Rep. John E. Bradley

Filed: 11/27/2011

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 397

2    AMENDMENT NO. ______. Amend Senate Bill 397 by replacing
3everything after the enacting clause with the following:
 
4
"Article 1. Findings

 
5    Section 1-1. Legislative findings.
6    (1) The House of Representatives adopted House Resolution
7110 on March 8, 2011, setting forth the estimates of general
8funds the House expects to be available during State fiscal
9year 2012.
10    (2) In determining the estimates of general funds expected
11to be available during State fiscal year 2012, the House
12Revenue & Finance Committee assumed that the State would not
13collect approximately $600,000,000 of income tax revenues due
14to the allowance of special bonus depreciation rules approved
15by the federal government.
16    (3) The House of Representatives adopted House Resolution

 

 

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1158 on March 30, 2011, which provides that if the actual amount
2of funds from State sources that become available during State
3fiscal year 2012 exceeds the House's estimates set forth in
4House Resolution 110, then that excess shall first be used to
5reduce the backlog of unpaid State obligations to the extent
6authorized by law.
7    (4) These concepts are prudent and should be continued for
8State fiscal year 2013 and beyond.
9    (5) As the House Revenue & Finance Committee develops the
10estimates of general funds expected to be available during
11State fiscal year 2013, an estimated $250,000,000 of income tax
12revenues in excess of the State fiscal year 2012 budgeted
13amount will become available due to the phasing out of the
14allowance of special bonus depreciation rules approved by the
15federal government.
16    (6) Therefore, the General Assembly finds that a tax
17incentive package that does not exceed $250,000,000 in State
18fiscal year 2013 can be approved without any negative impact to
19the State budget in State fiscal years 2012 and 2013 while
20providing tax relief to a large number of Illinois individual
21and business taxpayers.
 
22
Article 5. Illinois Independent Tax Tribunal Act

 
23    Section 5-1. Short title. This Article may be cited as the
24Illinois Independent Tax Tribunal Act.
 

 

 

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1    Section 5-5. Independent Tax Tribunal Board; Department of
2Revenue.
3    (a) On and after July 1, 2013, the Department of Revenue,
4or any successor agency, shall no longer hear and act upon (i)
5any protests of notices of tax liability or deficiencies for
6all taxes administered by the Department or (ii) revocations of
7licenses issued by the Department of Revenue.
8    (b) Beginning July 1, 2013, an Independent Tax Tribunal
9Board shall assume, exercise, and administer all rights,
10powers, duties, and responsibilities pertaining to (i) any
11protests of notices of tax liability or deficiencies for all
12taxes administered by the Department of Revenue or (ii)
13revocations of licenses issued by the Department of Revenue.
14The Independent Tax Tribunal Board shall be created by law and
15no State agency shall assume the functions of the Board.
 
16
Article 10. Live Theater Production Tax Credit Act

 
17    Section 10-1. Short title. This Article may be cited as the
18Live Theater Production Tax Credit Act. References in this
19Article to "this Act" mean this Article.
 
20    Section 10-5. Purpose. The Illinois economy depends
21heavily on the commercial for-profit live theater industry and
22the pre-Broadway and long-run shows that are presented in

 

 

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1Illinois. As a result of intense competition from other
2prominent theater cities in the United States and abroad in
3attracting pre-Broadway and long-run shows, Illinois must move
4aggressively with new business development investment tools so
5that Illinois is more competitive in site location decision
6making for show producers. In an increasingly global economy,
7Illinois' long term development will benefit from the rational,
8strategic use of State resources in support of pre-Broadway
9live theater and long run show development and growth. It is
10the purpose of this Act to preserve and expand the existing
11work force used in live theater and enhance the marketing of
12the presentation of live theater in Illinois. It shall be the
13policy of this State to promote and encourage the training and
14hiring of Illinois residents who represent the diversity of the
15Illinois population through the creation and implementation of
16training, education, and recruitment programs organized in
17cooperation with Illinois colleges and universities, labor
18organizations, and the commercial for-profit live theater
19industry.
 
20    Section 10-10. Definitions. As used in this Act:
21    "Accredited theater production" means a for-profit live
22stage presentation in a qualified production facility, as
23defined in this Section, that is either (i) a pre-Broadway
24production or (ii) a long-run production for which the
25aggregate Illinois labor and marketing expenditures exceed

 

 

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1$100,000.
2    "Pre-Broadway production" means a live stage production
3that, in its original or adaptive version, is performed in a
4qualified production facility having a presentation scheduled
5for Broadway's Theater District in New York City within 12
6months after its Illinois presentation.
7    "Long-run production" means a live stage production that is
8performed in a qualified production facility for longer than 8
9weeks, with at least 6 performances per week, and includes a
10production that spans the end of one tax year and the
11commencement of a new tax year that, in combination, meets the
12criteria set forth in this definition making it a long-run
13production eligible for a theater tax credit award in each tax
14year or portion thereof.
15    "Accredited theater production certificate" means a
16certificate issued by the Department certifying that the
17production is an accredited theater production that meets the
18guidelines of this Act.
19    "Applicant" means a taxpayer that is a theater producer,
20owner, licensee, operator, or presenter that is presenting or
21has presented a live stage presentation located within the
22State of Illinois who:
23        (1) owns or licenses the theatrical rights of the stage
24    presentation for the Illinois production period; or
25        (2) has contracted or will contract directly with the
26    owner or licensee of the theatrical rights or a person

