97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5343

 

Introduced 2/8/2012, by Rep. Bill Mitchell

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201

    Amends the Illinois Income Tax Act. Provides that, for taxable years beginning on or after January 1, 2012, the rate of tax imposed on the portion of the taxpayer's net income that is attributable to a subchapter S corporation is 3%. Effective immediately.


LRB097 16326 HLH 61481 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB5343LRB097 16326 HLH 61481 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 201. Tax Imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount equal
21    to 2 1/2% of the taxpayer's net income for the taxable
22    year.
23        (2) In the case of an individual, trust or estate, for

 

 

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1    taxable years beginning prior to July 1, 1989 and ending
2    after June 30, 1989, an amount equal to the sum of (i) 2
3    1/2% of the taxpayer's net income for the period prior to
4    July 1, 1989, as calculated under Section 202.3, and (ii)
5    3% of the taxpayer's net income for the period after June
6    30, 1989, as calculated under Section 202.3.
7        (3) In the case of an individual, trust or estate, for
8    taxable years beginning after June 30, 1989, and ending
9    prior to January 1, 2011, an amount equal to 3% of the
10    taxpayer's net income for the taxable year.
11        (4) In the case of an individual, trust, or estate, for
12    taxable years beginning prior to January 1, 2011, and
13    ending after December 31, 2010, an amount equal to the sum
14    of (i) 3% of the taxpayer's net income for the period prior
15    to January 1, 2011, as calculated under Section 202.5, and
16    (ii) 5% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (5) In the case of an individual, trust, or estate, for
19    taxable years beginning on or after January 1, 2011, and
20    ending prior to January 1, 2015, an amount equal to 5% of
21    the taxpayer's net income for the taxable year, except
22    that, for shareholders of a subchapter S corporation, the
23    tax is imposed as provided in items (5.5) and (5.6).
24        (5.1) In the case of an individual, trust, or estate,
25    for taxable years beginning prior to January 1, 2015, and
26    ending after December 31, 2014, an amount equal to the sum

 

 

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1    of (i) 5% of the taxpayer's net income for the period prior
2    to January 1, 2015, as calculated under Section 202.5, and
3    (ii) 3.75% of the taxpayer's net income for the period
4    after December 31, 2014, as calculated under Section 202.5,
5    except that, for shareholders of a subchapter S
6    corporation, the tax is imposed as provided in items (5.5)
7    and (5.6).
8        (5.2) In the case of an individual, trust, or estate,
9    for taxable years beginning on or after January 1, 2015,
10    and ending prior to January 1, 2025, an amount equal to
11    3.75% of the taxpayer's net income for the taxable year,
12    except that, for shareholders of a subchapter S
13    corporation, the tax is imposed as provided in items (5.5)
14    and (5.6).
15        (5.3) In the case of an individual, trust, or estate,
16    for taxable years beginning prior to January 1, 2025, and
17    ending after December 31, 2024, an amount equal to the sum
18    of (i) 3.75% of the taxpayer's net income for the period
19    prior to January 1, 2025, as calculated under Section
20    202.5, and (ii) 3.25% of the taxpayer's net income for the
21    period after December 31, 2024, as calculated under Section
22    202.5, except that, for shareholders of a subchapter S
23    corporation, the tax is imposed as provided in items (5.5)
24    and (5.6).
25        (5.4) In the case of an individual, trust, or estate,
26    for taxable years beginning on or after January 1, 2025, an

 

 

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1    amount equal to 3.25% of the taxpayer's net income for the
2    taxable year, except that, for shareholders of a subchapter
3    S corporation, the tax is imposed as provided in items
4    (5.5) and (5.6).
5        (5.5) In the case of a shareholder of a subchapter S
6    corporation, for taxable years beginning prior to January
7    1, 2012, and ending after December 31, 2011, an amount
8    equal to the sum of (i) 3% of the portion of the taxpayer's
9    net income for the taxable year that is (A) attributable to
10    the subchapter S corporation and (B) allocated to the
11    period after December 31, 2011, as calculated under Section
12    202.5, and (ii) 5% of the remainder of the taxpayer's net
13    income for the taxable year.
14        (5.6) In the case of a shareholder of a subchapter S
15    corporation, for taxable years beginning on or after
16    January 1, 2012, an amount equal to the sum of (i) 3% of
17    the portion of the taxpayer's net income for the taxable
18    year that is attributable to the subchapter S corporation
19    and (ii) the portion of the taxpayer's net income for the
20    taxable year that is not attributable to the subchapter S
21    corporation, multiplied by the rate or rates in effect for
22    that taxable year for individuals, trusts, or estates under
23    items (5) through (5.4) of this subsection (b).
24        (6) In the case of a corporation, for taxable years
25    ending prior to July 1, 1989, an amount equal to 4% of the
26    taxpayer's net income for the taxable year.

 

 

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1        (7) In the case of a corporation, for taxable years
2    beginning prior to July 1, 1989 and ending after June 30,
3    1989, an amount equal to the sum of (i) 4% of the
4    taxpayer's net income for the period prior to July 1, 1989,
5    as calculated under Section 202.3, and (ii) 4.8% of the
6    taxpayer's net income for the period after June 30, 1989,
7    as calculated under Section 202.3.
8        (8) In the case of a corporation, for taxable years
9    beginning after June 30, 1989, and ending prior to January
10    1, 2011, an amount equal to 4.8% of the taxpayer's net
11    income for the taxable year.
12        (9) In the case of a corporation, for taxable years
13    beginning prior to January 1, 2011, and ending after
14    December 31, 2010, an amount equal to the sum of (i) 4.8%
15    of the taxpayer's net income for the period prior to
16    January 1, 2011, as calculated under Section 202.5, and
17    (ii) 7% of the taxpayer's net income for the period after
18    December 31, 2010, as calculated under Section 202.5.
19        (10) In the case of a corporation, for taxable years
20    beginning on or after January 1, 2011, and ending prior to
21    January 1, 2015, an amount equal to 7% of the taxpayer's
22    net income for the taxable year.
23        (11) In the case of a corporation, for taxable years
24    beginning prior to January 1, 2015, and ending after
25    December 31, 2014, an amount equal to the sum of (i) 7% of
26    the taxpayer's net income for the period prior to January

 

 

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1    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
2    of the taxpayer's net income for the period after December
3    31, 2014, as calculated under Section 202.5.
4        (12) In the case of a corporation, for taxable years
5    beginning on or after January 1, 2015, and ending prior to
6    January 1, 2025, an amount equal to 5.25% of the taxpayer's
7    net income for the taxable year.
8        (13) In the case of a corporation, for taxable years
9    beginning prior to January 1, 2025, and ending after
10    December 31, 2024, an amount equal to the sum of (i) 5.25%
11    of the taxpayer's net income for the period prior to
12    January 1, 2025, as calculated under Section 202.5, and
13    (ii) 4.8% of the taxpayer's net income for the period after
14    December 31, 2024, as calculated under Section 202.5.
15        (14) In the case of a corporation, for taxable years
16    beginning on or after January 1, 2025, an amount equal to
17    4.8% of the taxpayer's net income for the taxable year.
18    The rates under this subsection (b) are subject to the
19provisions of Section 201.5.
20    (c) Personal Property Tax Replacement Income Tax.
21Beginning on July 1, 1979 and thereafter, in addition to such
22income tax, there is also hereby imposed the Personal Property
23Tax Replacement Income Tax measured by net income on every
24corporation (including Subchapter S corporations), partnership
25and trust, for each taxable year ending after June 30, 1979.
26Such taxes are imposed on the privilege of earning or receiving

 

 

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1income in or as a resident of this State. The Personal Property
2Tax Replacement Income Tax shall be in addition to the income
3tax imposed by subsections (a) and (b) of this Section and in
4addition to all other occupation or privilege taxes imposed by
5this State or by any municipal corporation or political
6subdivision thereof.
7    (d) Additional Personal Property Tax Replacement Income
8Tax Rates. The personal property tax replacement income tax
9imposed by this subsection and subsection (c) of this Section
10in the case of a corporation, other than a Subchapter S
11corporation and except as adjusted by subsection (d-1), shall
12be an additional amount equal to 2.85% of such taxpayer's net
13income for the taxable year, except that beginning on January
141, 1981, and thereafter, the rate of 2.85% specified in this
15subsection shall be reduced to 2.5%, and in the case of a
16partnership, trust or a Subchapter S corporation shall be an
17additional amount equal to 1.5% of such taxpayer's net income
18for the taxable year.
19    (d-1) Rate reduction for certain foreign insurers. In the
20case of a foreign insurer, as defined by Section 35A-5 of the
21Illinois Insurance Code, whose state or country of domicile
22imposes on insurers domiciled in Illinois a retaliatory tax
23(excluding any insurer whose premiums from reinsurance assumed
24are 50% or more of its total insurance premiums as determined
25under paragraph (2) of subsection (b) of Section 304, except
26that for purposes of this determination premiums from

 

 

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1reinsurance do not include premiums from inter-affiliate
2reinsurance arrangements), beginning with taxable years ending
3on or after December 31, 1999, the sum of the rates of tax
4imposed by subsections (b) and (d) shall be reduced (but not
5increased) to the rate at which the total amount of tax imposed
6under this Act, net of all credits allowed under this Act,
7shall equal (i) the total amount of tax that would be imposed
8on the foreign insurer's net income allocable to Illinois for
9the taxable year by such foreign insurer's state or country of
10domicile if that net income were subject to all income taxes
11and taxes measured by net income imposed by such foreign
12insurer's state or country of domicile, net of all credits
13allowed or (ii) a rate of zero if no such tax is imposed on such
14income by the foreign insurer's state of domicile. For the
15purposes of this subsection (d-1), an inter-affiliate includes
16a 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
17Section 250.
18    (e) Investment credit. A taxpayer shall be allowed a credit
19against the Personal Property Tax Replacement Income Tax for
20investment 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 for use or consumption and not for resale, or
12    services rendered in conjunction with the sale of tangible
13    personal property for use or consumption and not for
14    resale. For purposes of this subsection (e), "tangible
15    personal property" has the same meaning as when that term
16    is used in the Retailers' Occupation Tax Act, and, for
17    taxable years ending after December 31, 2008, does not
18    include the generation, transmission, or distribution of
19    electricity.
20        (4) The basis of qualified property shall be the basis
21    used to compute the depreciation deduction for federal
22    income tax purposes.
23        (5) If the basis of the property for federal income tax
24    depreciation purposes is increased after it has been placed
25    in service in Illinois by the taxpayer, the amount of such
26    increase shall be deemed property placed in service on the

