093_SB1725ham001











                                     LRB093 02872 SJM 17053 a

 1                    AMENDMENT TO SENATE BILL 1725

 2        AMENDMENT NO.     .  Amend Senate Bill 1725 by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.  The Illinois Estate and Generation-Skipping
 5    Transfer Tax Act is amended by changing Sections 2, 3, 5,  6,
 6    7, 8, and 10 as follows:

 7        (35 ILCS 405/2) (from Ch. 120, par. 405A-2)
 8        Sec. 2.  Definitions.
 9        "Federal  estate  tax"  means  the  tax due to the United
10    States with respect to a taxable transfer under Chapter 11 of
11    the Internal Revenue Code.
12        "Federal generation-skipping transfer tax" means the  tax
13    due  to  the United States with respect to a taxable transfer
14    under Chapter 13 of the Internal Revenue Code.
15        "Federal return" means the federal estate tax return with
16    respect to the federal  estate  tax  and  means  the  federal
17    generation-skipping  transfer  tax return with respect to the
18    federal generation-skipping transfer tax.
19        "Federal transfer tax" means the federal  estate  tax  or
20    the federal generation-skipping transfer tax.
21        "Illinois  estate  tax"  means  the tax due to this State
22    with respect to a taxable  transfer  that  gives  rise  to  a
 
                            -2-      LRB093 02872 SJM 17053 a
 1    federal estate tax.
 2        "Illinois generation-skipping transfer tax" means the tax
 3    due  to  this  State  with respect to a taxable transfer that
 4    gives rise to a federal generation-skipping transfer tax.
 5        "Illinois transfer tax" means the Illinois estate tax  or
 6    the Illinois generation-skipping transfer tax.
 7        "Internal Revenue Code" means, unless otherwise provided,
 8    the  Internal  Revenue  Code of 1986, as amended from time to
 9    time.
10        "Non-resident trust" means a trust that is not a resident
11    of this State for purposes of the Illinois Income Tax Act, as
12    amended from time to time.
13        "Person"  means  and  includes  any  individual,   trust,
14    estate, partnership, association, company or corporation.
15        "Qualified  heir"  means  a  qualified heir as defined in
16    Section 2032A(e)(1) of the Internal Revenue Code.
17        "Resident trust" means a trust that is a resident of this
18    State for purposes of the Illinois Income Tax Act, as amended
19    from time to time.
20        "State" means any state, territory or possession  of  the
21    United States and the District of Columbia.
22        "State tax credit" means:
23        (a)  For  persons dying on or after the effective date of
24    this amendatory Act of  the  93rd  General  Assembly  through
25    December  31,  2005,  an  amount  equal  to  the  full credit
26    calculable under Section 2011 or Section 2604 of the Internal
27    Revenue Code as the  credit  would  have  been  computed  and
28    allowed  under  the  Internal  Revenue  Code  as in effect on
29    December 31, 2001, without the reduction in the  State  Death
30    Tax   Credit   as  provided  in  Section  2011(b)(2)  or  the
31    termination of the State Death  Tax  Credit  as  provided  in
32    Section  2011(f)  as  enacted  by the Economic Growth and Tax
33    Relief  Reconciliation  Act  of  2001,  but  recognizing  the
34    increased applicable exclusion amount  through  December  31,
 
                            -3-      LRB093 02872 SJM 17053 a
 1    2005.
 2        (b)  For  persons dying after December 31, 2005 and on or
 3    before December 31, 2009, an amount equal to the full  credit
 4    calculable under Section 2011 or 2604 of the Internal Revenue
 5    Code as the credit would have been computed and allowed under
 6    the  Internal Revenue Code as in effect on December 31, 2001,
 7    without the reduction  in  the  State  Death  Tax  Credit  as
 8    provided  in  Section  2011(b)(2)  or  the termination of the
 9    State Death Tax Credit as  provided  in  Section  2011(f)  as
10    enacted  by the Economic Growth and Tax Relief Reconciliation
11    Act of 2001, but recognizing the  exclusion  amount  of  only
12    $2,000,000.
13        (c)  For  persons  dying  after  December  31,  2009, the
14    credit for state tax allowable under Section 2011 or  Section
15    2604 of the Internal Revenue Code.
16        "Taxable  transfer"  means  an event that gives rise to a
17    state tax credit, including any credit allowable as a  result
18    of the imposition of an additional tax under Section 2032A(c)
19    of the Internal Revenue Code.
20        "Transferee"  means  a  transferee  within the meaning of
21    Section  2603(a)(1)  and  Section  6901(h)  of  the  Internal
22    Revenue Code.
23        "Transferred property" means:
24             (1)  With respect to a taxable transfer occurring at
25        the death of an individual that results in the imposition
26        of federal estate tax, the  deceased  individual's  gross
27        estate as defined in Section 2031 of the Internal Revenue
28        Code.
29             (2)  With respect to a taxable transfer occurring as
30        a  result  of a taxable termination as defined in Section
31        2612(a) of the Internal Revenue Code,  the taxable amount
32        determined under Section 2622(a) of the Internal  Revenue
33        Code.
34             (3)  With respect to a taxable transfer occurring as
 