 

 

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1    acting on behalf of the owner or licensee to provide live
2    performances of the production.
3    An applicant that directly or indirectly owns, controls, or
4operates multiple qualified production facilities shall be
5presumed to be and considered for the purposes of this Act to
6be a single applicant; provided, however, that as to each of
7the applicant's qualified production facilities, the applicant
8shall be eligible to separately and contemporaneously (i) apply
9for and obtain accredited theater production certificates,
10(ii) stage accredited theater productions, and (iii) apply for
11and receive a tax credit award certificate for each of
12applicant's accredited theater productions performed at each
13of the applicant's qualified production facilities.
14    "Department" means the Department of Commerce and Economic
15Opportunity.
16    "Director" means the Director of the Department.
17    "Illinois labor expenditure" means gross salary or wages
18including, but not limited to, taxes, benefits, and any other
19consideration incurred or paid to non-talent employees of the
20applicant for services rendered to and on behalf of the
21accredited theater production. To qualify as an Illinois labor
22expenditure, the expenditure must be:
23        (1) incurred or paid by the applicant on or after the
24    effective date of the Act for services related to any
25    portion of an accredited theater production from its
26    pre-production stages, including, but not limited to, the

 

 

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1    writing of the script, casting, hiring of service
2    providers, purchases from vendors, marketing, advertising,
3    public relations, load in, rehearsals, performances, other
4    accredited theater production related activities, and load
5    out;
6        (2) directly attributable to the accredited theater
7    production;
8        (3) limited to the first $100,000 of wages incurred or
9    paid to each employee of an accredited theater production
10    in each tax year;
11        (4) included in the federal income tax basis of the
12    property;
13        (5) paid in the tax year for which the applicant is
14    claiming the tax credit award, or no later than 60 days
15    after the end of the tax year;
16        (6) paid to persons residing in Illinois at the time
17    payments were made; and
18        (7) reasonable in the circumstances.
19    "Illinois production spending" means any and all expenses
20directly or indirectly incurred relating to an accredited
21theater production presented in any qualified production
22facility of the applicant, including, but not limited to,
23expenditures for:
24        (1) national marketing, public relations, and the
25    creation and placement of print, electronic, television,
26    billboard, and other forms of advertising; and

 

 

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1        (2) the construction and fabrication of scenic
2    materials and elements; provided, however, that the
3    maximum amount of expenditures attributable to the
4    construction and fabrication of scenic materials and
5    elements eligible for a tax credit award shall not exceed
6    $500,000 per applicant per production in any single tax
7    year.
8    "Qualified production facility" means a facility located
9in the State in which live theatrical productions are, or are
10intended to be, exclusively presented that contains at least
11one stage, a seating capacity of 1,200 or more seats, and
12dressing rooms, storage areas, and other ancillary amenities
13necessary for the accredited theater production.
14    "Tax credit award" means the issuance to a taxpayer by the
15Department of a tax credit award in conformance with Sections
1610-40 and 10-45 of this Act.
17    "Tax year" means a calendar year for the period January 1
18to and including December 31.
 
19    Section 10-15. Powers of the Department. The Department, in
20addition to those powers granted under the Civil Administrative
21Code of Illinois, is granted and has all the powers necessary
22or convenient to carry out and effectuate the purposes and
23provisions of this Act, including, but not limited to, the
24power and authority to:
25        (1) adopt rules deemed necessary and appropriate for

 

 

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1    the administration of the Tax Credit Award program;
2    establish forms for applications, notifications,
3    contracts, or any other agreements; and accept
4    applications at any time during the year;
5        (2) assist applicants pursuant to the provisions of
6    this Act to promote, foster, and support live theater
7    development and production and its related job creation or
8    retention within the State;
9        (3) gather information and conduct inquiries, in the
10    manner and by the methods set forth in this Act, required
11    for the Department to comply with Section 10-40 and,
12    without limitation, obtain information with respect to
13    applicants for the purpose of making any designations or
14    certifications necessary or desirable to assist the
15    Department with any recommendation or guidance in the
16    furtherance of the purposes of this Act and relating to
17    applicants' participation in training, education, and
18    recruitment programs that are organized in cooperation
19    with Illinois colleges and universities or labor
20    organizations designed to promote and encourage the
21    training and hiring of Illinois residents who represent the
22    diversity of the Illinois population;
23        (4) provide for sufficient personnel to permit
24    administrative, staffing, operating, and related support
25    required to adequately discharge its duties and
26    responsibilities described in this Act from funds as may be

