95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
SB1500

 

Introduced 2/9/2007, by Sen. Dan Cronin - Kirk W. Dillard - David Luechtefeld - J. Bradley Burzynski, Todd Sieben, et al.

 

SYNOPSIS AS INTRODUCED:
 
See Index

    Provides that the Act may be referred to as the 2007 Education Reform and Funding Act. Amends the Department of Revenue Law of the Civil Administrative Code of Illinois to make changes concerning sales of tangible personal property conducted over the Internet. Amends the Illinois Income Tax Act. Provides that for taxable years ending on or after December 31, 2007, the education expense credit may not exceed $1,000 (now, $500). Amends the Use Tax Act and the Retailers' Occupation Tax Act. Provides that 80% of the revenue received from retail sales conducted over the Internet must be deposited into the Common School Fund. Amends the Telecommunications Excise Tax Act. Provides that, beginning July 1, 2007, digital subscriber line services are not considered telecommunications that are subject to the Act. Amends the School Code to make changes concerning the elimination of unfunded mandates, alternative school development grants, an Education Venture Partnership Pool, oversight of school board contracts, performance-based teacher compensation, contracts on a school district's website, special education reimbursement for personnel, the foundation level of support under the State aid formula, a Salary Incentive Program for Hard-to-Staff Schools, the completion of high school graduation requirements, and the limitation on the number of charter schools. Amends the Board of Higher Education Act concerning teacher and principal preparation programs. Effective July 1, 2007.


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FISCAL NOTE ACT MAY APPLY
HOUSING AFFORDABILITY IMPACT NOTE ACT MAY APPLY
STATE MANDATES ACT MAY REQUIRE REIMBURSEMENT

 

 

A BILL FOR

 

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1     AN ACT concerning education, which may be referred to as
2 the 2007 Education Reform and Funding Act.
 
3     Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
 
5     Section 5. The Department of Revenue Law of the Civil
6 Administrative Code of Illinois is amended by adding Section
7 2505-455 as follows:
 
8     (20 ILCS 2505/2505-455 new)
9     Sec. 2505-455. Tax collection on Internet sales.
10     (a) The Department must develop and implement a program to
11 strengthen its collection of amounts due to the State under the
12 Use Tax Act and the Retailers' Occupation Tax Act from sales of
13 tangible personal property conducted over the Internet. This
14 program shall contain specific measurers to correct the current
15 lack of enforcement of the Use Tax Act and the Retailers'
16 Occupation Tax Act as they now apply to Internet transactions.
17 This program shall not increase the tax rates or change the
18 definitions of properties that are subject to the Use Tax Act
19 and the Retailers' Occupation Tax Act.
20     (b) The Department must submit a report concerning the
21 status of this program to the General Assembly and the Governor
22 no later than January 1, 2008.
 

 

 

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1     Section 10. The Illinois Income Tax Act is amended by
2 changing Section 201 as follows:
 
3     (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
4     Sec. 201. Tax Imposed.
5     (a) In general. A tax measured by net income is hereby
6 imposed on every individual, corporation, trust and estate for
7 each taxable year ending after July 31, 1969 on the privilege
8 of earning or receiving income in or as a resident of this
9 State. Such tax shall be in addition to all other occupation or
10 privilege taxes imposed by this State or by any municipal
11 corporation or political subdivision thereof.
12     (b) Rates. The tax imposed by subsection (a) of this
13 Section shall be determined as follows, except as adjusted by
14 subsection (d-1):
15         (1) In the case of an individual, trust or estate, for
16     taxable years ending prior to July 1, 1989, an amount equal
17     to 2 1/2% of the taxpayer's net income for the taxable
18     year.
19         (2) In the case of an individual, trust or estate, for
20     taxable years beginning prior to July 1, 1989 and ending
21     after June 30, 1989, an amount equal to the sum of (i) 2
22     1/2% of the taxpayer's net income for the period prior to
23     July 1, 1989, as calculated under Section 202.3, and (ii)
24     3% of the taxpayer's net income for the period after June
25     30, 1989, as calculated under Section 202.3.