 

 

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1    date of such increase in basis.
2        (6) The term "placed in service" shall have the same
3    meaning as under Section 46 of the Internal Revenue Code.
4        (7) If during any taxable year, any property ceases to
5    be qualified property in the hands of the taxpayer within
6    48 months after being placed in service, or the situs of
7    any qualified property is moved outside Illinois within 48
8    months after being placed in service, the Personal Property
9    Tax Replacement Income Tax for such taxable year shall be
10    increased. Such increase shall be determined by (i)
11    recomputing the investment credit which would have been
12    allowed for the year in which credit for such property was
13    originally allowed by eliminating such property from such
14    computation and, (ii) subtracting such recomputed credit
15    from the amount of credit previously allowed. For the
16    purposes of this paragraph (7), a reduction of the basis of
17    qualified property resulting from a redetermination of the
18    purchase price shall be deemed a disposition of qualified
19    property to the extent of such reduction.
20        (8) Unless the investment credit is extended by law,
21    the basis of qualified property shall not include costs
22    incurred after December 31, 2013, except for costs incurred
23    pursuant to a binding contract entered into on or before
24    December 31, 2013.
25        (9) Each taxable year ending before December 31, 2000,
26    a partnership may elect to pass through to its partners the

 

 

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1    credits to which the partnership is entitled under this
2    subsection (e) for the taxable year. A partner may use the
3    credit allocated to him or her under this paragraph only
4    against the tax imposed in subsections (c) and (d) of this
5    Section. If the partnership makes that election, those
6    credits shall be allocated among the partners in the
7    partnership in accordance with the rules set forth in
8    Section 704(b) of the Internal Revenue Code, and the rules
9    promulgated under that Section, and the allocated amount of
10    the credits shall be allowed to the partners for that
11    taxable year. The partnership shall make this election on
12    its Personal Property Tax Replacement Income Tax return for
13    that taxable year. The election to pass through the credits
14    shall be irrevocable.
15        For taxable years ending on or after December 31, 2000,
16    a partner that qualifies its partnership for a subtraction
17    under subparagraph (I) of paragraph (2) of subsection (d)
18    of Section 203 or a shareholder that qualifies a Subchapter
19    S corporation for a subtraction under subparagraph (S) of
20    paragraph (2) of subsection (b) of Section 203 shall be
21    allowed a credit under this subsection (e) equal to its
22    share of the credit earned under this subsection (e) during
23    the taxable year by the partnership or Subchapter S
24    corporation, determined in accordance with the
25    determination of income and distributive share of income
26    under Sections 702 and 704 and Subchapter S of the Internal

 

 

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1    Revenue Code. This paragraph is exempt from the provisions
2    of Section 250.
3    (f) Investment credit; Enterprise Zone; River Edge
4Redevelopment Zone.
5        (1) A taxpayer shall be allowed a credit against the
6    tax imposed by subsections (a) and (b) of this Section for
7    investment in qualified property which is placed in service
8    in an Enterprise Zone created pursuant to the Illinois
9    Enterprise Zone Act or, for property placed in service on
10    or after July 1, 2006, a River Edge Redevelopment Zone
11    established pursuant to the River Edge Redevelopment Zone
12    Act. For partners, shareholders of Subchapter S
13    corporations, and owners of limited liability companies,
14    if the liability company is treated as a partnership for
15    purposes of federal and State income taxation, there shall
16    be allowed a credit under this subsection (f) to be
17    determined in accordance with the determination of income
18    and distributive share of income under Sections 702 and 704
19    and Subchapter S of the Internal Revenue Code. The credit
20    shall be .5% of the basis for such property. The credit
21    shall be available only in the taxable year in which the
22    property is placed in service in the Enterprise Zone or
23    River Edge Redevelopment Zone and shall not be allowed to
24    the extent that it would reduce a taxpayer's liability for
25    the tax imposed by subsections (a) and (b) of this Section
26    to below zero. For tax years ending on or after December

 

 

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1    31, 1985, the credit shall be allowed for the tax year in
2    which the property is placed in service, or, if the amount
3    of the credit exceeds the tax liability for that year,
4    whether it exceeds the original liability or the liability
5    as later amended, such excess may be carried forward and
6    applied to the tax liability of the 5 taxable years
7    following the excess credit year. The credit shall be
8    applied to the earliest year for which there is a
9    liability. If there is credit from more than one tax year
10    that is available to offset a liability, the credit
11    accruing first in time shall be applied first.
12        (2) The term qualified property means property which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings;
15            (B) is depreciable pursuant to Section 167 of the
16        Internal Revenue Code, except that "3-year property"
17        as defined in Section 168(c)(2)(A) of that Code is not
18        eligible for the credit provided by this subsection
19        (f);
20            (C) is acquired by purchase as defined in Section
21        179(d) of the Internal Revenue Code;
22            (D) is used in the Enterprise Zone or River Edge
23        Redevelopment Zone by the taxpayer; and
24            (E) has not been previously used in Illinois in
25        such a manner and by such a person as would qualify for
26        the credit provided by this subsection (f) or

 

 

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

 

 

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1    qualified property resulting from a redetermination of the
2    purchase price shall be deemed a disposition of qualified
3    property to the extent of such reduction.
4        (7) There shall be allowed an additional credit equal
5    to 0.5% of the basis of qualified property placed in
6    service during the taxable year in a River Edge
7    Redevelopment Zone, provided such property is placed in
8    service on or after July 1, 2006, and the taxpayer's base
9    employment within Illinois has increased by 1% or more over
10    the preceding year as determined by the taxpayer's
11    employment records filed with the Illinois Department of
12    Employment Security. Taxpayers who are new to Illinois
13    shall be deemed to have met the 1% growth in base
14    employment for the first year in which they file employment
15    records with the Illinois Department of Employment
16    Security. If, in any year, the increase in base employment
17    within Illinois over the preceding year is less than 1%,
18    the additional credit shall be limited to that percentage
19    times a fraction, the numerator of which is 0.5% and the
20    denominator of which is 1%, but shall not exceed 0.5%.
21    (g) Jobs Tax Credit; Enterprise Zone, River Edge
22Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
23        (1) A taxpayer conducting a trade or business in an
24    enterprise zone or a High Impact Business designated by the
25    Department of Commerce and Economic Opportunity or for
26    taxable years ending on or after December 31, 2006, in a

 

 

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1    River Edge Redevelopment Zone conducting a trade or
2    business in a federally designated Foreign Trade Zone or
3    Sub-Zone shall be allowed a credit against the tax imposed
4    by subsections (a) and (b) of this Section in the amount of
5    $500 per eligible employee hired to work in the zone during
6    the taxable year.
7        (2) To qualify for the credit:
8            (A) the taxpayer must hire 5 or more eligible
9        employees to work in an enterprise zone, River Edge
10        Redevelopment Zone, or federally designated Foreign
11        Trade Zone or Sub-Zone during the taxable year;
12            (B) the taxpayer's total employment within the
13        enterprise zone, River Edge Redevelopment Zone, or
14        federally designated Foreign Trade Zone or Sub-Zone
15        must increase by 5 or more full-time employees beyond
16        the total employed in that zone at the end of the
17        previous tax year for which a jobs tax credit under
18        this Section was taken, or beyond the total employed by
19        the taxpayer as of December 31, 1985, whichever is
20        later; and
21            (C) the eligible employees must be employed 180
22        consecutive days in order to be deemed hired for
23        purposes of this subsection.
24        (3) An "eligible employee" means an employee who is:
25            (A) Certified by the Department of Commerce and
26        Economic Opportunity as "eligible for services"

 

 

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1        pursuant to regulations promulgated in accordance with
2        Title II of the Job Training Partnership Act, Training
3        Services for the Disadvantaged or Title III of the Job
4        Training Partnership Act, Employment and Training
5        Assistance for Dislocated Workers Program.
6            (B) Hired after the enterprise zone, River Edge
7        Redevelopment Zone, or federally designated Foreign
8        Trade Zone or Sub-Zone was designated or the trade or
9        business was located in that zone, whichever is later.
10            (C) Employed in the enterprise zone, River Edge
11        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
12        An employee is employed in an enterprise zone or
13        federally designated Foreign Trade Zone or Sub-Zone if
14        his services are rendered there or it is the base of
15        operations for the services performed.
16            (D) A full-time employee working 30 or more hours
17        per week.
18        (4) For tax years ending on or after December 31, 1985
19    and prior to December 31, 1988, the credit shall be allowed
20    for the tax year in which the eligible employees are hired.
21    For tax years ending on or after December 31, 1988, the
22    credit shall be allowed for the tax year immediately
23    following the tax year in which the eligible employees are
24    hired. If the amount of the credit exceeds the tax
25    liability for that year, whether it exceeds the original
26    liability or the liability as later amended, such excess

 

 

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1    may be carried forward and applied to the tax liability of
2    the 5 taxable years following the excess credit year. The
3    credit shall be applied to the earliest year for which
4    there is a liability. If there is credit from more than one
5    tax year that is available to offset a liability, earlier
6    credit shall be applied first.
7        (5) The Department of Revenue shall promulgate such
8    rules and regulations as may be deemed necessary to carry
9    out the purposes of this subsection (g).
10        (6) The credit shall be available for eligible
11    employees hired on or after January 1, 1986.
12    (h) Investment credit; High Impact Business.
13        (1) Subject to subsections (b) and (b-5) of Section 5.5
14    of the Illinois Enterprise Zone Act, a taxpayer shall be
15    allowed a credit against the tax imposed by subsections (a)
16    and (b) of this Section for investment in qualified
17    property which is placed in service by a Department of
18    Commerce and Economic Opportunity designated High Impact
19    Business. The credit shall be .5% of the basis for such
20    property. The credit shall not be available (i) until the
21    minimum investments in qualified property set forth in
22    subdivision (a)(3)(A) of Section 5.5 of the Illinois
23    Enterprise Zone Act have been satisfied or (ii) until the
24    time authorized in subsection (b-5) of the Illinois
25    Enterprise Zone Act for entities designated as High Impact
26    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and