 

 

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1    appropriated by the General Assembly for the
2    administration of this Act; and
3        (5) require that the applicant at all times keep proper
4    books and records of accounts relating to the tax credit
5    award, in accordance with generally accepted accounting
6    principles consistently applied, and make, upon reasonable
7    written request by the Department, those books and records
8    available for reasonable Department inspection and audit
9    during the applicant's normal business hours. Any
10    documents or data made available to or received from the
11    applicant by any agent, employee, officer, or service
12    provider to the Department shall be deemed confidential and
13    shall not constitute public records to the extent that the
14    documents or data consist of commercial or financial
15    information regarding the operation by the applicant of any
16    theater or any accredited theater production, or any
17    recipient of any tax credit award under this Act.
 
18    Section 10-20. Tax credit award. Subject to the conditions
19set forth in this Act, an applicant is entitled to a tax credit
20award as approved by the Department for qualifying Illinois
21labor expenditures and Illinois production spending for each
22tax year in which the applicant is awarded an accredited
23theater production certificate issued by the Department. The
24aggregate amount of tax credits awarded pursuant to this Act
25shall not exceed $1,000,000 in any fiscal year. Credits shall

 

 

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1be awarded on a first-come, first-served basis.
2Notwithstanding the foregoing, if the amount of credits applied
3for in any fiscal year exceeds the amount authorized to be
4awarded under this Section, the excess credit amount shall be
5awarded in the next fiscal year in which credits remain
6available for award and shall be treated as having been applied
7for on the first day of that fiscal year.
 
8    Section 10-25. Application for certification of accredited
9theater production. Any applicant proposing an accredited
10theater production located or planned to be located in Illinois
11may request an accredited theater production certificate by
12application to the Department.
 
13    Section 10-30. Review of application for accredited
14theater production certificate.
15    (a) The Department shall issue an accredited theater
16production certificate to an applicant if it finds that by a
17preponderance the following conditions exist:
18        (1) the applicant intends to make the expenditure in
19    the State required for certification of the accredited
20    theater production;
21        (2) the applicant's accredited theater production is
22    economically sound and will benefit the people of the State
23    of Illinois by increasing opportunities for employment and
24    will strengthen the economy of Illinois;

 

 

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1        (3) the following requirements related to the
2    implementation of a diversity plan have been met: (i) the
3    applicant has filed with the Department a diversity plan
4    outlining specific goals for hiring Illinois labor
5    expenditure eligible minority persons and females, as
6    defined in the Business Enterprise for Minorities,
7    Females, and Persons with Disabilities Act, and for using
8    vendors receiving certification under the Business
9    Enterprise for Minorities, Females, and Persons with
10    Disabilities Act; (ii) the Department has approved the plan
11    as meeting the requirements established by the Department
12    and verified that the applicant has met or made good faith
13    efforts in achieving those goals; and (iii) the Department
14    has adopted any rules that are necessary to ensure
15    compliance with the provisions set forth in this paragraph
16    and necessary to require that the applicant's plan reflects
17    the diversity of the population of this State;
18        (4) the applicant's accredited theater production
19    application indicates whether the applicant intends to
20    participate in training, education, and recruitment
21    programs that are organized in cooperation with Illinois
22    colleges and universities, labor organizations, and the
23    holders of accredited theater production certificates and
24    are designed to promote and encourage the training and
25    hiring of Illinois residents who represent the diversity of
26    Illinois;

 

 

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1        (5) if not for the tax credit award, the applicant's
2    accredited theater production would not occur in Illinois,
3    which may be demonstrated by any means, including, but not
4    limited to, evidence that: (i) the applicant, presenter,
5    owner, or licensee of the production rights has other state
6    or international location options at which to present the
7    production and could reasonably and efficiently locate
8    outside of the State, (ii) at least one other state or
9    nation could be considered for the production, (iii) the
10    receipt of the tax award credit is a major factor in the
11    decision of the applicant, presenter, production owner or
12    licensee as to where the production will be presented and
13    that without the tax credit award the applicant likely
14    would not create or retain jobs in Illinois, or (iv)
15    receipt of the tax credit award is essential to the
16    applicant's decision to create or retain new jobs in the
17    State; and
18        (6) the tax credit award will result in an overall
19    positive impact to the State, as determined by the
20    Department using the best available data.
21    (b) If any of the provisions in this Section conflict with
22any existing collective bargaining agreements, the terms and
23conditions of those collective bargaining agreements shall
24control.
25    (c) The Department shall act expeditiously regarding
26approval of applications for accredited theater production

 

 

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1certificates so as to accommodate the pre-production work,
2booking, commencement of ticket sales, determination of
3performance dates, load in, and other matters relating to the
4live theater productions for which approval is sought.
 