 

 

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1         (3) In the case of an individual, trust or estate, for
2     taxable years beginning after June 30, 1989, an amount
3     equal to 3% of the taxpayer's net income for the taxable
4     year.
5         (4) (Blank).
6         (5) (Blank).
7         (6) In the case of a corporation, for taxable years
8     ending prior to July 1, 1989, an amount equal to 4% of the
9     taxpayer's net income for the taxable year.
10         (7) In the case of a corporation, for taxable years
11     beginning prior to July 1, 1989 and ending after June 30,
12     1989, an amount equal to the sum of (i) 4% of the
13     taxpayer's net income for the period prior to July 1, 1989,
14     as calculated under Section 202.3, and (ii) 4.8% of the
15     taxpayer's net income for the period after June 30, 1989,
16     as calculated under Section 202.3.
17         (8) In the case of a corporation, for taxable years
18     beginning after June 30, 1989, an amount equal to 4.8% of
19     the taxpayer's net income for the taxable year.
20     (c) Personal Property Tax Replacement Income Tax.
21 Beginning on July 1, 1979 and thereafter, in addition to such
22 income tax, there is also hereby imposed the Personal Property
23 Tax Replacement Income Tax measured by net income on every
24 corporation (including Subchapter S corporations), partnership
25 and trust, for each taxable year ending after June 30, 1979.
26 Such taxes are imposed on the privilege of earning or receiving

 

 

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1 income in or as a resident of this State. The Personal Property
2 Tax Replacement Income Tax shall be in addition to the income
3 tax imposed by subsections (a) and (b) of this Section and in
4 addition to all other occupation or privilege taxes imposed by
5 this State or by any municipal corporation or political
6 subdivision thereof.
7     (d) Additional Personal Property Tax Replacement Income
8 Tax Rates. The personal property tax replacement income tax
9 imposed by this subsection and subsection (c) of this Section
10 in the case of a corporation, other than a Subchapter S
11 corporation and except as adjusted by subsection (d-1), shall
12 be an additional amount equal to 2.85% of such taxpayer's net
13 income for the taxable year, except that beginning on January
14 1, 1981, and thereafter, the rate of 2.85% specified in this
15 subsection shall be reduced to 2.5%, and in the case of a
16 partnership, trust or a Subchapter S corporation shall be an
17 additional amount equal to 1.5% of such taxpayer's net income
18 for the taxable year.
19     (d-1) Rate reduction for certain foreign insurers. In the
20 case of a foreign insurer, as defined by Section 35A-5 of the
21 Illinois Insurance Code, whose state or country of domicile
22 imposes on insurers domiciled in Illinois a retaliatory tax
23 (excluding any insurer whose premiums from reinsurance assumed
24 are 50% or more of its total insurance premiums as determined
25 under paragraph (2) of subsection (b) of Section 304, except
26 that for purposes of this determination premiums from

 

 

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1 reinsurance do not include premiums from inter-affiliate
2 reinsurance arrangements), beginning with taxable years ending
3 on or after December 31, 1999, the sum of the rates of tax
4 imposed by subsections (b) and (d) shall be reduced (but not
5 increased) to the rate at which the total amount of tax imposed
6 under this Act, net of all credits allowed under this Act,
7 shall equal (i) the total amount of tax that would be imposed
8 on the foreign insurer's net income allocable to Illinois for
9 the taxable year by such foreign insurer's state or country of
10 domicile if that net income were subject to all income taxes
11 and taxes measured by net income imposed by such foreign
12 insurer's state or country of domicile, net of all credits
13 allowed or (ii) a rate of zero if no such tax is imposed on such
14 income by the foreign insurer's state of domicile. For the
15 purposes of this subsection (d-1), an inter-affiliate includes
16 a mutual insurer under common management.
17         (1) For the purposes of subsection (d-1), in no event
18     shall the sum of the rates of tax imposed by subsections
19     (b) and (d) be reduced below the rate at which the sum of:
20             (A) the total amount of tax imposed on such foreign
21         insurer under this Act for a taxable year, net of all
22         credits allowed under this Act, plus
23             (B) the privilege tax imposed by Section 409 of the
24         Illinois Insurance Code, the fire insurance company
25         tax imposed by Section 12 of the Fire Investigation
26         Act, and the fire department taxes imposed under

