under the laws of
19 or taxable with respect to such rents or royalties in the state
20 in which the property was utilized. The extent of utilization
21 of tangible personal property in a state is determined by
22 multiplying the rents or royalties derived from such property
23 by a fraction, the numerator of which is the number of days of
24 physical location of the property in the state during the
25 rental or royalty period in the taxable year and the
26 denominator of which is the number of days of physical location
27 of the property everywhere during all rental or royalty periods
28 in the taxable year. If the physical location of the property
29 during the rental or royalty period is unknown or
30 unascertainable by the taxpayer, tangible personal property is
31 utilized in the state in which the property was located at the
32 time the rental or royalty payer obtained possession.
33     (d) Patent and copyright royalties.
34     (1) Allocation. Patent and copyright royalties are

 

 

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1 allocable to this State:
2     (A) If and to the extent that the patent or copyright is
3 utilized by the payer in this State; or
4     (B) If and to the extent that the patent or copyright is
5 utilized by the payer in a state in which the taxpayer is not
6 taxable with respect to such royalties and, at the time such
7 royalties were paid or accrued, the taxpayer had its commercial
8 domicile in this State.
9     (2) Utilization.
10     (A) A patent is utilized in a state to the extent that it
11 is employed in production, fabrication, manufacturing or other
12 processing in the state or to the extent that a patented
13 product is produced in the state. If the basis of receipts from
14 patent royalties does not permit allocation to states or if the
15 accounting procedures do not reflect states of utilization, the
16 patent is utilized in this State if the taxpayer has its
17 commercial domicile in this State.
18     (B) A copyright is utilized in a state to the extent that
19 printing or other publication originates in the state. If the
20 basis of receipts from copyright royalties does not permit
21 allocation to states or if the accounting procedures do not
22 reflect states of utilization, the copyright is utilized in
23 this State if the taxpayer has its commercial domicile in this
24 State.
25     (e) Illinois lottery prizes. Prizes awarded under the
26 "Illinois Lottery Law", approved December 14, 1973, are
27 allocable to this State.
28     (e-5) Wagering and gambling winnings. Payments made after
29 December 31, 2004 of winnings from pari-mutuel wagering
30 conducted at a wagering facility licensed under the Illinois
31 Horse Racing Act of 1975 or from gambling games conducted on a
32 riverboat licensed under the Riverboat Gambling Act are
33 allocable to this State.
34     (f) Taxability in other state. For purposes of allocation

 

 

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1 of income pursuant to this Section, a taxpayer is taxable in
2 another state if:
3     (1) In that state he is subject to a net income tax, a
4 franchise tax measured by net income, a franchise tax for the
5 privilege of doing business, or a corporate stock tax; or
6     (2) That state has jurisdiction to subject the taxpayer to
7 a net income tax regardless of whether, in fact, the state does
8 or does not.
9     (g) Cross references. (1) For allocation of interest and
10 dividends by persons other than residents, see Section
11 301(c)(2).
12     (2) For allocation of nonbusiness income by residents, see
13 Section 301(a).
14 (Source: P.A. 79-743.)
 
15     (35 ILCS 5/701)  (from Ch. 120, par. 7-701)
16     Sec. 701. Requirement and Amount of Withholding.
17     (a) In General. Every employer maintaining an office or
18 transacting business within this State and required under the
19 provisions of the Internal Revenue Code to withhold a tax on:
20         (1) compensation paid in this State (as determined
21     under Section 304(a)(2)(B) to an individual; or
22         (2) payments described in subsection (b) shall deduct
23     and withhold from such compensation for each payroll period
24     (as defined in Section 3401 of the Internal Revenue Code)
25     an amount equal to the amount by which such individual's
26     compensation exceeds the proportionate part of this
27     withholding exemption (computed as provided in Section
28     702) attributable to the payroll period for which such
29     compensation is payable multiplied by a percentage equal to
30     the percentage tax rate for individuals provided in
31     subsection (b) of Section 201.
32     (b) Payment to Residents. Any payment (including
33 compensation, but not including a payment from which

 

 

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1 withholding is required under Section 710 of this Act) to a
2 resident by a payor maintaining an office or transacting
3 business within this State (including any agency, officer, or
4 employee of this State or of any political subdivision of this
5 State) and on which withholding of tax is required under the
6 provisions of the Internal Revenue Code shall be deemed to be
7 compensation paid in this State by an employer to an employee
8 for the purposes of Article 7 and Section 601(b)(1) to the
9 extent such payment is included in the recipient's base income
10 and not subjected to withholding by another state.
11 Notwithstanding any other provision to the contrary, no amount
12 shall be withheld from unemployment insurance benefit payments
13 made to an individual pursuant to the Unemployment Insurance
14 Act unless the individual has voluntarily elected the
15 withholding pursuant to rules promulgated by the Director of
16 Employment Security.
17     (c) Special Definitions. Withholding shall be considered
18 required under the provisions of the Internal Revenue Code to
19 the extent the Internal Revenue Code either requires
20 withholding or allows for voluntary withholding the payor and
21 recipient have entered into such a voluntary withholding
22 agreement. For the purposes of Article 7 and Section 1002(c)
23 the term "employer" includes any payor who is required to
24 withhold tax pursuant to this Section.
25     (d) Reciprocal Exemption. The Director may enter into an
26 agreement with the taxing authorities of any state which
27 imposes a tax on or measured by income to provide that
28 compensation paid in such state to residents of this State
29 shall be exempt from withholding of such tax; in such case, any
30 compensation paid in this State to residents of such state
31 shall be exempt from withholding. All reciprocal agreements
32 shall be subject to the requirements of Section 2505-575 of the
33 Department of Revenue Law (20 ILCS 2505/2505-575).
34     (e) Notwithstanding subsection (a)(2) of this Section, no

 

 

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1 withholding is required on payments for which withholding is
2 required under Section 3405 or 3406 of the Internal Revenue
3 Code of 1954.
4 (Source: P.A. 92-846, eff. 8-23-02; 93-634, eff. 1-1-04.)
 
5     (35 ILCS 5/710)  (from Ch. 120, par. 7-710)
6     Sec. 710. Withholding from lottery, wagering, and gambling
7 winnings. (a) In General. Any person making a payment to a
8 resident or nonresident of winnings under the Illinois Lottery
9 Law and not required to withhold Illinois income tax from such
10 payment under Subsection (b) of Section 701 of this Act because
11 those winnings are not subject to Federal income tax
12 withholding, must withhold Illinois income tax from such
13 payment at a rate equal to the percentage tax rate for
14 individuals provided in subsection (b) of Section 201, provided
15 that withholding is not required if such payment of winnings is
16 less than $1,000. Any person making a payment after December
17 31, 2004 to a resident or nonresident of winnings from
18 pari-mutuel wagering conducted at a wagering facility licensed
19 under the Illinois Horse Racing Act of 1975 or from gambling
20 games conducted on a riverboat licensed under the Riverboat
21 Gambling Act must withhold Illinois income tax from that
22 payment at a rate equal to the percentage tax rate for
23 individuals provided in subsection (b) of Section 201, provided
24 that the withholding is not required if the payment of winnings
25 is less than $1,000.
26     (b) Credit for taxes withheld. Any amount withheld under
27 Subsection (a) shall be a credit against the Illinois income
28 tax liability of the person to whom the payment of winnings was
29 made for the taxable year in which that person incurred an
30 Illinois income tax liability with respect to those winnings.
31 (Source: P.A. 85-731.)
 
32     Section 99. Effective date. This Act takes effect upon

 

 

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1 becoming law.".