                            -4-      LRB093 02872 SJM 17053 a
 1        a  result of a taxable distribution as defined in Section
 2        2612(b) of the Internal Revenue Code, the taxable  amount
 3        determined  under Section 2621(a) of the Internal Revenue
 4        Code.
 5             (4)  With respect  to  an  event  which  causes  the
 6        imposition  of  an  additional  estate  tax under Section
 7        2032A(c) of the Internal Revenue Code, the qualified real
 8        property that was disposed of or which ceased to be  used
 9        for  the  qualified  use,  within  the meaning of Section
10        2032A(c)(1) of the Internal Revenue Code.
11        "Trust" includes a trust as defined in Section 2652(b)(1)
12    of the Internal Revenue Code.
13    (Source: P.A. 86-737.)

14        (35 ILCS 405/3) (from Ch. 120, par. 405A-3)
15        Sec. 3.  Illinois estate tax.
16        (a)  Imposition  of  Tax.   An  Illinois  estate  tax  is
17    imposed  on  every  taxable  transfer  involving  transferred
18    property having a tax situs within the State of Illinois.
19        (b)  Amount of tax.  The amount of  the  Illinois  estate
20    tax  shall  be  the  maximum  state tax credit, as defined in
21    Section 2 of this Act, allowable with respect to the  taxable
22    transfer reduced by the lesser of:
23             (1)  the  amount of the state tax credit paid to any
24        other state or states; and
25             (2)  the  amount  determined  by   multiplying   the
26        maximum  state  tax  credit allowable with respect to the
27        taxable transfer  by the percentage which the gross value
28        of the transferred property not having  a  tax  situs  in
29        Illinois   bears   to   the  gross  value  of  the  total
30        transferred property.
31    (Source: P.A. 86-737.)

32        (35 ILCS 405/5) (from Ch. 120, par. 405A-5)
 
                            -5-      LRB093 02872 SJM 17053 a
 1        Sec. 5.  Determination of tax situs and valuation.
 2        (a)  Illinois estate tax.
 3             (1)  For purposes of the Illinois estate tax, in the
 4        case of a decedent who was a resident of  this  State  at
 5        the  time of death, all of the transferred property has a
 6        tax situs in this State, including any such property held
 7        in trust,  except  real  or  tangible  personal  property
 8        physically situated in another state.
 9             (2)  For purposes of the Illinois estate tax, in the
10        case  of  a decedent who was not a resident of this State
11        at the time of death, the transferred property  having  a
12        tax situs in this State, including any such property held
13        in  trust,  is only the real estate and tangible personal
14        property physically situated in this State.
15        (b)  Illinois generation-skipping transfer tax.
16             (1)  For     purposes      of      the      Illinois
17        generation-skipping   transfer   tax,   all   transferred
18        property  from  or in a resident trust has a tax situs in
19        this State, including any such property  held  in  trust,
20        except  real  or  tangible  personal  property physically
21        situated in another state on the date  that  the  taxable
22        transfer occurs.
23             (2)  For      purposes      of      the     Illinois
24        generation-skipping transfer tax, none of the transferred
25        property from or in a non-resident trust has a tax  situs
26        in  this  State,  except  that portion of the transferred
27        property that  is  real  or  tangible  personal  property
28        physically  situated  in  this  State, including any such
29        property held in trust, on  the  date  that  the  taxable
30        transfer occurs.
31        (c)  Valuation.   Except as otherwise expressly provided,
32    for purposes of this Act,  the  gross  value  of  transferred
33    property  shall  be  its  value  as  finally  determined  for
34    purposes of the related federal transfer tax, undiminished by
 
                            -6-      LRB093 02872 SJM 17053 a
 1    any   mortgages,   liens  or  other  encumbrances  upon  such
 2    transferred property for which the  decedent  was  personally
 3    liable.
 4    (Source: P.A. 86-737.)