 

 

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1         Section 11-10-1 of the Illinois Municipal Code,
2     equals 1.25% for taxable years ending prior to December 31,
3     2003, or 1.75% for taxable years ending on or after
4     December 31, 2003, of the net taxable premiums written for
5     the taxable year, as described by subsection (1) of Section
6     409 of the Illinois Insurance Code. This paragraph will in
7     no event increase the rates imposed under subsections (b)
8     and (d).
9         (2) Any reduction in the rates of tax imposed by this
10     subsection shall be applied first against the rates imposed
11     by subsection (b) and only after the tax imposed by
12     subsection (a) net of all credits allowed under this
13     Section other than the credit allowed under subsection (i)
14     has been reduced to zero, against the rates imposed by
15     subsection (d).
16     This subsection (d-1) is exempt from the provisions of
17 Section 250.
18     (e) Investment credit. A taxpayer shall be allowed a credit
19 against the Personal Property Tax Replacement Income Tax for
20 investment in qualified property.
21         (1) A taxpayer shall be allowed a credit equal to .5%
22     of the basis of qualified property placed in service during
23     the taxable year, provided such property is placed in
24     service on or after July 1, 1984. There shall be allowed an
25     additional credit equal to .5% of the basis of qualified
26     property placed in service during the taxable year,

 

 

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1     provided such property is placed in service on or after
2     July 1, 1986, and the taxpayer's base employment within
3     Illinois has increased by 1% or more over the preceding
4     year as determined by the taxpayer's employment records
5     filed with the Illinois Department of Employment Security.
6     Taxpayers who are new to Illinois shall be deemed to have
7     met the 1% growth in base employment for the first year in
8     which they file employment records with the Illinois
9     Department of Employment Security. The provisions added to
10     this Section by Public Act 85-1200 (and restored by Public
11     Act 87-895) shall be construed as declaratory of existing
12     law and not as a new enactment. If, in any year, the
13     increase in base employment within Illinois over the
14     preceding year is less than 1%, the additional credit shall
15     be limited to that percentage times a fraction, the
16     numerator of which is .5% and the denominator of which is
17     1%, but shall not exceed .5%. The investment credit shall
18     not be allowed to the extent that it would reduce a
19     taxpayer's liability in any tax year below zero, nor may
20     any credit for qualified property be allowed for any year
21     other than the year in which the property was placed in
22     service in Illinois. For tax years ending on or after
23     December 31, 1987, and on or before December 31, 1988, the
24     credit shall be allowed for the tax year in which the
25     property is placed in service, or, if the amount of the
26     credit exceeds the tax liability for that year, whether it

 

 

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1     exceeds the original liability or the liability as later
2     amended, such excess may be carried forward and applied to
3     the tax liability of the 5 taxable years following the
4     excess credit years if the taxpayer (i) makes investments
5     which cause the creation of a minimum of 2,000 full-time
6     equivalent jobs in Illinois, (ii) is located in an
7     enterprise zone established pursuant to the Illinois
8     Enterprise Zone Act and (iii) is certified by the
9     Department of Commerce and Community Affairs (now
10     Department of Commerce and Economic Opportunity) as
11     complying with the requirements specified in clause (i) and
12     (ii) by July 1, 1986. The Department of Commerce and
13     Community Affairs (now Department of Commerce and Economic
14     Opportunity) shall notify the Department of Revenue of all
15     such certifications immediately. For tax years ending
16     after December 31, 1988, the credit shall be allowed for
17     the tax year in which the property is placed in service,
18     or, if the amount of the credit exceeds the tax liability
19     for that year, whether it exceeds the original liability or
20     the liability as later amended, such excess may be carried
21     forward and applied to the tax liability of the 5 taxable
22     years following the excess credit years. The credit shall
23     be applied to the earliest year for which there is a
24     liability. If there is credit from more than one tax year
25     that is available to offset a liability, earlier credit
26     shall be applied first.