 

 

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1    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
2    Act, and shall not be allowed to the extent that it would
3    reduce a taxpayer's liability for the tax imposed by
4    subsections (a) and (b) of this Section to below zero. The
5    credit applicable to such investments shall be taken in the
6    taxable year in which such investments have been completed.
7    The credit for additional investments beyond the minimum
8    investment by a designated high impact business authorized
9    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
10    Enterprise Zone Act shall be available only in the taxable
11    year in which the property is placed in service and shall
12    not be allowed to the extent that it would reduce a
13    taxpayer's liability for the tax imposed by subsections (a)
14    and (b) of this Section to below zero. For tax years ending
15    on or after December 31, 1987, the credit shall be allowed
16    for the tax year in which the property is placed in
17    service, or, 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, the
25    credit accruing first in time shall be applied first.
26        Changes made in this subdivision (h)(1) by Public Act

 

 

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1    88-670 restore changes made by Public Act 85-1182 and
2    reflect existing law.
3        (2) The term qualified property means property which:
4            (A) is tangible, whether new or used, including
5        buildings and structural components of buildings;
6            (B) is depreciable pursuant to Section 167 of the
7        Internal Revenue Code, except that "3-year property"
8        as defined in Section 168(c)(2)(A) of that Code is not
9        eligible for the credit provided by this subsection
10        (h);
11            (C) is acquired by purchase as defined in Section
12        179(d) of the Internal Revenue Code; and
13            (D) is not eligible for the Enterprise Zone
14        Investment Credit provided by subsection (f) of this
15        Section.
16        (3) The basis of qualified property shall be the basis
17    used to compute the depreciation deduction for federal
18    income tax purposes.
19        (4) If the basis of the property for federal income tax
20    depreciation purposes is increased after it has been placed
21    in service in a federally designated Foreign Trade Zone or
22    Sub-Zone located in Illinois by the taxpayer, the amount of
23    such increase shall be deemed property placed in service on
24    the date of such increase in basis.
25        (5) The term "placed in service" shall have the same
26    meaning as under Section 46 of the Internal Revenue Code.

 

 

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1        (6) If during any taxable year ending on or before
2    December 31, 1996, any property ceases to be qualified
3    property in the hands of the taxpayer within 48 months
4    after being placed in service, or the situs of any
5    qualified property is moved outside Illinois within 48
6    months after being placed in service, the tax imposed under
7    subsections (a) and (b) of this Section for such taxable
8    year shall be increased. Such increase shall be determined
9    by (i) recomputing the investment credit which would have
10    been allowed for the year in which credit for such property
11    was originally allowed by eliminating such property from
12    such computation, and (ii) subtracting such recomputed
13    credit from the amount of credit previously allowed. For
14    the purposes of this paragraph (6), a reduction of the
15    basis of qualified property resulting from a
16    redetermination of the purchase price shall be deemed a
17    disposition of qualified property to the extent of such
18    reduction.
19        (7) Beginning with tax years ending after December 31,
20    1996, if a taxpayer qualifies for the credit under this
21    subsection (h) and thereby is granted a tax abatement and
22    the taxpayer relocates its entire facility in violation of
23    the explicit terms and length of the contract under Section
24    18-183 of the Property Tax Code, the tax imposed under
25    subsections (a) and (b) of this Section shall be increased
26    for the taxable year in which the taxpayer relocated its

 

 

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1    facility by an amount equal to the amount of credit
2    received by the taxpayer under this subsection (h).
3    (i) Credit for Personal Property Tax Replacement Income
4Tax. For tax years ending prior to December 31, 2003, a credit
5shall be allowed against the tax imposed by subsections (a) and
6(b) of this Section for the tax imposed by subsections (c) and
7(d) of this Section. This credit shall be computed by
8multiplying the tax imposed by subsections (c) and (d) of this
9Section by a fraction, the numerator of which is base income
10allocable to Illinois and the denominator of which is Illinois
11base income, and further multiplying the product by the tax
12rate imposed by subsections (a) and (b) of this Section.
13    Any credit earned on or after December 31, 1986 under this
14subsection which is unused in the year the credit is computed
15because it exceeds the tax liability imposed by subsections (a)
16and (b) for that year (whether it exceeds the original
17liability or the liability as later amended) may be carried
18forward and applied to the tax liability imposed by subsections
19(a) and (b) of the 5 taxable years following the excess credit
20year, provided that no credit may be carried forward to any
21year ending on or after December 31, 2003. This credit shall be
22applied first to the earliest year for which there is a
23liability. If there is a credit under this subsection from more
24than one tax year that is available to offset a liability the
25earliest credit arising under this subsection shall be applied
26first.

 

 

HB5343- 27 -LRB097 16326 HLH 61481 b

1    If, during any taxable year ending on or after December 31,
21986, the tax imposed by subsections (c) and (d) of this
3Section for which a taxpayer has claimed a credit under this
4subsection (i) is reduced, the amount of credit for such tax
5shall also be reduced. Such reduction shall be determined by
6recomputing the credit to take into account the reduced tax
7imposed by subsections (c) and (d). If any portion of the
8reduced amount of credit has been carried to a different
9taxable year, an amended return shall be filed for such taxable
10year to reduce the amount of credit claimed.
11    (j) Training expense credit. Beginning with tax years
12ending on or after December 31, 1986 and prior to December 31,
132003, a taxpayer shall be allowed a credit against the tax
14imposed by subsections (a) and (b) under this Section for all
15amounts paid or accrued, on behalf of all persons employed by
16the taxpayer in Illinois or Illinois residents employed outside
17of Illinois by a taxpayer, for educational or vocational
18training in semi-technical or technical fields or semi-skilled
19or skilled fields, which were deducted from gross income in the
20computation of taxable income. The credit against the tax
21imposed by subsections (a) and (b) shall be 1.6% of such
22training expenses. For partners, shareholders of subchapter S
23corporations, and owners of limited liability companies, if the
24liability company is treated as a partnership for purposes of
25federal and State income taxation, there shall be allowed a
26credit under this subsection (j) to be determined in accordance

 

 

HB5343- 28 -LRB097 16326 HLH 61481 b

1with the determination of income and distributive share of
2income under Sections 702 and 704 and subchapter S of the
3Internal Revenue Code.
4    Any credit allowed under this subsection which is unused in
5the year the credit is earned may be carried forward to each of
6the 5 taxable years following the year for which the credit is
7first computed until it is used. This credit shall be applied
8first to the earliest year for which there is a liability. If
9there is a credit under this subsection from more than one tax
10year that is available to offset a liability the earliest
11credit arising under this subsection shall be applied first. No
12carryforward credit may be claimed in any tax year ending on or
13after December 31, 2003.
14    (k) Research and development credit.
15    For tax years ending after July 1, 1990 and prior to
16December 31, 2003, and beginning again for tax years ending on
17or after December 31, 2004, and ending prior to January 1,
182011, a taxpayer shall be allowed a credit against the tax
19imposed by subsections (a) and (b) of this Section for
20increasing research activities in this State. The credit
21allowed against the tax imposed by subsections (a) and (b)
22shall be equal to 6 1/2% of the qualifying expenditures for
23increasing research activities in this State. For partners,
24shareholders of subchapter S corporations, and owners of
25limited liability companies, if the liability company is
26treated as a partnership for purposes of federal and State

 

 

HB5343- 29 -LRB097 16326 HLH 61481 b

1income taxation, there shall be allowed a credit under this
2subsection to be determined in accordance with the
3determination of income and distributive share of income under
4Sections 702 and 704 and subchapter S of the Internal Revenue
5Code.
6    For purposes of this subsection, "qualifying expenditures"
7means the qualifying expenditures as defined for the federal
8credit for increasing research activities which would be
9allowable under Section 41 of the Internal Revenue Code and
10which are conducted in this State, "qualifying expenditures for
11increasing research activities in this State" means the excess
12of qualifying expenditures for the taxable year in which
13incurred over qualifying expenditures for the base period,
14"qualifying expenditures for the base period" means the average
15of the qualifying expenditures for each year in the base
16period, and "base period" means the 3 taxable years immediately
17preceding the taxable year for which the determination is being
18made.
19    Any credit in excess of the tax liability for the taxable
20year may be carried forward. A taxpayer may elect to have the
21unused credit shown on its final completed return carried over
22as a credit against the tax liability for the following 5
23taxable years or until it has been fully used, whichever occurs
24first; provided that no credit earned in a tax year ending
25prior to December 31, 2003 may be carried forward to any year
26ending on or after December 31, 2003, and no credit may be

 

 

HB5343- 30 -LRB097 16326 HLH 61481 b

1carried forward to any taxable year ending on or after January
21, 2011.
3    If an unused credit is carried forward to a given year from
42 or more earlier years, that credit arising in the earliest
5year will be applied first against the tax liability for the
6given year. If a tax liability for the given year still
7remains, the credit from the next earliest year will then be
8applied, and so on, until all credits have been used or no tax
9liability for the given year remains. Any remaining unused
10credit or credits then will be carried forward to the next
11following year in which a tax liability is incurred, except
12that no credit can be carried forward to a year which is more
13than 5 years after the year in which the expense for which the
14credit is given was incurred.
15    No inference shall be drawn from this amendatory Act of the
1691st General Assembly in construing this Section for taxable
17years beginning before January 1, 1999.
18    (l) Environmental Remediation Tax Credit.
19        (i) For tax years ending after December 31, 1997 and on
20    or before December 31, 2001, a taxpayer shall be allowed a
21    credit against the tax imposed by subsections (a) and (b)
22    of this Section for certain amounts paid for unreimbursed
23    eligible remediation costs, as specified in this
24    subsection. For purposes of this Section, "unreimbursed
25    eligible remediation costs" means costs approved by the
26    Illinois Environmental Protection Agency ("Agency") under

 

 