 5        (35 ILCS 405/6) (from Ch. 120, par. 405A-6)
 6        Sec. 6.  Returns and payments.
 7        (a)  Due  Dates.  The Illinois transfer tax shall be paid
 8    and the Illinois transfer tax return shall be  filed  on  the
 9    due  date  or  dates, respectively, including extensions, for
10    paying the  related  federal  transfer  tax  and  filing  the
11    related federal return.
12        (b)  Installment  payments  and  deferral.   In the event
13    that any portion of the federal transfer tax is  deferred  or
14    to  be  paid  in  installments  under  the  provisions of the
15    Internal Revenue Code, the portion of the  Illinois  transfer
16    tax  which  is subject to deferral or payable in installments
17    shall be determined by multiplying the Illinois transfer  tax
18    by  a  fraction, the numerator of which is the gross value of
19    the assets included in the transferred property having a  tax
20    situs  in  this  State and which give rise to the deferred or
21    installment payment under  the Internal Revenue Code, and the
22    denominator of  which  is  the  gross  value  of  all  assets
23    included  in  the  transferred property having a tax situs in
24    this State.  Deferred payments and installment payments, with
25    interest, shall be paid at the same  time  and  in  the  same
26    manner  as  payments of the federal transfer tax are required
27    to be made under the  applicable  Sections  of  the  Internal
28    Revenue  Code,  provided  that the rate of interest on unpaid
29    amounts of Illinois transfer tax shall  be  determined  under
30    this  Act.   Acceleration of payment under this Section shall
31    occur under the same circumstances and in the same manner  as
32    provided in the Internal Revenue Code.
33        (c)  Who  shall  file and pay.  The Illinois transfer tax
 
                            -7-      LRB093 02872 SJM 17053 a
 1    return (including any supplemental or amended  return)  shall
 2    be  filed,  and  the  Illinois  transfer  tax  (including any
 3    additional tax that may become due) shall be paid by the same
 4    person or persons, respectively, who are required to pay  the
 5    related  federal  transfer  tax  and file the related federal
 6    return, or who would have been  required  to  pay  a  federal
 7    transfer  tax and file a federal return if a federal transfer
 8    tax were due.
 9        (d)  Where  to  file  return.   The   executed   Illinois
10    transfer tax return shall be filed with the Attorney General.
11    In addition, a copy of the Illinois transfer tax return shall
12    be  filed  with  the  county  treasurer  to whom the Illinois
13    transfer tax is paid, determined under subsection (e) of this
14    Section.
15        (e)  Where to pay tax.  The Illinois transfer  tax  shall
16    be  paid  to the treasurer of the county determined under the
17    following rules:
18             (1)  Illinois Estate Tax.  The Illinois  estate  tax
19        shall be paid to the treasurer of the county in which the
20        decedent  was  a  resident  on the date of the decedent's
21        death or, if the decedent was  not  a  resident  of  this
22        State  on  the  date  of  death,  the county in which the
23        greater part, by gross value, of the transferred property
24        with a tax situs in this State is located.
25             (2)  Illinois Generation-Skipping Transfer Tax.  The
26        Illinois  generation-skipping  transfer   tax   involving
27        transferred property from or in a resident trust shall be
28        paid  to the county treasurer for the county in which the
29        grantor resided at the time the trust became  irrevocable
30        (in  the  case  of an inter vivos trust) or the county in
31        which the decedent resided at death (in  the  case  of  a
32        trust  created by the will of a decedent). In the case of
33        an Illinois generation-skipping  transfer  tax  involving
34        transferred property from or in a non-resident trust, the
 