 

 

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1         (2) The term "qualified property" means property
2     which:
3             (A) is tangible, whether new or used, including
4         buildings and structural components of buildings and
5         signs that are real property, but not including land or
6         improvements to real property that are not a structural
7         component of a building such as landscaping, sewer
8         lines, local access roads, fencing, parking lots, and
9         other appurtenances;
10             (B) is depreciable pursuant to Section 167 of the
11         Internal Revenue Code, except that "3-year property"
12         as defined in Section 168(c)(2)(A) of that Code is not
13         eligible for the credit provided by this subsection
14         (e);
15             (C) is acquired by purchase as defined in Section
16         179(d) of the Internal Revenue Code;
17             (D) is used in Illinois by a taxpayer who is
18         primarily engaged in manufacturing, or in mining coal
19         or fluorite, or in retailing, or was placed in service
20         on or after July 1, 2006 in a River Edge Redevelopment
21         Zone established pursuant to the River Edge
22         Redevelopment Zone Act; and
23             (E) has not previously been used in Illinois in
24         such a manner and by such a person as would qualify for
25         the credit provided by this subsection (e) or
26         subsection (f).

 

 

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1         (3) For purposes of this subsection (e),
2     "manufacturing" means the material staging and production
3     of tangible personal property by procedures commonly
4     regarded as manufacturing, processing, fabrication, or
5     assembling which changes some existing material into new
6     shapes, new qualities, or new combinations. For purposes of
7     this subsection (e) the term "mining" shall have the same
8     meaning as the term "mining" in Section 613(c) of the
9     Internal Revenue Code. For purposes of this subsection (e),
10     the term "retailing" means the sale of tangible personal
11     property or services rendered in conjunction with the sale
12     of tangible consumer goods or commodities.
13         (4) The basis of qualified property shall be the basis
14     used to compute the depreciation deduction for federal
15     income tax purposes.
16         (5) If the basis of the property for federal income tax
17     depreciation purposes is increased after it has been placed
18     in service in Illinois by the taxpayer, the amount of such
19     increase shall be deemed property placed in service on the
20     date of such increase in basis.
21         (6) The term "placed in service" shall have the same
22     meaning as under Section 46 of the Internal Revenue Code.
23         (7) If during any taxable year, any property ceases to
24     be qualified property in the hands of the taxpayer within
25     48 months after being placed in service, or the situs of
26     any qualified property is moved outside Illinois within 48

 

 

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1     months after being placed in service, the Personal Property
2     Tax Replacement Income Tax for such taxable year shall be
3     increased. Such increase shall be determined by (i)
4     recomputing the investment credit which would have been
5     allowed for the year in which credit for such property was
6     originally allowed by eliminating such property from such
7     computation and, (ii) subtracting such recomputed credit
8     from the amount of credit previously allowed. For the
9     purposes of this paragraph (7), a reduction of the basis of
10     qualified property resulting from a redetermination of the
11     purchase price shall be deemed a disposition of qualified
12     property to the extent of such reduction.
13         (8) Unless the investment credit is extended by law,
14     the basis of qualified property shall not include costs
15     incurred after December 31, 2008, except for costs incurred
16     pursuant to a binding contract entered into on or before
17     December 31, 2008.
18         (9) Each taxable year ending before December 31, 2000,
19     a partnership may elect to pass through to its partners the
20     credits to which the partnership is entitled under this
21     subsection (e) for the taxable year. A partner may use the
22     credit allocated to him or her under this paragraph only
23     against the tax imposed in subsections (c) and (d) of this
24     Section. If the partnership makes that election, those
25     credits shall be allocated among the partners in the
26     partnership in accordance with the rules set forth in