5    Section 10-35. Training programs for skills in critical
6demand. To accomplish the purposes of this Act, the Department
7may use the training programs provided under Section 605-800 of
8the Department of Commerce and Economic Opportunity Law of the
9Civil Administrative Code of Illinois.
 
10    Section 10-40. Issuance of Tax Credit Award Certificate.
11    (a) In order to qualify for a tax credit award under this
12Act, an applicant must file an application for each accredited
13theater production at each of the applicant's qualified
14production facilities, on forms prescribed by the Department,
15providing information necessary to calculate the tax credit
16award and any additional information as reasonably required by
17the Department.
18    (b) Upon satisfactory review of the application, the
19Department shall issue a tax credit award certificate stating
20the amount of the tax credit award to which the applicant is
21entitled for that tax year and shall contemporaneously notify
22the applicant and Illinois Department of Revenue in accordance
23with Section 222 of the Illinois Income Tax Act.
 

 

 

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1    Section 10-45. Amount and payment of the tax credit award.
2The tax credit award shall be calculated each tax year based
3upon the filing by the applicant on forms prescribed by the
4Department containing information regarding qualifying and
5quantified Illinois labor expenditures, as defined in Section
610-10, net of the limitation in that Section, and Illinois
7production spending, as defined in Section 10-10, net of the
8limitation in that Section. From the amount calculated, the
9applicant shall be entitled to receive a tax credit award of up
10to:
11        (1) 20% of the Illinois labor expenditures for each tax
12    year; plus
13        (2) 20% of the Illinois production spending for each
14    tax year; plus
15        (3) 15% of the Illinois labor expenditures generated by
16    the employment of Illinois residents in geographic areas of
17    high poverty or high unemployment in each tax year, as
18    determined by the Department.
19    Following the Department's determination of the tax credit
20award, the Department shall issue the tax credit award to the
21applicant.
 
22    Section 10-50. Live theater tax credit award program
23evaluation and reports.
24    (a) The Department's live theater tax credit award
25evaluation must include:

 

 

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1        (i) an assessment of the effectiveness of the program
2    in creating and retaining new jobs in Illinois;
3        (ii) an assessment of the revenue impact of the
4    program;
5        (iii) in the discretion of the Department, a review of
6    the practices and experiences of other states or nations
7    with similar programs; and
8        (iv) an assessment of the overall success of the
9    program. The Department may make a recommendation to
10    extend, modify, or not extend the program based on the
11    evaluation.
12    (b) At the end of each fiscal quarter, the Department shall
13submit to the General Assembly a report that includes, without
14limitation:
15        (i) an assessment of the economic impact of the
16    program, including the number of jobs created and retained,
17    and whether the job positions are entry level, management,
18    vendor, or production related;
19        (ii) the amount of accredited theater production
20    spending brought to Illinois, including the amount of
21    spending and type of Illinois vendors hired in connection
22    with an accredited theater production; and
23        (iii) a determination of whether those receiving
24    qualifying Illinois labor expenditure salaries or wages
25    reflect the geographical, racial and ethnic, gender, and
26    income level diversity of the State of Illinois.

 

 

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1    (c) At the end of each fiscal year, the Department shall
2submit to the General Assembly a report that includes, without
3limitation:
4        (i) the identification of each vendor that provided
5    goods or services that were included in an accredited
6    theater production's Illinois production spending;
7        (ii) a statement of the amount paid to each identified
8    vendor by the accredited theater production and whether the
9    vendor is a minority or female owned business as defined in
10    Section 2 of the Business Enterprise for Minorities,
11    Females, and Persons with Disabilities Act; and
12        (iii) a description of the steps taken by the
13    Department to encourage accredited theater productions to
14    use vendors who are minority or female owned businesses.
 
15    Section 10-55. Program terms and conditions. Any
16documentary materials or data made available or received from
17an applicant by any agent or employee of the Department are
18confidential and are not public records to the extent that the
19materials or data consist of commercial or financial
20information regarding the operation of or the production of the
21applicant or recipient of any tax credit award under this Act.
 
22    Section 10-80. The Illinois Income Tax Act is amended by
23adding Section 222 as follows:
 

 

 

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1    (35 ILCS 5/222 new)
2    Sec. 222. Live theater production credit.
3    (a) For tax years beginning on or after January 1, 2012, a
4taxpayer who has received a tax credit award under the Live
5Theater Production Tax Credit Act is entitled to a credit
6against the taxes imposed under subsections (a) and (b) of
7Section 201 of this Act in an amount determined under that Act
8by the Department of Commerce and Economic Opportunity.
9    (b) If the taxpayer is a partnership, limited liability
10partnership, limited liability company, or Subchapter S
11corporation, the tax credit award is allowed to the partners,
12unit holders, or shareholders in accordance with the
13determination of income and distributive share of income under
14Sections 702 and 704 and Subchapter S of the Internal Revenue
15Code.
16    (c) A sale, assignment, or transfer of the tax credit award
17may be made by the taxpayer earning the credit within one year
18after the credit is awarded in accordance with rules adopted by
19the Department of Commerce and Economic Opportunity.
20    (d) The Department of Revenue, in cooperation with the
21Department of Commerce and Economic Opportunity, shall adopt
22rules to enforce and administer the provisions of this Section.
23    (e) The tax credit award may not be carried back. If the
24amount of the credit exceeds the tax liability for the year,
25the excess may be carried forward and applied to the tax
26liability of the 5 tax years following the excess credit year.