                            -8-      LRB093 02872 SJM 17053 a
 1        Illinois  generation-skipping  transfer tax shall be paid
 2        to the county treasurer  for  the  county  in  which  the
 3        greater part, by gross value, of the transferred property
 4        with a tax situs in this State is located.
 5        (f)  Forms;  confidentiality.   The Illinois transfer tax
 6    return shall be in  all  respects  in  the  manner  and  form
 7    prescribed  by  the  regulations of the Attorney General.  At
 8    the same time the Illinois transfer tax return is filed,  the
 9    person  required  to  file  shall also file with the Attorney
10    General a copy of the related federal return. For individuals
11    dying after December 31, 2005,  in  cases  where  no  federal
12    return  is  required to be filed, the person required to file
13    an Illinois return shall also file with the Attorney  General
14    schedules  of assets in the manner and form prescribed by the
15    Attorney General. The Illinois transfer tax  return  and  the
16    copy of the federal return filed with the Attorney General or
17    any  county treasurer shall be confidential, and the Attorney
18    General, each county treasurer and all of their assistants or
19    employees are prohibited from divulging in any manner any  of
20    the  contents  of  those returns, except only in a proceeding
21    instituted under the provisions of this Act.
22        (g)  County Treasurer shall accept  payment.   No  county
23    treasurer  shall  refuse  to accept payment of any amount due
24    under this Act on the grounds that the county  treasurer  has
25    not  yet received a copy of the appropriate Illinois transfer
26    tax return.
27    (Source: P.A. 86-737.)

28        (35 ILCS 405/7) (from Ch. 120, par. 405A-7)
29        Sec. 7.  Supplemental returns; refunds.
30        (a)  Supplemental returns.  If the State  tax  credit  is
31    increased  after  the  filing  of  the  Illinois transfer tax
32    return, the person or persons required to file  the  Illinois
33    transfer  tax  return and pay the Illinois transfer tax shall
 
                            -9-      LRB093 02872 SJM 17053 a
 1    file  a  supplemental  Illinois  transfer  tax  return.   The
 2    supplemental return shall be filed  and  the  additional  tax
 3    shall  be  paid  in  the same place and manner as provided in
 4    Section 6 of this Act.  The due  date  for  the  supplemental
 5    return  and for the payment of the additional tax reported in
 6    the supplemental return shall be no later than 3 months after
 7    the earliest of:
 8             (1)  the date an amended, related federal return  is
 9        filed;
10             (2)  the  date  an  increase in the federal transfer
11        tax is paid or accepted in writing; or
12             (3)  the date the Internal Revenue Service issues  a
13        request  for evidence of payment of the State tax credit;
14        or
15             (4)  the date  that  any  increase  to  the  taxable
16        estate is discovered;
17    provided  that  if  the  related  federal transfer tax may be
18    deferred or paid in installments, then part  or  all  of  the
19    additional  Illinois  transfer tax may be deferred or paid in
20    installments under rules consistent with  subsection  (b)  of
21    Section 6 of this Act.
22        (b)  Refunds.   If  the state tax credit is reduced after
23    the filing of the Illinois transfer tax  return,  the  person
24    who  paid  the Illinois transfer tax (or the person upon whom
25    the burden of payment fell) shall file  an  amended  Illinois
26    transfer  tax return and shall be entitled to a refund of tax
27    or interest paid on the Illinois transfer tax.   No  interest
28    shall be paid on any amount refunded.
29    (Source: P.A. 86-737.)

30        (35 ILCS 405/8) (from Ch. 120, par. 405A-8)
31        Sec.  8.   Penalties for failure to file tax return or to
32    pay tax.
33        (a)  Failure to file return.  In case of failure to  file
 