 

 

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1     Section 704(b) of the Internal Revenue Code, and the rules
2     promulgated under that Section, and the allocated amount of
3     the credits shall be allowed to the partners for that
4     taxable year. The partnership shall make this election on
5     its Personal Property Tax Replacement Income Tax return for
6     that taxable year. The election to pass through the credits
7     shall be irrevocable.
8         For taxable years ending on or after December 31, 2000,
9     a partner that qualifies its partnership for a subtraction
10     under subparagraph (I) of paragraph (2) of subsection (d)
11     of Section 203 or a shareholder that qualifies a Subchapter
12     S corporation for a subtraction under subparagraph (S) of
13     paragraph (2) of subsection (b) of Section 203 shall be
14     allowed a credit under this subsection (e) equal to its
15     share of the credit earned under this subsection (e) during
16     the taxable year by the partnership or Subchapter S
17     corporation, determined in accordance with the
18     determination of income and distributive share of income
19     under Sections 702 and 704 and Subchapter S of the Internal
20     Revenue Code. This paragraph is exempt from the provisions
21     of Section 250.
22       (f) Investment credit; Enterprise Zone; River Edge
23 Redevelopment Zone.
24         (1) A taxpayer shall be allowed a credit against the
25     tax imposed by subsections (a) and (b) of this Section for
26     investment in qualified property which is placed in service

 

 

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1     in an Enterprise Zone created pursuant to the Illinois
2     Enterprise Zone Act or, for property placed in service on
3     or after July 1, 2006, a River Edge Redevelopment Zone
4     established pursuant to the River Edge Redevelopment Zone
5     Act. For partners, shareholders of Subchapter S
6     corporations, and owners of limited liability companies,
7     if the liability company is treated as a partnership for
8     purposes of federal and State income taxation, there shall
9     be allowed a credit under this subsection (f) to be
10     determined in accordance with the determination of income
11     and distributive share of income under Sections 702 and 704
12     and Subchapter S of the Internal Revenue Code. The credit
13     shall be .5% of the basis for such property. The credit
14     shall be available only in the taxable year in which the
15     property is placed in service in the Enterprise Zone or
16     River Edge Redevelopment Zone and shall not be allowed to
17     the extent that it would reduce a taxpayer's liability for
18     the tax imposed by subsections (a) and (b) of this Section
19     to below zero. For tax years ending on or after December
20     31, 1985, the credit shall be allowed for the tax year in
21     which the property is placed in service, or, if the amount
22     of the credit exceeds the tax liability for that year,
23     whether it exceeds the original liability or the liability
24     as later amended, such excess may be carried forward and
25     applied to the tax liability of the 5 taxable years
26     following the excess credit year. The credit shall be

 

 

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1     applied to the earliest year for which there is a
2     liability. If there is credit from more than one tax year
3     that is available to offset a liability, the credit
4     accruing first in time shall be applied first.
5         (2) The term qualified property means property which:
6             (A) is tangible, whether new or used, including
7         buildings and structural components of buildings;
8             (B) is depreciable pursuant to Section 167 of the
9         Internal Revenue Code, except that "3-year property"
10         as defined in Section 168(c)(2)(A) of that Code is not
11         eligible for the credit provided by this subsection
12         (f);
13             (C) is acquired by purchase as defined in Section
14         179(d) of the Internal Revenue Code;
15             (D) is used in the Enterprise Zone or River Edge
16         Redevelopment Zone by the taxpayer; and
17             (E) has not been previously used in Illinois in
18         such a manner and by such a person as would qualify for
19         the credit provided by this subsection (f) or
20         subsection (e).
21         (3) The basis of qualified property shall be the basis
22     used to compute the depreciation deduction for federal
23     income tax purposes.
24         (4) If the basis of the property for federal income tax
25     depreciation purposes is increased after it has been placed
26     in service in the Enterprise Zone or River Edge

 

 