HB5343- 31 -LRB097 16326 HLH 61481 b

1    Section 58.14 of the Environmental Protection Act that were
2    paid in performing environmental remediation at a site for
3    which a No Further Remediation Letter was issued by the
4    Agency and recorded under Section 58.10 of the
5    Environmental Protection Act. The credit must be claimed
6    for the taxable year in which Agency approval of the
7    eligible remediation costs is granted. The credit is not
8    available to any taxpayer if the taxpayer or any related
9    party caused or contributed to, in any material respect, a
10    release of regulated substances on, in, or under the site
11    that was identified and addressed by the remedial action
12    pursuant to the Site Remediation Program of the
13    Environmental Protection Act. After the Pollution Control
14    Board rules are adopted pursuant to the Illinois
15    Administrative Procedure Act for the administration and
16    enforcement of Section 58.9 of the Environmental
17    Protection Act, determinations as to credit availability
18    for purposes of this Section shall be made consistent with
19    those rules. For purposes of this Section, "taxpayer"
20    includes a person whose tax attributes the taxpayer has
21    succeeded to under Section 381 of the Internal Revenue Code
22    and "related party" includes the persons disallowed a
23    deduction for losses by paragraphs (b), (c), and (f)(1) of
24    Section 267 of the Internal Revenue Code by virtue of being
25    a related taxpayer, as well as any of its partners. The
26    credit allowed against the tax imposed by subsections (a)

 

 

HB5343- 32 -LRB097 16326 HLH 61481 b

1    and (b) shall be equal to 25% of the unreimbursed eligible
2    remediation costs in excess of $100,000 per site, except
3    that the $100,000 threshold shall not apply to any site
4    contained in an enterprise zone as determined by the
5    Department of Commerce and Community Affairs (now
6    Department of Commerce and Economic Opportunity). The
7    total credit allowed shall not exceed $40,000 per year with
8    a maximum total of $150,000 per site. For partners and
9    shareholders of subchapter S corporations, there shall be
10    allowed a credit under this subsection to be determined in
11    accordance with the determination of income and
12    distributive share of income under Sections 702 and 704 and
13    subchapter S of the Internal Revenue Code.
14        (ii) A credit allowed under this subsection that is
15    unused in the year the credit is earned may be carried
16    forward to each of the 5 taxable years following the year
17    for which the credit is first earned until it is used. The
18    term "unused credit" does not include any amounts of
19    unreimbursed eligible remediation costs in excess of the
20    maximum credit per site authorized under paragraph (i).
21    This credit shall be applied first to the earliest year for
22    which there is a liability. If there is a credit under this
23    subsection from more than one tax year that is available to
24    offset a liability, the earliest credit arising under this
25    subsection shall be applied first. A credit allowed under
26    this subsection may be sold to a buyer as part of a sale of

 

 

HB5343- 33 -LRB097 16326 HLH 61481 b

1    all or part of the remediation site for which the credit
2    was granted. The purchaser of a remediation site and the
3    tax credit shall succeed to the unused credit and remaining
4    carry-forward period of the seller. To perfect the
5    transfer, the assignor shall record the transfer in the
6    chain of title for the site and provide written notice to
7    the Director of the Illinois Department of Revenue of the
8    assignor's intent to sell the remediation site and the
9    amount of the tax credit to be transferred as a portion of
10    the sale. In no event may a credit be transferred to any
11    taxpayer if the taxpayer or a related party would not be
12    eligible under the provisions of subsection (i).
13        (iii) For purposes of this Section, the term "site"
14    shall have the same meaning as under Section 58.2 of the
15    Environmental Protection Act.
16    (m) Education expense credit. Beginning with tax years
17ending after December 31, 1999, a taxpayer who is the custodian
18of one or more qualifying pupils shall be allowed a credit
19against the tax imposed by subsections (a) and (b) of this
20Section for qualified education expenses incurred on behalf of
21the qualifying pupils. The credit shall be equal to 25% of
22qualified education expenses, but in no event may the total
23credit under this subsection claimed by a family that is the
24custodian of qualifying pupils exceed $500. In no event shall a
25credit under this subsection reduce the taxpayer's liability
26under this Act to less than zero. This subsection is exempt

 

 

HB5343- 34 -LRB097 16326 HLH 61481 b

1from the provisions of Section 250 of this Act.
2    For purposes of this subsection:
3    "Qualifying pupils" means individuals who (i) are
4residents of the State of Illinois, (ii) are under the age of
521 at the close of the school year for which a credit is
6sought, and (iii) during the school year for which a credit is
7sought were full-time pupils enrolled in a kindergarten through
8twelfth grade education program at any school, as defined in
9this subsection.
10    "Qualified education expense" means the amount incurred on
11behalf of a qualifying pupil in excess of $250 for tuition,
12book fees, and lab fees at the school in which the pupil is
13enrolled during the regular school year.
14    "School" means any public or nonpublic elementary or
15secondary school in Illinois that is in compliance with Title
16VI of the Civil Rights Act of 1964 and attendance at which
17satisfies the requirements of Section 26-1 of the School Code,
18except that nothing shall be construed to require a child to
19attend any particular public or nonpublic school to qualify for
20the credit under this Section.
21    "Custodian" means, with respect to qualifying pupils, an
22Illinois resident who is a parent, the parents, a legal
23guardian, or the legal guardians of the qualifying pupils.
24    (n) River Edge Redevelopment Zone site remediation tax
25credit.
26        (i) For tax years ending on or after December 31, 2006,

 

 

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1    a taxpayer shall be allowed a credit against the tax
2    imposed by subsections (a) and (b) of this Section for
3    certain amounts paid for unreimbursed eligible remediation
4    costs, as specified in this subsection. For purposes of
5    this Section, "unreimbursed eligible remediation costs"
6    means costs approved by the Illinois Environmental
7    Protection Agency ("Agency") under Section 58.14a of the
8    Environmental Protection Act that were paid in performing
9    environmental remediation at a site within a River Edge
10    Redevelopment Zone for which a No Further Remediation
11    Letter was issued by the Agency and recorded under Section
12    58.10 of the Environmental Protection Act. The credit must
13    be claimed for the taxable year in which Agency approval of
14    the eligible remediation costs is granted. The credit is
15    not available to any taxpayer if the taxpayer or any
16    related party caused or contributed to, in any material
17    respect, a release of regulated substances on, in, or under
18    the site that was identified and addressed by the remedial
19    action pursuant to the Site Remediation Program of the
20    Environmental Protection Act. Determinations as to credit
21    availability for purposes of this Section shall be made
22    consistent with rules adopted by the Pollution Control
23    Board pursuant to the Illinois Administrative Procedure
24    Act for the administration and enforcement of Section 58.9
25    of the Environmental Protection Act. For purposes of this
26    Section, "taxpayer" includes a person whose tax attributes

 

 

HB5343- 36 -LRB097 16326 HLH 61481 b

1    the taxpayer has succeeded to under Section 381 of the
2    Internal Revenue Code and "related party" includes the
3    persons disallowed a deduction for losses by paragraphs
4    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
5    Code by virtue of being a related taxpayer, as well as any
6    of its partners. The credit allowed against the tax imposed
7    by subsections (a) and (b) shall be equal to 25% of the
8    unreimbursed eligible remediation costs in excess of
9    $100,000 per site.
10        (ii) A credit allowed under this subsection that is
11    unused in the year the credit is earned may be carried
12    forward to each of the 5 taxable years following the year
13    for which the credit is first earned until it is used. This
14    credit shall be applied first to the earliest year for
15    which there is a liability. If there is a credit under this
16    subsection from more than one tax year that is available to
17    offset a liability, the earliest credit arising under this
18    subsection shall be applied first. A credit allowed under
19    this subsection may be sold to a buyer as part of a sale of
20    all or part of the remediation site for which the credit
21    was granted. The purchaser of a remediation site and the
22    tax credit shall succeed to the unused credit and remaining
23    carry-forward period of the seller. To perfect the
24    transfer, the assignor shall record the transfer in the
25    chain of title for the site and provide written notice to
26    the Director of the Illinois Department of Revenue of the

 

 

HB5343- 37 -LRB097 16326 HLH 61481 b

1    assignor's intent to sell the remediation site and the
2    amount of the tax credit to be transferred as a portion of
3    the sale. In no event may a credit be transferred to any
4    taxpayer if the taxpayer or a related party would not be
5    eligible under the provisions of subsection (i).
6        (iii) For purposes of this Section, the term "site"
7    shall have the same meaning as under Section 58.2 of the
8    Environmental Protection Act.
9(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1096-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
111-13-11; 97-2, eff. 5-6-11.)
 
12    (Text of Section after amendment by P.A. 97-636)
13    Sec. 201. Tax Imposed.
14    (a) In general. A tax measured by net income is hereby
15imposed on every individual, corporation, trust and estate for
16each taxable year ending after July 31, 1969 on the privilege
17of earning or receiving income in or as a resident of this
18State. Such tax shall be in addition to all other occupation or
19privilege taxes imposed by this State or by any municipal
20corporation or political subdivision thereof.
21    (b) Rates. The tax imposed by subsection (a) of this
22Section shall be determined as follows, except as adjusted by
23subsection (d-1):
24        (1) In the case of an individual, trust or estate, for
25    taxable years ending prior to July 1, 1989, an amount equal

 

 

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1    to 2 1/2% of the taxpayer's net income for the taxable
2    year.
3        (2) In the case of an individual, trust or estate, for
4    taxable years beginning prior to July 1, 1989 and ending
5    after June 30, 1989, an amount equal to the sum of (i) 2
6    1/2% of the taxpayer's net income for the period prior to
7    July 1, 1989, as calculated under Section 202.3, and (ii)
8    3% of the taxpayer's net income for the period after June
9    30, 1989, as calculated under Section 202.3.
10        (3) In the case of an individual, trust or estate, for
11    taxable years beginning after June 30, 1989, and ending
12    prior to January 1, 2011, an amount equal to 3% of the
13    taxpayer's net income for the taxable year.
14        (4) In the case of an individual, trust, or estate, for
15    taxable years beginning prior to January 1, 2011, and
16    ending after December 31, 2010, an amount equal to the sum
17    of (i) 3% of the taxpayer's net income for the period prior
18    to January 1, 2011, as calculated under Section 202.5, and
19    (ii) 5% of the taxpayer's net income for the period after
20    December 31, 2010, as calculated under Section 202.5.
21        (5) In the case of an individual, trust, or estate, for
22    taxable years beginning on or after January 1, 2011, and
23    ending prior to January 1, 2015, an amount equal to 5% of
24    the taxpayer's net income for the taxable year, except
25    that, for shareholders of a subchapter S corporation, the
26    tax is imposed as provided in items (5.5) and (5.6).