 

 

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1The tax credit award shall be applied to the earliest year for
2which there is a tax liability. If there are credits from more
3than one tax year that are available to offset liability, the
4earlier credit shall be applied first. In no event may a credit
5under this Section reduce the taxpayer's liability to less than
6zero.
 
7
Article 15. Amendatory Provisions

 
8    Section 15-5. The Economic Development Area Tax Increment
9Allocation Act is amended by changing Sections 3, 4, 5, 8, 9,
10and 11 and by adding Sections 4.5 and 4.7 as follows:
 
11    (20 ILCS 620/3)  (from Ch. 67 1/2, par. 1003)
12    Sec. 3. Definitions. In this Act, words or terms shall have
13the following meanings unless the context or usage clearly
14indicates that another meaning is intended.
15    (a) "Department" means the Department of Commerce and
16Economic Opportunity.
17    (b) "Economic development plan" means the written plan of a
18municipality which sets forth an economic development program
19for an economic development project area. Each economic
20development plan shall include but not be limited to (1)
21estimated economic development project costs, (2) the sources
22of funds to pay such costs, (3) the nature and term of any
23obligations to be issued by the municipality to pay such costs,

 

 

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1(4) the most recent equalized assessed valuation of the
2economic development project area, (5) an estimate of the
3equalized assessed valuation of the economic development
4project area after completion of an economic development
5project, (6) the estimated date of completion of any economic
6development project proposed to be undertaken, (7) a general
7description of any proposed developer, user, or tenant of any
8property to be located or improved within the economic
9development project area, (8) a description of the type,
10structure and general character of the facilities to be
11developed or improved in the economic development project area,
12(9) a description of the general land uses to apply in the
13economic development project area, (10) a description of the
14type, class and number of employees to be employed in the
15operation of the facilities to be developed or improved in the
16economic development project area, and (11) a commitment by the
17municipality to fair employment practices and an affirmative
18action plan with respect to any economic development program to
19be undertaken by the municipality.
20    (c) "Economic development project" means any development
21project in furtherance of the objectives of this Act.
22    (d) "Economic development project area" means any improved
23or vacant area which (1) is located within or partially within
24or partially without the territorial limits of a municipality,
25provided that no area without the territorial limits of a
26municipality shall be included in an economic development

 

 

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1project area without the express consent of the Department,
2acting as agent for the State, (2) is contiguous, (3) is not
3less in the aggregate than three hundred twenty acres, (4) is
4suitable for siting by any commercial, manufacturing,
5industrial, research or transportation enterprise of
6facilities to include but not be limited to commercial
7businesses, offices, factories, mills, processing plants,
8assembly plants, packing plants, fabricating plants,
9industrial or commercial distribution centers, warehouses,
10repair overhaul or service facilities, freight terminals,
11research facilities, test facilities or transportation
12facilities, whether or not such area has been used at any time
13for such facilities and whether or not the area has been used
14or is suitable for other uses, including commercial
15agricultural purposes, and (5) which has been approved and
16certified by the Department pursuant to this Act.
17    (e) "Economic development project costs" mean and include
18the sum total of all reasonable or necessary costs incurred by
19a municipality incidental to an economic development project,
20including, without limitation, the following:
21    (1) Costs of studies, surveys, development of plans and
22specifications, implementation and administration of an
23economic development plan, personnel and professional service
24costs for architectural, engineering, legal, marketing,
25financial, planning, police, fire, public works or other
26services, provided that no charges for professional services

 

 

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1may be based on a percentage of incremental tax revenues;
2    (2) Property assembly costs within an economic development
3project area, including but not limited to acquisition of land
4and other real or personal property or rights or interests
5therein, and specifically including payments to developers or
6other nongovernmental persons as reimbursement for property
7assembly costs incurred by such developer or other
8nongovernmental person;
9    (3) Site preparation costs, including but not limited to
10clearance of any area within an economic development project
11area by demolition or removal of any existing buildings,
12structures, fixtures, utilities and improvements and clearing
13and grading; and including installation, repair, construction,
14reconstruction, or relocation of public streets, public
15utilities, and other public site improvements within or without
16an economic development project area which are essential to the
17preparation of the economic development project area for use in
18accordance with an economic development plan; and specifically
19including payments to developers or other nongovernmental
20persons as reimbursement for site preparation costs incurred by
21such developer or nongovernmental person;
22    (4) Costs of renovation, rehabilitation, reconstruction,
23relocation, repair or remodeling of any existing buildings,
24improvements, and fixtures within an economic development
25project area, and specifically including payments to
26developers or other nongovernmental persons as reimbursement