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1     Redevelopment Zone by the taxpayer, the amount of such
2     increase shall be deemed property placed in service on the
3     date of such increase in basis.
4         (5) The term "placed in service" shall have the same
5     meaning as under Section 46 of the Internal Revenue Code.
6         (6) If during any taxable year, any property ceases to
7     be qualified property in the hands of the taxpayer within
8     48 months after being placed in service, or the situs of
9     any qualified property is moved outside the Enterprise Zone
10     or River Edge Redevelopment Zone within 48 months after
11     being placed in service, the tax imposed under subsections
12     (a) and (b) of this Section for such taxable year shall be
13     increased. Such increase shall be determined by (i)
14     recomputing the investment credit which would have been
15     allowed for the year in which credit for such property was
16     originally allowed by eliminating such property from such
17     computation, and (ii) subtracting such recomputed credit
18     from the amount of credit previously allowed. For the
19     purposes of this paragraph (6), a reduction of the basis of
20     qualified property resulting from a redetermination of the
21     purchase price shall be deemed a disposition of qualified
22     property to the extent of such reduction.
23         (7) There shall be allowed an additional credit equal
24     to 0.5% of the basis of qualified property placed in
25     service during the taxable year in a River Edge
26     Redevelopment Zone, provided such property is placed in

 

 

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1     service on or after July 1, 2006, and the taxpayer's base
2     employment within Illinois has increased by 1% or more over
3     the preceding year as determined by the taxpayer's
4     employment records filed with the Illinois Department of
5     Employment Security. Taxpayers who are new to Illinois
6     shall be deemed to have met the 1% growth in base
7     employment for the first year in which they file employment
8     records with the Illinois Department of Employment
9     Security. If, in any year, the increase in base employment
10     within Illinois over the preceding year is less than 1%,
11     the additional credit shall be limited to that percentage
12     times a fraction, the numerator of which is 0.5% and the
13     denominator of which is 1%, but shall not exceed 0.5%.
14       (g) Jobs Tax Credit; Enterprise Zone, River Edge
15 Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
16         (1) A taxpayer conducting a trade or business in an
17     enterprise zone or a High Impact Business designated by the
18     Department of Commerce and Economic Opportunity or for
19     taxable years ending on or after December 31, 2006, in a
20     River Edge Redevelopment Zone conducting a trade or
21     business in a federally designated Foreign Trade Zone or
22     Sub-Zone shall be allowed a credit against the tax imposed
23     by subsections (a) and (b) of this Section in the amount of
24     $500 per eligible employee hired to work in the zone during
25     the taxable year.
26         (2) To qualify for the credit:

 

 

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1             (A) the taxpayer must hire 5 or more eligible
2         employees to work in an enterprise zone, River Edge
3         Redevelopment Zone, or federally designated Foreign
4         Trade Zone or Sub-Zone during the taxable year;
5             (B) the taxpayer's total employment within the
6         enterprise zone, River Edge Redevelopment Zone, or
7         federally designated Foreign Trade Zone or Sub-Zone
8         must increase by 5 or more full-time employees beyond
9         the total employed in that zone at the end of the
10         previous tax year for which a jobs tax credit under
11         this Section was taken, or beyond the total employed by
12         the taxpayer as of December 31, 1985, whichever is
13         later; and
14             (C) the eligible employees must be employed 180
15         consecutive days in order to be deemed hired for
16         purposes of this subsection.
17         (3) An "eligible employee" means an employee who is:
18             (A) Certified by the Department of Commerce and
19         Economic Opportunity as "eligible for services"
20         pursuant to regulations promulgated in accordance with
21         Title II of the Job Training Partnership Act, Training
22         Services for the Disadvantaged or Title III of the Job
23         Training Partnership Act, Employment and Training
24         Assistance for Dislocated Workers Program.
25             (B) Hired after the enterprise zone, River Edge
26         Redevelopment Zone, or federally designated Foreign

 

 