                            -10-     LRB093 02872 SJM 17053 a
 1    any  return required under this Act with the Attorney General
 2    by the due date, unless it is shown that the failure to  file
 3    is  due  to  a  reasonable cause, there shall be added to the
 4    amount required to be shown as tax on the return  5%  of  the
 5    amount  of  that  tax (or 5% of the additional tax due in the
 6    case of a supplemental return) if the failure is for not more
 7    than one month from the due date, with an additional  5%  for
 8    each  additional  month  or  fraction  of  a month thereafter
 9    during which the failure to file continues, not exceeding  in
10    the   aggregate  25%  of  the  tax  or,  in  the  case  of  a
11    supplemental return, 25% of the additional tax.
12        (b)  Failure to pay tax.  In the case of failure  to  pay
13    the amount of tax shown due on any return required under this
14    Act on or before the due date for payment of that tax, unless
15    it  is  shown  that  the  failure to pay is due to reasonable
16    cause, there shall be added to the unpaid amount of  the  tax
17    0.5%  of  that  unpaid  amount if the failure is for not more
18    than one month from the due date, with an additional 0.5% for
19    each additional month  or  fraction  of  a  month  thereafter
20    during  which  the failure to pay continues, not exceeding in
21    the aggregate 25% of the unpaid amount.
22        (c)  Extensions of Time.
23             (1)  Internal Revenue Service  Extensions.   If  the
24        date  for  filing  the related federal return or the date
25        for payment  of  the  related  federal  transfer  tax  is
26        extended  by  the Internal Revenue Service, the filing of
27        the return and payment of the tax  imposed  by  this  Act
28        shall  be  due  on  the  respective date specified by the
29        Internal  Revenue  Service  in  granting  a  request  for
30        extension.  If the request for extension  is  granted  by
31        the Internal Revenue Service, the person required to file
32        the  Illinois  transfer  tax  return  shall  furnish  the
33        Attorney General with a copy of the request for extension
34        showing approval of the extension by the Internal Revenue
 
                            -11-     LRB093 02872 SJM 17053 a
 1        Service.   If a request for extension of time to file the
 2        federal return is denied by the Internal Revenue Service,
 3        no penalty shall be due under  this  Act  if  the  return
 4        required  by  this Act is filed within the time specified
 5        by the Internal Revenue Service for  filing  the  federal
 6        return.   If  a  request for extension of time to pay the
 7        federal transfer tax is denied by  the  Internal  Revenue
 8        Service,  no  penalty  shall be due under this Act if the
 9        tax is paid within the time  specified  by  the  Internal
10        Revenue Service for paying the federal transfer tax.
11             (2)  Attorney  General  Extensions.   The  person or
12        persons required to file the Illinois transfer tax return
13        and to pay the Illinois transfer tax  may  apply  to  the
14        Attorney  General  for  an  extension of time to file the
15        Illinois transfer tax  return  or  to  pay  the  Illinois
16        transfer  tax.  The application must establish reasonable
17        cause why it is  impossible  or  impractical  to  file  a
18        reasonably  complete  return or to pay the full amount of
19        tax due by the due date.  The Attorney  General  may  for
20        reasonable cause extend the time for filing the return or
21        paying  the  tax  for  a  reasonable period from the date
22        fixed for filing the return or paying the tax.
23        (d)  Waiver of Penalties.
24             (1)  Internal  Revenue  Service  Waiver.    If   the
25        Internal  Revenue  Service waives the penalty provided in
26        the Internal Revenue Code for failure to timely file  the
27        related  federal  return  or  the  penalty for failure to
28        timely pay the related federal  transfer  tax  liability,
29        such  waiver  or  waivers  shall  be deemed to constitute
30        reasonable cause for purposes of this Section.
31             (2)  Attorney General Waiver.  The Attorney  General
32        may waive the penalty or penalties for failure to file or
33        pay  for reasonable cause, notwithstanding the failure of
34        the Internal Revenue Service  to  waive  the  penalty  or
 
                            -12-     LRB093 02872 SJM 17053 a
 1        penalties for failure to timely file the federal transfer
 2        tax return or to pay the federal transfer tax.
 3    (Source: P.A. 86-737.)