 

 

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1for such costs incurred by such developer or nongovernmental
2person;
3    (5) Costs of construction, acquisition, and operation
4within an economic development project area of public
5improvements, including but not limited to, publicly-owned
6buildings, structures, works, utilities or fixtures; provided
7that no allocation made to the municipality pursuant to
8subparagraph (A) of paragraph (2) of subsection (g) of Section
94 of this Act or subparagraph (A) of paragraph (4) of
10subsection (g) of Section 4 of this Act shall be used to
11operate a convention center or similar entertainment complex or
12venue;
13    (6) Financing costs, including but not limited to all
14necessary and incidental expenses related to the issuance of
15obligations, payment of any interest on any obligations issued
16hereunder which accrues during the estimated period of
17construction of any economic development project for which such
18obligations are issued and for not exceeding 36 months
19thereafter, and any reasonable reserves related to the issuance
20of such obligations;
21    (7) All or a portion of a taxing district's capital costs
22resulting from an economic development project necessarily
23incurred or estimated to be incurred by a taxing district in
24the furtherance of the objectives of an economic development
25project, to the extent that the municipality by written
26agreement accepts and approves such costs;

 

 

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1    (8) Relocation costs to the extent that a municipality
2determines that relocation costs shall be paid or is required
3to make payment of relocation costs by federal or State law;
4    (9) The estimated tax revenues from real property in an
5economic development project area acquired by a municipality
6which, according to the economic development plan, is to be
7used for a private use and which any taxing district would have
8received had the municipality not adopted tax increment
9allocation financing for an economic development project area
10and which would result from such taxing district's levies made
11after the time of the adoption by the municipality of tax
12increment allocation financing to the time the current
13equalized assessed value of real property in the economic
14development project area exceeds the total initial equalized
15value of real property in said area;
16    (10) Costs of job training, advanced vocational or career
17education, including but not limited to courses in
18occupational, semi-technical or technical fields leading
19directly to employment, incurred by one or more taxing
20districts, provided that such costs are related to the
21establishment and maintenance of additional job training,
22advanced vocational education or career education programs for
23persons employed or to be employed by employers located in an
24economic development project area, and further provided that
25when such costs are incurred by a taxing district or taxing
26districts other than the municipality they shall be set forth

 

 

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1in a written agreement by or among the municipality and the
2taxing district or taxing districts, which agreement describes
3the program to be undertaken, including but not limited to the
4number of employees to be trained, a description of the
5training and services to be provided, the number and type of
6positions available or to be available, itemized costs of the
7program and sources of funds to pay the same, and the term of
8the agreement. Such costs include, specifically, the payment by
9community college districts of costs pursuant to Sections 3-37,
103-38, 3-40 and 3-40.1 of the Public Community College Act and
11by school districts of costs pursuant to Sections 10-22.20a and
1210-23.3a of The School Code;
13    (11) Private financing costs incurred by developers or
14other nongovernmental persons in connection with an economic
15development project, and specifically including payments to
16developers or other nongovernmental persons as reimbursement
17for such costs incurred by such developer or other
18nongovernmental person, provided that:
19    (A) private financing costs shall be paid or reimbursed by
20a municipality only pursuant to the prior official action of
21the municipality evidencing an intent to pay or reimburse such
22private financing costs;
23    (B) except as provided in subparagraph (D), the aggregate
24amount of such costs paid or reimbursed by a municipality in
25any one year shall not exceed 30% of such costs paid or
26incurred by the developer or other nongovernmental person in

 

 

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1that year;
2    (C) private financing costs shall be paid or reimbursed by
3a municipality solely from the special tax allocation fund
4established pursuant to this Act and shall not be paid or
5reimbursed from the proceeds of any obligations issued by a
6municipality;
7    (D) if there are not sufficient funds available in the
8special tax allocation fund in any year to make such payment or
9reimbursement in full, any amount of such interest cost
10remaining to be paid or reimbursed by a municipality shall
11accrue and be payable when funds are available in the special
12tax allocation fund to make such payment; and
13    (E) in connection with its approval and certification of an
14economic development project pursuant to Section 5 of this Act,
15the Department shall review any agreement authorizing the
16payment or reimbursement by a municipality of private financing
17costs in its consideration of the impact on the revenues of the
18municipality and the affected taxing districts of the use of
19tax increment allocation financing.
20    (f) "Municipality" means a city, village or incorporated
21town.
22    (g) "Obligations" means any instrument evidencing the
23obligation of a municipality to pay money, including without
24limitation, bonds, notes, installment or financing contracts,
25certificates, tax anticipation warrants or notes, vouchers,
26and any other evidence of indebtedness.