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1         Trade Zone or Sub-Zone was designated or the trade or
2         business was located in that zone, whichever is later.
3             (C) Employed in the enterprise zone, River Edge
4         Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
5         An employee is employed in an enterprise zone or
6         federally designated Foreign Trade Zone or Sub-Zone if
7         his services are rendered there or it is the base of
8         operations for the services performed.
9             (D) A full-time employee working 30 or more hours
10         per week.
11         (4) For tax years ending on or after December 31, 1985
12     and prior to December 31, 1988, the credit shall be allowed
13     for the tax year in which the eligible employees are hired.
14     For tax years ending on or after December 31, 1988, the
15     credit shall be allowed for the tax year immediately
16     following the tax year in which the eligible employees are
17     hired. If the amount of the credit exceeds the tax
18     liability for that year, whether it exceeds the original
19     liability or the liability as later amended, such excess
20     may be carried forward and applied to the tax liability of
21     the 5 taxable years following the excess credit year. The
22     credit shall be applied to the earliest year for which
23     there is a liability. If there is credit from more than one
24     tax year that is available to offset a liability, earlier
25     credit shall be applied first.
26         (5) The Department of Revenue shall promulgate such

 

 

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1     rules and regulations as may be deemed necessary to carry
2     out the purposes of this subsection (g).
3         (6) The credit shall be available for eligible
4     employees hired on or after January 1, 1986.
5     (h) Investment credit; High Impact Business.
6         (1) Subject to subsections (b) and (b-5) of Section 5.5
7     of the Illinois Enterprise Zone Act, a taxpayer shall be
8     allowed a credit against the tax imposed by subsections (a)
9     and (b) of this Section for investment in qualified
10     property which is placed in service by a Department of
11     Commerce and Economic Opportunity designated High Impact
12     Business. The credit shall be .5% of the basis for such
13     property. The credit shall not be available (i) until the
14     minimum investments in qualified property set forth in
15     subdivision (a)(3)(A) of Section 5.5 of the Illinois
16     Enterprise Zone Act have been satisfied or (ii) until the
17     time authorized in subsection (b-5) of the Illinois
18     Enterprise Zone Act for entities designated as High Impact
19     Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
20     (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
21     Act, and shall not be allowed to the extent that it would
22     reduce a taxpayer's liability for the tax imposed by
23     subsections (a) and (b) of this Section to below zero. The
24     credit applicable to such investments shall be taken in the
25     taxable year in which such investments have been completed.
26     The credit for additional investments beyond the minimum

 

 

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1     investment by a designated high impact business authorized
2     under subdivision (a)(3)(A) of Section 5.5 of the Illinois
3     Enterprise Zone Act shall be available only in the taxable
4     year in which the property is placed in service and shall
5     not be allowed to the extent that it would reduce a
6     taxpayer's liability for the tax imposed by subsections (a)
7     and (b) of this Section to below zero. For tax years ending
8     on or after December 31, 1987, the credit shall be allowed
9     for the tax year in which the property is placed in
10     service, or, if the amount of the credit exceeds the tax
11     liability for that year, whether it exceeds the original
12     liability or the liability as later amended, such excess
13     may be carried forward and applied to the tax liability of
14     the 5 taxable years following the excess credit year. The
15     credit shall be applied to the earliest year for which
16     there is a liability. If there is credit from more than one
17     tax year that is available to offset a liability, the
18     credit accruing first in time shall be applied first.
19         Changes made in this subdivision (h)(1) by Public Act
20     88-670 restore changes made by Public Act 85-1182 and
21     reflect existing law.
22         (2) The term qualified property means property which:
23             (A) is tangible, whether new or used, including
24         buildings and structural components of buildings;
25             (B) is depreciable pursuant to Section 167 of the
26         Internal Revenue Code, except that "3-year property"

 

 