 4        (35 ILCS 405/10) (from Ch. 120, par. 405A-10)
 5        Sec. 10.  Liens and Personal Liability.
 6        (a)  Lien for Illinois transfer tax.  Unless the Illinois
 7    transfer  tax  is  sooner paid in full, the Illinois transfer
 8    tax shall  be  a  lien  in  favor  of  this  State  upon  the
 9    transferred property having a tax situs within this State for
10    10  years  from  the date of the taxable transfer, or, in the
11    case of Illinois transfer tax subject to deferral or  payable
12    in  installments,  the later of 10 years from the date of the
13    taxable transfer or one  year  after  the  last  deferred  or
14    installment payment may become due.  The lien imposed by this
15    Section  on  the  transferred  property shall not be valid as
16    against any purchaser, mortgagee, pledgee, or other holder of
17    a security interest for a full and adequate consideration  in
18    money or money's worth; provided, however, that any property,
19    consideration  or  proceeds received as a result of any sale,
20    mortgage, pledge or granting of  a  security  interest  shall
21    remain  subject  to  the  lien  imposed  by this Section.  In
22    addition, the lien imposed by this Section on the transferred
23    property shall be subject to  the  exceptions  set  forth  in
24    Section  6324(c)(i)  of  the  Internal Revenue Code as if the
25    lien were a lien imposed by that Section.  In no event  shall
26    the issuance by the Attorney General of a release of the lien
27    imposed  by  this  subsection be required with respect to the
28    sale, mortgage, pledge, granting of a security  interest  in,
29    transfer or distribution of transferred property.
30        (b)  Special lien for property valued under Section 2032A
31    of  the  Internal  Revenue  Code.   In the event the Illinois
32    estate tax is reduced  as  a  result  of  an  election  under
33    Section  2032A  of  the Internal Revenue Code, then an amount
 
                            -13-     LRB093 02872 SJM 17053 a
 1    equal to the additional Illinois estate tax that would be due
 2    in the absence of such an election shall be a lien  in  favor
 3    of  this  State  on  the  transferred property that has a tax
 4    situs in this State and is subject  to  such  election.   The
 5    lien  imposed  by  this subsection shall arise at the time an
 6    election is filed under Section 2032A of the Internal Revenue
 7    Code and shall continue  with  respect  to  such  transferred
 8    property:
 9             (1)  until the liability for the Illinois estate tax
10        with  respect  to  such  transferred  property  has  been
11        satisfied  or has become unenforceable by reason of lapse
12        of time or otherwise; or
13             (2)  until it is established to the satisfaction  of
14        the  Attorney  General  that no further tax liability may
15        arise under this Act with  respect  to  such  transferred
16        property.
17        The lien imposed by this subsection shall not be valid as
18    against  any purchaser, mortgagee, pledgee, other holder of a
19    security interest, mechanic's lien, or judgment lien creditor
20    until notice of such lien has been filed as provided  by  the
21    laws  of this State.  In regulations prescribed in accordance
22    with Section 16 of this Act, the Attorney General may require
23    that the qualified heir  file  such  notice  of  lien.   Even
24    though  notice of said lien has been filed as provided in the
25    preceding sentence, such lien shall be subject to  the  rules
26    set  forth  in  paragraph  (3)  of  Section  6324A(d)  of the
27    Internal Revenue Code as if the lien were a lien  imposed  by
28    that Section.
29        (c)  Personal liability.  If the Illinois transfer tax is
30    not  paid  when  due,  then  the  person required to file the
31    related federal return and the transferee of any  transferred
32    property  having  a  tax  situs  within  this  State shall be
33    personally liable for  the  Illinois  transfer  tax,  to  the
34    extent  of  such  transferred  property  originally received,
 
                            -14-     LRB093 02872 SJM 17053 a
 1    controlled or transferred to that person or transferee,  less
 2    the amount of any expenses or charges against the transferred
 3    property,  related  to  the  taxable  transfer,  which have a
 4    higher priority of payment  under  applicable  law  than  the
 5    Illinois transfer tax.
 6        (d)  Collection.   The  Attorney  General  shall have the
 7    right to sue for collection of the Illinois transfer tax  for
 8    3  years  after  the date of the actual filing of the related
 9    Illinois transfer tax return with the Attorney  General,  or,
10    if  later, the last date upon which application for refund of
11    the Illinois transfer tax  could  be  filed  with  the  State
12    Treasurer.
13        (e)  Waiver  of  lien  and  personal  liability.   If the
14    Attorney General is satisfied that no liability for  Illinois
15    transfer  tax  exists  or  that the Illinois transfer tax has
16    been fully discharged or provided for, the  Attorney  General
17    shall  issue  a  certificate releasing all of the transferred
18    property having a tax situs within the State of Illinois from
19    the  lien  imposed  by  this  Section.   Issuance   of   such
20    certificate  shall  discharge the person required to file the
21    Illinois related  federal  return  and  any  transferee  from
22    personal liability for the Illinois transfer tax.
23    (Source: P.A. 86-737.)

24        Section  99.  Effective date.  This Act takes effect upon
25    becoming law.".