 

 

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1    (h) "Taxing districts" means counties, townships,
2municipalities, and school, road, park, sanitary, mosquito
3abatement, forest preserve, public health, fire protection,
4river conservancy, tuberculosis sanitarium and any other
5municipal corporations or districts with the power to levy
6taxes upon property located within the economic development
7project area.
8(Source: P.A. 94-793, eff. 5-19-06.)
 
9    (20 ILCS 620/4)  (from Ch. 67 1/2, par. 1004)
10    Sec. 4. Establishment of economic development project
11areas; ordinance; notice; hearing; changes in economic
12development plan. Economic development project areas shall be
13established as follows:
14    (a) The corporate authorities of a municipality shall by
15ordinance propose the establishment of an economic development
16project area and fix a time and place for a public hearing, and
17shall submit a certified copy of the ordinance as adopted to
18the Department.
19    (b) (1) Notice of the public hearing shall be given by
20publication and mailing. Notice by publication shall be given
21by publication at least twice, the first publication to be not
22more than 30 nor less than 10 days prior to the hearing in a
23newspaper of general circulation within the taxing districts
24having property in the proposed economic development project
25area. Notice by mailing shall be given by depositing such

 

 

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1notice together with a copy of the proposed economic
2development plan in the United States mails by certified mail
3addressed to the person or persons in whose name the general
4taxes for the last preceding year were paid on each lot, block,
5tract, or parcel of land lying within the economic development
6project area. The notice shall be mailed not less than 10 days
7prior to the date set for the public hearing. In the event
8taxes for the last preceding year were not paid, the notice
9shall also be sent to the persons last listed on the tax rolls
10within the preceding 3 years as the owners of such property.
11    (2) The notices issued pursuant to this Section shall
12include the following:
13    (A) The time and place of public hearing;
14    (B) The boundaries of the proposed economic development
15project area by legal description and by street location where
16possible;
17    (C) A notification that all interested persons will be
18given an opportunity to be heard at the public hearing;
19    (D) An invitation for any person to submit alternative
20proposals or bids for any proposed conveyance, lease, mortgage
21or other disposition of land within the proposed economic
22development project area;
23    (E) A description of the economic development plan or
24economic development project if a plan or project is a subject
25matter of the hearing; and
26    (F) Such other matters as the municipality may deem

 

 

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1appropriate.
2    (3) Not less than 30 days prior to the date set for
3hearing, the municipality shall give notice by mail as provided
4in this subsection (b) to all taxing districts, of which
5taxable property is included in the economic development
6project area, and to the Department. In addition to the other
7requirements under this subsection (b), the notice shall
8include an invitation to the Department and each taxing
9district to submit comments to the municipality concerning the
10subject matter of the hearing prior to the date of hearing.
11    (c) At the public hearing any interested person, the
12Department or any affected taxing district may file written
13objections with the municipal clerk and may be heard orally
14with respect to any issues embodied in the notice. The
15municipality shall hear and determine all alternate proposals
16or bids for any proposed conveyance, lease, mortgage or other
17disposition of land and all protests and objections at the
18hearing, and the hearing may be adjourned to another date
19without further notice other than a motion to be entered upon
20the minutes fixing the time and place of the adjourned hearing.
21Public hearings with regard to an economic development plan,
22economic development project area, or economic development
23project may be held simultaneously.
24    (d) At the public hearing or at any time prior to the
25adoption by the municipality of an ordinance approving an
26economic development plan, the municipality may make changes in

 

 

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1the economic development plan. Changes which (1) alter the
2exterior boundaries of the proposed economic development
3project area, (2) substantially affect the general land uses
4established in the proposed economic development plan, (3)
5substantially change the nature of the proposed economic
6development project, (4) change the general description of any
7proposed developer, user or tenant of any property to be
8located or improved within the economic development project
9area, or (5) change the description of the type, class and
10number of employees to be employed in the operation of the
11facilities to be developed or improved within the economic
12development project area shall be made only after notice and
13hearing pursuant to the procedures set forth in this Section.
14Changes which do not (1) alter the exterior boundaries of a
15proposed economic development project area, (2) substantially
16affect the general land uses established in the proposed
17economic development plan, (3) substantially change the nature
18of the proposed economic development project, (4) change the
19general description of any proposed developer, user or tenant
20of any property to be located or improved within the economic
21development project area, or (5) change the description of the
22type, class and number of employees to be employed in the
23operation of the facilities to be developed or improved within
24the economic development project area may be made without
25further hearing, provided that the municipality shall give
26notice of its changes by mail to the Department and to each

 

 