 

 

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1        (5.1) In the case of an individual, trust, or estate,
2    for taxable years beginning prior to January 1, 2015, and
3    ending after December 31, 2014, an amount equal to the sum
4    of (i) 5% of the taxpayer's net income for the period prior
5    to January 1, 2015, as calculated under Section 202.5, and
6    (ii) 3.75% of the taxpayer's net income for the period
7    after December 31, 2014, as calculated under Section 202.5,
8    except that, for shareholders of a subchapter S
9    corporation, the tax is imposed as provided in items (5.5)
10    and (5.6).
11        (5.2) In the case of an individual, trust, or estate,
12    for taxable years beginning on or after January 1, 2015,
13    and ending prior to January 1, 2025, an amount equal to
14    3.75% of the taxpayer's net income for the taxable year,
15    except that, for shareholders of a subchapter S
16    corporation, the tax is imposed as provided in items (5.5)
17    and (5.6).
18        (5.3) In the case of an individual, trust, or estate,
19    for taxable years beginning prior to January 1, 2025, and
20    ending after December 31, 2024, an amount equal to the sum
21    of (i) 3.75% of the taxpayer's net income for the period
22    prior to January 1, 2025, as calculated under Section
23    202.5, and (ii) 3.25% of the taxpayer's net income for the
24    period after December 31, 2024, as calculated under Section
25    202.5, except that, for shareholders of a subchapter S
26    corporation, the tax is imposed as provided in items (5.5)

 

 

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1    and (5.6).
2        (5.4) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2025, an
4    amount equal to 3.25% of the taxpayer's net income for the
5    taxable year, except that, for shareholders of a subchapter
6    S corporation, the tax is imposed as provided in items
7    (5.5) and (5.6).
8        (5.5) In the case of a shareholder of a subchapter S
9    corporation, for taxable years beginning prior to January
10    1, 2012, and ending after December 31, 2011, an amount
11    equal to the sum of (i) 3% of the portion of the taxpayer's
12    net income for the taxable year that is (A) attributable to
13    the subchapter S corporation and (B) allocated to the
14    period after December 31, 2011, as calculated under Section
15    202.5, and (ii) 5% of the remainder of the taxpayer's net
16    income for the taxable year.
17        (5.6) In the case of a shareholder of a subchapter S
18    corporation, for taxable years beginning on or after
19    January 1, 2012, an amount equal to the sum of (i) 3% of
20    the portion of the taxpayer's net income for the taxable
21    year that is attributable to the subchapter S corporation
22    and (ii) the portion of the taxpayer's net income for the
23    taxable year that is not attributable to the subchapter S
24    corporation, multiplied by the rate or rates in effect for
25    that taxable year for individuals, trusts, or estates under
26    items (5) through (5.4) of this subsection (b).

 

 

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1        (6) In the case of a corporation, for taxable years
2    ending prior to July 1, 1989, an amount equal to 4% of the
3    taxpayer's net income for the taxable year.
4        (7) In the case of a corporation, for taxable years
5    beginning prior to July 1, 1989 and ending after June 30,
6    1989, an amount equal to the sum of (i) 4% of the
7    taxpayer's net income for the period prior to July 1, 1989,
8    as calculated under Section 202.3, and (ii) 4.8% of the
9    taxpayer's net income for the period after June 30, 1989,
10    as calculated under Section 202.3.
11        (8) In the case of a corporation, for taxable years
12    beginning after June 30, 1989, and ending prior to January
13    1, 2011, an amount equal to 4.8% of the taxpayer's net
14    income for the taxable year.
15        (9) In the case of a corporation, for taxable years
16    beginning prior to January 1, 2011, and ending after
17    December 31, 2010, an amount equal to the sum of (i) 4.8%
18    of the taxpayer's net income for the period prior to
19    January 1, 2011, as calculated under Section 202.5, and
20    (ii) 7% of the taxpayer's net income for the period after
21    December 31, 2010, as calculated under Section 202.5.
22        (10) In the case of a corporation, for taxable years
23    beginning on or after January 1, 2011, and ending prior to
24    January 1, 2015, an amount equal to 7% of the taxpayer's
25    net income for the taxable year.
26        (11) In the case of a corporation, for taxable years

 

 

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1    beginning prior to January 1, 2015, and ending after
2    December 31, 2014, an amount equal to the sum of (i) 7% of
3    the taxpayer's net income for the period prior to January
4    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
5    of the taxpayer's net income for the period after December
6    31, 2014, as calculated under Section 202.5.
7        (12) In the case of a corporation, for taxable years
8    beginning on or after January 1, 2015, and ending prior to
9    January 1, 2025, an amount equal to 5.25% of the taxpayer's
10    net income for the taxable year.
11        (13) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2025, and ending after
13    December 31, 2024, an amount equal to the sum of (i) 5.25%
14    of the taxpayer's net income for the period prior to
15    January 1, 2025, as calculated under Section 202.5, and
16    (ii) 4.8% of the taxpayer's net income for the period after
17    December 31, 2024, as calculated under Section 202.5.
18        (14) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2025, an amount equal to
20    4.8% of the taxpayer's net income for the taxable year.
21    The rates under this subsection (b) are subject to the
22provisions of Section 201.5.
23    (c) Personal Property Tax Replacement Income Tax.
24Beginning on July 1, 1979 and thereafter, in addition to such
25income tax, there is also hereby imposed the Personal Property
26Tax Replacement Income Tax measured by net income on every

 

 

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1corporation (including Subchapter S corporations), partnership
2and trust, for each taxable year ending after June 30, 1979.
3Such taxes are imposed on the privilege of earning or receiving
4income in or as a resident of this State. The Personal Property
5Tax Replacement Income Tax shall be in addition to the income
6tax imposed by subsections (a) and (b) of this Section and in
7addition to all other occupation or privilege taxes imposed by
8this State or by any municipal corporation or political
9subdivision thereof.
10    (d) Additional Personal Property Tax Replacement Income
11Tax Rates. The personal property tax replacement income tax
12imposed by this subsection and subsection (c) of this Section
13in the case of a corporation, other than a Subchapter S
14corporation and except as adjusted by subsection (d-1), shall
15be an additional amount equal to 2.85% of such taxpayer's net
16income for the taxable year, except that beginning on January
171, 1981, and thereafter, the rate of 2.85% specified in this
18subsection shall be reduced to 2.5%, and in the case of a
19partnership, trust or a Subchapter S corporation shall be an
20additional amount equal to 1.5% of such taxpayer's net income
21for the taxable year.
22    (d-1) Rate reduction for certain foreign insurers. In the
23case of a foreign insurer, as defined by Section 35A-5 of the
24Illinois Insurance Code, whose state or country of domicile
25imposes on insurers domiciled in Illinois a retaliatory tax
26(excluding any insurer whose premiums from reinsurance assumed

 

 

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1are 50% or more of its total insurance premiums as determined
2under paragraph (2) of subsection (b) of Section 304, except
3that for purposes of this determination premiums from
4reinsurance do not include premiums from inter-affiliate
5reinsurance arrangements), beginning with taxable years ending
6on or after December 31, 1999, the sum of the rates of tax
7imposed by subsections (b) and (d) shall be reduced (but not
8increased) to the rate at which the total amount of tax imposed
9under this Act, net of all credits allowed under this Act,
10shall equal (i) the total amount of tax that would be imposed
11on the foreign insurer's net income allocable to Illinois for
12the taxable year by such foreign insurer's state or country of
13domicile if that net income were subject to all income taxes
14and taxes measured by net income imposed by such foreign
15insurer's state or country of domicile, net of all credits
16allowed or (ii) a rate of zero if no such tax is imposed on such
17income by the foreign insurer's state of domicile. For the
18purposes of this subsection (d-1), an inter-affiliate includes
19a mutual insurer under common management.
20        (1) For the purposes of subsection (d-1), in no event
21    shall the sum of the rates of tax imposed by subsections
22    (b) and (d) be reduced below the rate at which the sum of:
23            (A) the total amount of tax imposed on such foreign
24        insurer under this Act for a taxable year, net of all
25        credits allowed under this Act, plus
26            (B) the privilege tax imposed by Section 409 of the

 

 

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

 

 

HB5343- 46 -LRB097 16326 HLH 61481 b

1    service on or after July 1, 1984. There shall be allowed an
2    additional credit equal to .5% of the basis of qualified
3    property placed in service during the taxable year,
4    provided such property is placed in service on or after
5    July 1, 1986, and the taxpayer's base employment within
6    Illinois has increased by 1% or more over the preceding
7    year as determined by the taxpayer's employment records
8    filed with the Illinois Department of Employment Security.
9    Taxpayers who are new to Illinois shall be deemed to have
10    met the 1% growth in base employment for the first year in
11    which they file employment records with the Illinois
12    Department of Employment Security. The provisions added to
13    this Section by Public Act 85-1200 (and restored by Public
14    Act 87-895) shall be construed as declaratory of existing
15    law and not as a new enactment. If, in any year, the
16    increase in base employment within Illinois over the
17    preceding year is less than 1%, the additional credit shall
18    be limited to that percentage times a fraction, the
19    numerator of which is .5% and the denominator of which is
20    1%, but shall not exceed .5%. The investment credit shall
21    not be allowed to the extent that it would reduce a
22    taxpayer's liability in any tax year below zero, nor may
23    any credit for qualified property be allowed for any year
24    other than the year in which the property was placed in
25    service in Illinois. For tax years ending on or after
26    December 31, 1987, and on or before December 31, 1988, the

 

 

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

 

 

HB5343- 48 -LRB097 16326 HLH 61481 b

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

 