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1         as defined in Section 168(c)(2)(A) of that Code is not
2         eligible for the credit provided by this subsection
3         (h);
4             (C) is acquired by purchase as defined in Section
5         179(d) of the Internal Revenue Code; and
6             (D) is not eligible for the Enterprise Zone
7         Investment Credit provided by subsection (f) of this
8         Section.
9         (3) The basis of qualified property shall be the basis
10     used to compute the depreciation deduction for federal
11     income tax purposes.
12         (4) If the basis of the property for federal income tax
13     depreciation purposes is increased after it has been placed
14     in service in a federally designated Foreign Trade Zone or
15     Sub-Zone located in Illinois by the taxpayer, the amount of
16     such increase shall be deemed property placed in service on
17     the date of such increase in basis.
18         (5) The term "placed in service" shall have the same
19     meaning as under Section 46 of the Internal Revenue Code.
20         (6) If during any taxable year ending on or before
21     December 31, 1996, any property ceases to be qualified
22     property in the hands of the taxpayer within 48 months
23     after being placed in service, or the situs of any
24     qualified property is moved outside Illinois within 48
25     months after being placed in service, the tax imposed under
26     subsections (a) and (b) of this Section for such taxable

 

 

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1     year shall be increased. Such increase shall be determined
2     by (i) recomputing the investment credit which would have
3     been allowed for the year in which credit for such property
4     was originally allowed by eliminating such property from
5     such computation, and (ii) subtracting such recomputed
6     credit from the amount of credit previously allowed. For
7     the purposes of this paragraph (6), a reduction of the
8     basis of qualified property resulting from a
9     redetermination of the purchase price shall be deemed a
10     disposition of qualified property to the extent of such
11     reduction.
12         (7) Beginning with tax years ending after December 31,
13     1996, if a taxpayer qualifies for the credit under this
14     subsection (h) and thereby is granted a tax abatement and
15     the taxpayer relocates its entire facility in violation of
16     the explicit terms and length of the contract under Section
17     18-183 of the Property Tax Code, the tax imposed under
18     subsections (a) and (b) of this Section shall be increased
19     for the taxable year in which the taxpayer relocated its
20     facility by an amount equal to the amount of credit
21     received by the taxpayer under this subsection (h).
22     (i) Credit for Personal Property Tax Replacement Income
23 Tax. For tax years ending prior to December 31, 2003, a credit
24 shall be allowed against the tax imposed by subsections (a) and
25 (b) of this Section for the tax imposed by subsections (c) and
26 (d) of this Section. This credit shall be computed by

 

 

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1 multiplying the tax imposed by subsections (c) and (d) of this
2 Section by a fraction, the numerator of which is base income
3 allocable to Illinois and the denominator of which is Illinois
4 base income, and further multiplying the product by the tax
5 rate imposed by subsections (a) and (b) of this Section.
6     Any credit earned on or after December 31, 1986 under this
7 subsection which is unused in the year the credit is computed
8 because it exceeds the tax liability imposed by subsections (a)
9 and (b) for that year (whether it exceeds the original
10 liability or the liability as later amended) may be carried
11 forward and applied to the tax liability imposed by subsections
12 (a) and (b) of the 5 taxable years following the excess credit
13 year, provided that no credit may be carried forward to any
14 year ending on or after December 31, 2003. This credit shall be
15 applied first to the earliest year for which there is a
16 liability. If there is a credit under this subsection from more
17 than one tax year that is available to offset a liability the
18 earliest credit arising under this subsection shall be applied
19 first.
20     If, during any taxable year ending on or after December 31,
21 1986, the tax imposed by subsections (c) and (d) of this
22 Section for which a taxpayer has claimed a credit under this
23 subsection (i) is reduced, the amount of credit for such tax
24 shall also be reduced. Such reduction shall be determined by
25 recomputing the credit to take into account the reduced tax
26 imposed by subsections (c) and (d). If any portion of the

 

 

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1 reduced amount of credit has been carried to a different
2 taxable year, an amended return shall be filed for such taxable
3 year to reduce the amount of credit claimed.
4     (j) Training expense credit. Beginning with tax years
5 ending on or after December 31, 1986 and prior to December 31,
6 2003, a taxpayer shall be allowed a credit against the tax
7 imposed by subsections (a) and (b) under this Section for all
8