 

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1        such a manner and by such a person as would qualify for
2        the credit provided by this subsection (e) or
3        subsection (f).
4        (3) For purposes of this subsection (e),
5    "manufacturing" means the material staging and production
6    of tangible personal property by procedures commonly
7    regarded as manufacturing, processing, fabrication, or
8    assembling which changes some existing material into new
9    shapes, new qualities, or new combinations. For purposes of
10    this subsection (e) the term "mining" shall have the same
11    meaning as the term "mining" in Section 613(c) of the
12    Internal Revenue Code. For purposes of this subsection (e),
13    the term "retailing" means the sale of tangible personal
14    property for use or consumption and not for resale, or
15    services rendered in conjunction with the sale of tangible
16    personal property for use or consumption and not for
17    resale. For purposes of this subsection (e), "tangible
18    personal property" has the same meaning as when that term
19    is used in the Retailers' Occupation Tax Act, and, for
20    taxable years ending after December 31, 2008, does not
21    include the generation, transmission, or distribution of
22    electricity.
23        (4) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (5) If the basis of the property for federal income tax

 

 

HB5343- 50 -LRB097 16326 HLH 61481 b

1    depreciation purposes is increased after it has been placed
2    in service in Illinois by the taxpayer, the amount of such
3    increase shall be deemed property placed in service on the
4    date of such increase in basis.
5        (6) The term "placed in service" shall have the same
6    meaning as under Section 46 of the Internal Revenue Code.
7        (7) If during any taxable year, any property ceases to
8    be qualified property in the hands of the taxpayer within
9    48 months after being placed in service, or the situs of
10    any qualified property is moved outside Illinois within 48
11    months after being placed in service, the Personal Property
12    Tax Replacement Income Tax 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 (7), 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        (8) Unless the investment credit is extended by law,
24    the basis of qualified property shall not include costs
25    incurred after December 31, 2018, except for costs incurred
26    pursuant to a binding contract entered into on or before

 

 

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1    December 31, 2018.
2        (9) Each taxable year ending before December 31, 2000,
3    a partnership may elect to pass through to its partners the
4    credits to which the partnership is entitled under this
5    subsection (e) for the taxable year. A partner may use the
6    credit allocated to him or her under this paragraph only
7    against the tax imposed in subsections (c) and (d) of this
8    Section. If the partnership makes that election, those
9    credits shall be allocated among the partners in the
10    partnership in accordance with the rules set forth in
11    Section 704(b) of the Internal Revenue Code, and the rules
12    promulgated under that Section, and the allocated amount of
13    the credits shall be allowed to the partners for that
14    taxable year. The partnership shall make this election on
15    its Personal Property Tax Replacement Income Tax return for
16    that taxable year. The election to pass through the credits
17    shall be irrevocable.
18        For taxable years ending on or after December 31, 2000,
19    a partner that qualifies its partnership for a subtraction
20    under subparagraph (I) of paragraph (2) of subsection (d)
21    of Section 203 or a shareholder that qualifies a Subchapter
22    S corporation for a subtraction under subparagraph (S) of
23    paragraph (2) of subsection (b) of Section 203 shall be
24    allowed a credit under this subsection (e) equal to its
25    share of the credit earned under this subsection (e) during
26    the taxable year by the partnership or Subchapter S

 

 

HB5343- 52 -LRB097 16326 HLH 61481 b

1    corporation, determined in accordance with the
2    determination of income and distributive share of income
3    under Sections 702 and 704 and Subchapter S of the Internal
4    Revenue Code. This paragraph is exempt from the provisions
5    of Section 250.
6    (f) Investment credit; Enterprise Zone; River Edge
7Redevelopment Zone.
8        (1) A taxpayer shall be allowed a credit against the
9    tax imposed by subsections (a) and (b) of this Section for
10    investment in qualified property which is placed in service
11    in an Enterprise Zone created pursuant to the Illinois
12    Enterprise Zone Act or, for property placed in service on
13    or after July 1, 2006, a River Edge Redevelopment Zone
14    established pursuant to the River Edge Redevelopment Zone
15    Act. For partners, shareholders of Subchapter S
16    corporations, and owners of limited liability companies,
17    if the liability company is treated as a partnership for
18    purposes of federal and State income taxation, there shall
19    be allowed a credit under this subsection (f) to be
20    determined in accordance with the determination of income
21    and distributive share of income under Sections 702 and 704
22    and Subchapter S of the Internal Revenue Code. The credit
23    shall be .5% of the basis for such property. The credit
24    shall be available only in the taxable year in which the
25    property is placed in service in the Enterprise Zone or
26    River Edge Redevelopment Zone and shall not be allowed to

 

 

HB5343- 53 -LRB097 16326 HLH 61481 b

1    the extent that it would reduce a taxpayer's liability for
2    the tax imposed by subsections (a) and (b) of this Section
3    to below zero. For tax years ending on or after December
4    31, 1985, the credit shall be allowed for the tax year in
5    which the property is placed in service, or, if the amount
6    of the credit exceeds the tax liability for that year,
7    whether it exceeds the original liability or the liability
8    as later amended, such excess may be carried forward and
9    applied to the tax liability of the 5 taxable years
10    following the excess credit year. The credit shall be
11    applied to the earliest year for which there is a
12    liability. If there is credit from more than one tax year
13    that is available to offset a liability, the credit
14    accruing first in time shall be applied first.
15        (2) The term qualified property means property which:
16            (A) is tangible, whether new or used, including
17        buildings and structural components of buildings;
18            (B) is depreciable pursuant to Section 167 of the
19        Internal Revenue Code, except that "3-year property"
20        as defined in Section 168(c)(2)(A) of that Code is not
21        eligible for the credit provided by this subsection
22        (f);
23            (C) is acquired by purchase as defined in Section
24        179(d) of the Internal Revenue Code;
25            (D) is used in the Enterprise Zone or River Edge
26        Redevelopment Zone by the taxpayer; and

 

 

HB5343- 54 -LRB097 16326 HLH 61481 b

1            (E) has not been previously used in Illinois in
2        such a manner and by such a person as would qualify for
3        the credit provided by this subsection (f) or
4        subsection (e).
5        (3) The basis of qualified property shall be the basis
6    used to compute the depreciation deduction for federal
7    income tax purposes.
8        (4) If the basis of the property for federal income tax
9    depreciation purposes is increased after it has been placed
10    in service in the Enterprise Zone or River Edge
11    Redevelopment Zone by the taxpayer, the amount of such
12    increase shall be deemed property placed in service on the
13    date of such increase in basis.
14        (5) The term "placed in service" shall have the same
15    meaning as under Section 46 of the Internal Revenue Code.
16        (6) If during any taxable year, any property ceases to
17    be qualified property in the hands of the taxpayer within
18    48 months after being placed in service, or the situs of
19    any qualified property is moved outside the Enterprise Zone
20    or River Edge Redevelopment Zone within 48 months after
21    being placed in service, the tax imposed under subsections
22    (a) and (b) of this Section for such taxable year shall be
23    increased. Such increase shall be determined by (i)
24    recomputing the investment credit which would have been
25    allowed for the year in which credit for such property was
26    originally allowed by eliminating such property from such

 

 

HB5343- 55 -LRB097 16326 HLH 61481 b

1    computation, and (ii) subtracting such recomputed credit
2    from the amount of credit previously allowed. For the
3    purposes of this paragraph (6), a reduction of the basis of
4    qualified property resulting from a redetermination of the
5    purchase price shall be deemed a disposition of qualified
6    property to the extent of such reduction.
7        (7) There shall be allowed an additional credit equal
8    to 0.5% of the basis of qualified property placed in
9    service during the taxable year in a River Edge
10    Redevelopment Zone, provided such property is placed in
11    service on or after July 1, 2006, and the taxpayer's base
12    employment within Illinois has increased by 1% or more over
13    the preceding year as determined by the taxpayer's
14    employment records filed with the Illinois Department of
15    Employment Security. Taxpayers who are new to Illinois
16    shall be deemed to have met the 1% growth in base
17    employment for the first year in which they file employment
18    records with the Illinois Department of Employment
19    Security. If, in any year, the increase in base employment
20    within Illinois over the preceding year is less than 1%,
21    the additional credit shall be limited to that percentage
22    times a fraction, the numerator of which is 0.5% and the
23    denominator of which is 1%, but shall not exceed 0.5%.
24    (g) Jobs Tax Credit; Enterprise Zone, River Edge
25Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
26        (1) A taxpayer conducting a trade or business in an

 

 

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1    enterprise zone or a High Impact Business designated by the
2    Department of Commerce and Economic Opportunity or for
3    taxable years ending on or after December 31, 2006, in a
4    River Edge Redevelopment Zone conducting a trade or
5    business in a federally designated Foreign Trade Zone or
6    Sub-Zone shall be allowed a credit against the tax imposed
7    by subsections (a) and (b) of this Section in the amount of
8    $500 per eligible employee hired to work in the zone during
9    the taxable year.
10        (2) To qualify for the credit:
11            (A) the taxpayer must hire 5 or more eligible
12        employees to work in an enterprise zone, River Edge
13        Redevelopment Zone, or federally designated Foreign
14        Trade Zone or Sub-Zone during the taxable year;
15            (B) the taxpayer's total employment within the
16        enterprise zone, River Edge Redevelopment Zone, or
17        federally designated Foreign Trade Zone or Sub-Zone
18        must increase by 5 or more full-time employees beyond
19        the total employed in that zone at the end of the
20        previous tax year for which a jobs tax credit under
21        this Section was taken, or beyond the total employed by
22        the taxpayer as of December 31, 1985, whichever is
23        later; and
24            (C) the eligible employees must be employed 180
25        consecutive days in order to be deemed hired for
26        purposes of this subsection.

 

 

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1        (3) An "eligible employee" means an employee who is:
2            (A) Certified by the Department of Commerce and
3        Economic Opportunity as "eligible for services"
4        pursuant to regulations promulgated in accordance with
5        Title II of the Job Training Partnership Act, Training
6        Services for the Disadvantaged or Title III of the Job
7        Training Partnership Act, Employment and Training
8        Assistance for Dislocated Workers Program.
9            (B) Hired after the enterprise zone, River Edge
10        Redevelopment Zone, or federally designated Foreign
11        Trade Zone or Sub-Zone was designated or the trade or
12        business was located in that zone, whichever is later.
13            (C) Employed in the enterprise zone, River Edge
14        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
15        An employee is employed in an enterprise zone or
16        federally designated Foreign Trade Zone or Sub-Zone if
17        his services are rendered there or it is the base of
18        operations for the services performed.
19            (D) A full-time employee working 30 or more hours
20        per week.
21        (4) For tax years ending on or after December 31, 1985
22    and prior to December 31, 1988, the credit shall be allowed
23    for the tax year in which the eligible employees are hired.
24    For tax years ending on or after December 31, 1988, the
25    credit shall be allowed for the tax year immediately
26    following the tax year in which the eligible employees are

 

 

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1    hired. If the amount of the credit exceeds the tax
2    liability for that year, whether it exceeds the original
3    liability or the liability as later amended, such excess
4    may be carried forward and applied to the tax liability of
5    the 5 taxable years following the excess credit year. The
6    credit shall be applied to the earliest year for which
7    there is a liability. If there is credit from more than one
8    tax year that is available to offset a liability, earlier
9    credit shall be applied first.
10        (5) The Department of Revenue shall promulgate such
11    rules and regulations as may be deemed necessary to carry
12    out the purposes of this subsection (g).
13        (6) The credit shall be available for eligible
14    employees hired on or after January 1, 1986.
15    (h) Investment credit; High Impact Business.
16        (1) Subject to subsections (b) and (b-5) of Section 5.5
17    of the Illinois Enterprise Zone Act, a taxpayer shall be
18    allowed a credit against the tax imposed by subsections (a)
19    and (b) of this Section for investment in qualified
20    property which is placed in service by a Department of
21    Commerce and Economic Opportunity designated High Impact
22    Business. The credit shall be .5% of the basis for such
23    property. The credit shall not be available (i) until the
24    minimum investments in qualified property set forth in
25    subdivision (a)(3)(A) of Section 5.5 of the Illinois
26    Enterprise Zone Act have been satisfied or (ii) until the

 

 

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1    time authorized in subsection (b-5) of the Illinois
2    Enterprise Zone Act for entities designated as High Impact
3    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
4    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
5    Act, and shall not be allowed to the extent that it would
6    reduce a taxpayer's liability for the tax imposed by
7    subsections (a) and (b) of this Section to below zero. The
8    credit applicable to such investments shall be taken in the
9    taxable year in which such investments have been completed.
10    The credit for additional investments beyond the minimum
11    investment by a designated high impact business authorized
12    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
13    Enterprise Zone Act shall be available only in the taxable
14    year in which the property is placed in service and shall
15    not be allowed to the extent that it would reduce a
16    taxpayer's liability for the tax imposed by subsections (a)
17    and (b) of this Section to below zero. For tax years ending
18    on or after December 31, 1987, the credit shall be allowed
19    for the tax year in which the property is placed in
20    service, or, if the amount of the credit exceeds the tax
21    liability for that year, whether it exceeds the original
22    liability or the liability as later amended, such excess
23    may be carried forward and applied to the tax liability of
24    the 5 taxable years following the excess credit year. The
25    credit shall be applied to the earliest year for which
26    there is a liability. If there is credit from more than one

 

 

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1    tax year that is available to offset a liability, the
2    credit accruing first in time shall be applied first.
3        Changes made in this subdivision (h)(1) by Public Act
4    88-670 restore changes made by Public Act 85-1182 and
5    reflect existing law.
6        (2) The term qualified property means property which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (h);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code; and
16            (D) is not eligible for the Enterprise Zone
17        Investment Credit provided by subsection (f) of this
18        Section.
19        (3) The basis of qualified property shall be the basis
20    used to compute the depreciation deduction for federal
21    income tax purposes.
22        (4) If the basis of the property for federal income tax
23    depreciation purposes is increased after it has been placed
24    in service in a federally designated Foreign Trade Zone or
25    Sub-Zone located in Illinois by the taxpayer, the amount of
26    such increase shall be deemed property placed in service on

 

 

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1    the date of such increase in basis.
2        (5) The term "placed in service" shall have the same
3    meaning as under Section 46 of the Internal Revenue Code.
4        (6) If during any taxable year ending on or before
5    December 31, 1996, any property ceases to be qualified
6    property in the hands of the taxpayer within 48 months
7    after being placed in service, or the situs of any
8    qualified property is moved outside Illinois within 48
9    months after being placed in service, the tax imposed under
10    subsections (a) and (b) of this Section for such taxable
11    year shall be increased. Such increase shall be determined
12    by (i) recomputing the investment credit which would have
13    been allowed for the year in which credit for such property
14    was originally allowed by eliminating such property from
15    such computation, and (ii) subtracting such recomputed
16    credit from the amount of credit previously allowed. For
17    the purposes of this paragraph (6), a reduction of the
18    basis of qualified property resulting from a
19    redetermination of the purchase price shall be deemed a
20    disposition of qualified property to the extent of such
21    reduction.
22        (7) Beginning with tax years ending after December 31,
23    1996, if a taxpayer qualifies for the credit under this
24    subsection (h) and thereby is granted a tax abatement and
25    the taxpayer relocates its entire facility in violation of
26    the explicit terms and length of the contract under Section

 

 

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1    18-183 of the Property Tax Code, the tax imposed under
2    subsections (a) and (b) of this Section shall be increased
3    for the taxable year in which the taxpayer relocated its
4    facility by an amount equal to the amount of credit
5    received by the taxpayer under this subsection (h).
6    (i) Credit for Personal Property Tax Replacement Income
7Tax. For tax years ending prior to December 31, 2003, a credit
8shall be allowed against the tax imposed by subsections (a) and
9(b) of this Section for the tax imposed by subsections (c) and
10(d) of this Section. This credit shall be computed by
11multiplying the tax imposed by subsections (c) and (d) of this
12Section by a fraction, the numerator of which is base income
13allocable to Illinois and the denominator of which is Illinois
14base income, and further multiplying the product by the tax
15rate imposed by subsections (a) and (b) of this Section.
16    Any credit earned on or after December 31, 1986 under this
17subsection which is unused in the year the credit is computed
18because it exceeds the tax liability imposed by subsections (a)
19and (b) for that year (whether it exceeds the original
20liability or the liability as later amended) may be carried
21forward and applied to the tax liability imposed by subsections
22(a) and (b) of the 5 taxable years following the excess credit
23year, provided that no credit may be carried forward to any
24year ending on or after December 31, 2003. This credit shall be
25applied first to the earliest year for which there is a
26liability. If there is a credit under this subsection from more

 

 

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1than one tax year that is available to offset a liability the
2earliest credit arising under this subsection shall be applied
3first.
4    If, during any taxable year ending on or after December 31,
51986, the tax imposed by subsections (c) and (d) of this
6Section for which a taxpayer has claimed a credit under this
7subsection (i) is reduced, the amount of credit for such tax
8shall also be reduced. Such reduction shall be determined by
9recomputing the credit to take into account the reduced tax
10imposed by subsections (c) and (d). If any portion of the
11reduced amount of credit has been carried to a different
12taxable year, an amended return shall be filed for such taxable
13year to reduce the amount of credit claimed.
14    (j) Training expense credit. Beginning with tax years
15ending on or after December 31, 1986 and prior to December 31,
162003, a taxpayer shall be allowed a credit against the tax
17imposed by subsections (a) and (b) under this Section for all
18amounts paid or accrued, on behalf of all persons employed by
19the taxpayer in Illinois or Illinois residents employed outside
20of Illinois by a taxpayer, for educational or vocational
21training in semi-technical or technical fields or semi-skilled
22or skilled fields, which were deducted from gross income in the
23computation of taxable income. The credit against the tax
24imposed by subsections (a) and (b) shall be 1.6% of such
25training expenses. For partners, shareholders of subchapter S
26corporations, and owners of limited liability companies, if the

 

 

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1liability company is treated as a partnership for purposes of
2federal and State income taxation, there shall be allowed a
3credit under this subsection (j) to be determined in accordance
4with the determination of income and distributive share of
5income under Sections 702 and 704 and subchapter S of the
6Internal Revenue Code.
7    Any credit allowed under this subsection which is unused in
8the year the credit is earned may be carried forward to each of
9the 5 taxable years following the year for which the credit is
10first computed until it is used. This credit shall be applied
11first to the earliest year for which there is a liability. If
12there is a credit under this subsection from more than one tax
13year that is available to offset a liability the earliest
14credit arising under this subsection shall be applied first. No
15carryforward credit may be claimed in any tax year ending on or
16after December 31, 2003.
17    (k) Research and development credit.
18    For tax years ending after July 1, 1990 and prior to
19December 31, 2003, and beginning again for tax years ending on
20or after December 31, 2004, and ending prior to January 1,
212016, a taxpayer shall be allowed a credit against the tax
22imposed by subsections (a) and (b) of this Section for
23increasing research activities in this State. The credit
24allowed against the tax imposed by subsections (a) and (b)
25shall be equal to 6 1/2% of the qualifying expenditures for
26increasing research activities in this State. For partners,

 

 

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1shareholders of subchapter S corporations, and owners of
2limited liability companies, if the liability company is
3treated as a partnership for purposes of federal and State
4income taxation, there shall be allowed a credit under this
5subsection to be determined in accordance with the
6determination of income and distributive share of income under
7Sections 702 and 704 and subchapter S of the Internal Revenue
8Code.
9    For purposes of this subsection, "qualifying expenditures"
10means the qualifying expenditures as defined for the federal
11credit for increasing research activities which would be
12allowable under Section 41 of the Internal Revenue Code and
13which are conducted in this State, "qualifying expenditures for
14increasing research activities in this State" means the excess
15of qualifying expenditures for the taxable year in which
16incurred over qualifying expenditures for the base period,
17"qualifying expenditures for the base period" means the average
18of the qualifying expenditures for each year in the base
19period, and "base period" means the 3 taxable years immediately
20preceding the taxable year for which the determination is being
21made.
22    Any credit in excess of the tax liability for the taxable
23year may be carried forward. A taxpayer may elect to have the
24unused credit shown on its final completed return carried over
25as a credit against the tax liability for the following 5
26taxable years or until it has been fully used, whichever occurs

 

 

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1first; provided that no credit earned in a tax year ending
2prior to December 31, 2003 may be carried forward to any year
3ending on or after December 31, 2003.
4    If an unused credit is carried forward to a given year from
52 or more earlier years, that credit arising in the earliest
6year will be applied first against the tax liability for the
7given year. If a tax liability for the given year still
8remains, the credit from the next earliest year will then be
9applied, and so on, until all credits have been used or no tax
10liability for the given year remains. Any remaining unused
11credit or credits then will be carried forward to the next
12following year in which a tax liability is incurred, except
13that no credit can be carried forward to a year which is more
14than 5 years after the year in which the expense for which the
15credit is given was incurred.
16    No inference shall be drawn from this amendatory Act of the
1791st General Assembly in construing this Section for taxable
18years beginning before January 1, 1999.
19    (l) Environmental Remediation Tax Credit.
20        (i) For tax years ending after December 31, 1997 and on
21    or before December 31, 2001, a taxpayer shall be allowed a
22    credit against the tax imposed by subsections (a) and (b)
23    of this Section for certain amounts paid for unreimbursed
24    eligible remediation costs, as specified in this
25    subsection. For purposes of this Section, "unreimbursed
26    eligible remediation costs" means costs approved by the

 

 

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1    Illinois Environmental Protection Agency ("Agency") under
2    Section 58.14 of the Environmental Protection Act that were
3    paid in performing environmental remediation at a site for
4    which a No Further Remediation Letter was issued by the
5    Agency and recorded under Section 58.10 of the
6    Environmental Protection Act. The credit must be claimed
7    for the taxable year in which Agency approval of the
8    eligible remediation costs is granted. The credit is not
9    available to any taxpayer if the taxpayer or any related
10    party caused or contributed to, in any material respect, a
11    release of regulated substances on, in, or under the site
12    that was identified and addressed by the remedial action
13    pursuant to the Site Remediation Program of the
14    Environmental Protection Act. After the Pollution Control
15    Board rules are adopted pursuant to the Illinois
16    Administrative Procedure Act for the administration and
17    enforcement of Section 58.9 of the Environmental
18    Protection Act, determinations as to credit availability
19    for purposes of this Section shall be made consistent with
20    those rules. For purposes of this Section, "taxpayer"
21    includes a person whose tax attributes the taxpayer has
22    succeeded to under Section 381 of the Internal Revenue Code
23    and "related party" includes the persons disallowed a
24    deduction for losses by paragraphs (b), (c), and (f)(1) of
25    Section 267 of the Internal Revenue Code by virtue of being
26    a related taxpayer, as well as any of its partners. The

 

 

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1    credit allowed against the tax imposed by subsections (a)
2    and (b) shall be equal to 25% of the unreimbursed eligible
3    remediation costs in excess of $100,000 per site, except
4    that the $100,000 threshold shall not apply to any site
5    contained in an enterprise zone as determined by the
6    Department of Commerce and Community Affairs (now
7    Department of Commerce and Economic Opportunity). The
8    total credit allowed shall not exceed $40,000 per year with
9    a maximum total of $150,000 per site. For partners and
10    shareholders of subchapter S corporations, there shall be
11    allowed a credit under this subsection to be determined in
12    accordance with the determination of income and
13    distributive share of income under Sections 702 and 704 and
14    subchapter S of the Internal Revenue Code.
15        (ii) A credit allowed under this subsection that is
16    unused in the year the credit is earned may be carried
17    forward to each of the 5 taxable years following the year
18    for which the credit is first earned until it is used. The
19    term "unused credit" does not include any amounts of
20    unreimbursed eligible remediation costs in excess of the
21    maximum credit per site authorized under paragraph (i).
22    This credit shall be applied first to the earliest year for
23    which there is a liability. If there is a credit under this
24    subsection from more than one tax year that is available to
25    offset a liability, the earliest credit arising under this
26    subsection shall be applied first. A credit allowed under

 

 

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1    this subsection may be sold to a buyer as part of a sale of
2    all or part of the remediation site for which the credit
3    was granted. The purchaser of a remediation site and the
4    tax credit shall succeed to the unused credit and remaining
5    carry-forward period of the seller. To perfect the
6    transfer, the assignor shall record the transfer in the
7    chain of title for the site and provide written notice to
8    the Director of the Illinois Department of Revenue of the
9    assignor's intent to sell the remediation site and the
10    amount of the tax credit to be transferred as a portion of
11    the sale. In no event may a credit be transferred to any
12    taxpayer if the taxpayer or a related party would not be
13    eligible under the provisions of subsection (i).
14        (iii) For purposes of this Section, the term "site"
15    shall have the same meaning as under Section 58.2 of the
16    Environmental Protection Act.
17    (m) Education expense credit. Beginning with tax years
18ending after December 31, 1999, a taxpayer who is the custodian
19of one or more qualifying pupils shall be allowed a credit
20against the tax imposed by subsections (a) and (b) of this
21Section for qualified education expenses incurred on behalf of
22the qualifying pupils. The credit shall be equal to 25% of
23qualified education expenses, but in no event may the total
24credit under this subsection claimed by a family that is the
25custodian of qualifying pupils exceed $500. In no event shall a
26credit under this subsection reduce the taxpayer's liability

 

 

HB5343- 70 -LRB097 16326 HLH 61481 b

1under this Act to less than zero. This subsection is exempt
2from the provisions of Section 250 of this Act.
3    For purposes of this subsection:
4    "Qualifying pupils" means individuals who (i) are
5residents of the State of Illinois, (ii) are under the age of
621 at the close of the school year for which a credit is
7sought, and (iii) during the school year for which a credit is
8sought were full-time pupils enrolled in a kindergarten through
9twelfth grade education program at any school, as defined in
10this subsection.
11    "Qualified education expense" means the amount incurred on
12behalf of a qualifying pupil in excess of $250 for tuition,
13book fees, and lab fees at the school in which the pupil is
14enrolled during the regular school year.
15    "School" means any public or nonpublic elementary or
16secondary school in Illinois that is in compliance with Title
17VI of the Civil Rights Act of 1964 and attendance at which
18satisfies the requirements of Section 26-1 of the School Code,
19except that nothing shall be construed to require a child to
20attend any particular public or nonpublic school to qualify for
21the credit under this Section.
22    "Custodian" means, with respect to qualifying pupils, an
23Illinois resident who is a parent, the parents, a legal
24guardian, or the legal guardians of the qualifying pupils.
25    (n) River Edge Redevelopment Zone site remediation tax
26credit.

 

 

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1        (i) For tax years ending on or after December 31, 2006,
2    a taxpayer shall be allowed a credit against the tax
3    imposed by subsections (a) and (b) of this Section for
4    certain amounts paid for unreimbursed eligible remediation
5    costs, as specified in this subsection. For purposes of
6    this Section, "unreimbursed eligible remediation costs"
7    means costs approved by the Illinois Environmental
8    Protection Agency ("Agency") under Section 58.14a of the
9    Environmental Protection Act that were paid in performing
10    environmental remediation at a site within a River Edge
11    Redevelopment Zone for which a No Further Remediation
12    Letter was issued by the Agency and recorded under Section
13    58.10 of the Environmental Protection Act. The credit must
14    be claimed for the taxable year in which Agency approval of
15    the eligible remediation costs is granted. The credit is
16    not available to any taxpayer if the taxpayer or any
17    related party caused or contributed to, in any material
18    respect, a release of regulated substances on, in, or under
19    the site that was identified and addressed by the remedial
20    action pursuant to the Site Remediation Program of the
21    Environmental Protection Act. Determinations as to credit
22    availability for purposes of this Section shall be made
23    consistent with rules adopted by the Pollution Control
24    Board pursuant to the Illinois Administrative Procedure
25    Act for the administration and enforcement of Section 58.9
26    of the Environmental Protection Act. For purposes of this

 

 

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1    Section, "taxpayer" includes a person whose tax attributes
2    the taxpayer has succeeded to under Section 381 of the
3    Internal Revenue Code and "related party" includes the
4    persons disallowed a deduction for losses by paragraphs
5    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
6    Code by virtue of being a related taxpayer, as well as any
7    of its partners. The credit allowed against the tax imposed
8    by subsections (a) and (b) shall be equal to 25% of the
9    unreimbursed eligible remediation costs in excess of
10    $100,000 per site.
11        (ii) A credit allowed under this subsection that is
12    unused in the year the credit is earned may be carried
13    forward to each of the 5 taxable years following the year
14    for which the credit is first earned until it is used. This
15    credit shall be applied first to the earliest year for
16    which there is a liability. If there is a credit under this
17    subsection from more than one tax year that is available to
18    offset a liability, the earliest credit arising under this
19    subsection shall be applied first. A credit allowed under
20    this subsection may be sold to a buyer as part of a sale of
21    all or part of the remediation site for which the credit
22    was granted. The purchaser of a remediation site and the
23    tax credit shall succeed to the unused credit and remaining
24    carry-forward period of the seller. To perfect the
25    transfer, the assignor shall record the transfer in the
26    chain of title for the site and provide written notice to

 

 

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1    the Director of the Illinois Department of Revenue of the
2    assignor's intent to sell the remediation site and the
3    amount of the tax credit to be transferred as a portion of
4    the sale. In no event may a credit be transferred to any
5    taxpayer if the taxpayer or a related party would not be
6    eligible under the provisions of subsection (i).
7        (iii) For purposes of this Section, the term "site"
8    shall have the same meaning as under Section 58.2 of the
9    Environmental Protection Act.
10(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1196-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
121-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
13    Section 95. No acceleration or delay. Where this Act makes
14changes in a statute that is represented in this Act by text
15that is not yet or no longer in effect (for example, a Section
16represented by multiple versions), the use of that text does
17not accelerate or delay the taking effect of (i) the changes
18made by this Act or (ii) provisions derived from any other
19Public Act.
 
20    Section 99. Effective date. This Act takes effect upon
21becoming law.