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1affected taxing district and by publication in a newspaper or
2newspapers of general circulation within the affected taxing
3districts. Such notice by mail and by publication shall each
4occur not later than 10 days following the adoption by
5ordinance of such changes.
6    (e) At any time within 30 days of the final adjournment of
7the public hearing, a municipality may, by ordinance, approve
8the economic development plan, establish the economic
9development project area, and authorize tax increment
10allocation financing for such economic development project
11area. Any ordinance adopted which approves an economic
12development plan shall contain findings that the developer or
13any of its successor entities and its subsidiaries economic
14development project shall create or retain not less than 4,250
152,000 full-time equivalent jobs, that private investment in an
16amount not less than $100,000,000 shall occur in the economic
17development project area, that the economic development
18project will encourage the increase of commerce and industry
19within the State, thereby reducing the evils attendant upon
20unemployment and increasing opportunities for personal income,
21and that the economic development project will increase or
22maintain the property, sales and income tax bases of the
23municipality and of the State. Any ordinance adopted which
24establishes an economic development project area shall contain
25the boundaries of such area by legal description and, where
26possible, by street location. Any ordinance adopted which

 

 

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1authorizes tax increment allocation financing shall provide
2that the ad valorem taxes, if any, arising from the levies upon
3taxable real property in such economic development project area
4by taxing districts and tax rates determined in the manner
5provided in subsection (b) of Section 6 of this Act each year
6after the effective date of the ordinance until economic
7development project costs and all municipal obligations
8financing economic development project costs incurred under
9this Act have been paid shall be divided as follows:
10    (1) That portion of taxes levied upon each taxable lot,
11block, tract or parcel of real property which is attributable
12to the lower of the current equalized assessed value or the
13initial equalized assessed value of each such taxable lot,
14block, tract or parcel of real property in the economic
15development project area shall be allocated to and when
16collected shall be paid by the county collector to the
17respective affected taxing districts in the manner required by
18law in the absence of the adoption of tax increment allocation
19financing.
20    (2) That portion, if any, of such taxes which is
21attributable to the increase in the current equalized assessed
22valuation of each taxable lot, block, tract or parcel of real
23property in the economic development project area over and
24above the initial equalized assessed value of each property in
25the economic development project area shall be allocated to and
26when collected shall be paid to the municipal treasurer who

 

 

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1shall deposit such taxes into a special fund called the special
2tax allocation fund of the municipality for the purpose of
3paying economic development project costs and obligations
4incurred in the payment thereof.
5    (f) After a municipality has by ordinance approved an
6economic development plan and established an economic
7development project area, the plan may be amended and the
8boundaries of the area may be altered only as herein provided.
9Amendments which (1) alter the exterior boundaries of an
10economic development project area, (2) substantially affect
11the general land uses established pursuant to the economic
12development plan, (3) substantially change the nature of the
13economic development project, (4) change the general
14description of any proposed developer, user, or tenant of any
15property to be located or improved within the economic
16development project area, or (5) change the description of the
17type, class and number of employees to be employed in the
18operation of the facilities to be developed or improved within
19the economic development project area, shall be made only after
20notice and hearing pursuant to the procedures set forth in this
21Section. Amendments which do not (1) alter the boundaries of
22the economic development project area, (2) substantially
23affect the general land uses established in the economic
24development plan, (3) substantially change the nature of the
25economic development project, (4) change the general
26description of any proposed developer, user, or tenant of any

 

 

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1property to be located or improved within the economic
2development project area, or (5) change the description of the
3type, class and number of employees to be employed in the
4operation of the facilities to be developed or improved within
5the economic development project area may be made without
6further hearing, provided that the municipality shall give
7notice of any amendment by mail to the Department and to each
8taxing district and by publication in a newspaper or newspapers
9of general circulation within the affected taxing districts.
10Such notice by mail and by publication shall each occur not
11later than 10 days following the adoption by ordinance of any
12amendments.
13    (g) Extension of economic development project area;
14allocations; payment of outstanding claims; changes in
15equalized assessed valuation.
16    (1) Notwithstanding anything to the contrary set forth in
17this Act, upon the effective date of this amendatory Act of the
1897th General Assembly, the duration of any existing economic
19development plan created pursuant to this Act is extended to
20the duration permitted under this subsection, up to a maximum
21duration of 15 years.
22    (2) For the purposes of this Section, real estate taxes
23paid on property within the economic development project area
24during calendar year 2013 and remitted to the developer and the
25taxing districts in 2014 shall be the "base amount". Beginning
26with real estate taxes remitted in 2014, for any economic

 

 

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1development plan extended by operation of item (1) of this
2subsection (g), until such time as all existing obligations, as
3that term is defined in item (5) of this subsection (g), have
4been satisfied, the allocation of the special tax allocation
5fund shall be as follows:
6        (A) All receipts up to the first $350,000 shall be
7    maintained by the municipality in an escrow account to be
8    used solely for (i) expenses relating to the reports
9    required by Section 4.7 of this Act and (ii) legal expenses
10    incurred in defense of any civil action brought against the
11    municipality relating to the economic development
12    agreement. The escrow account shall be within the scope of
13    the annual audit provided in Section 4.7 of this Act. Each
14    December 31 following a deposit into the escrow account,
15    any unobligated balance in the escrow account shall be
16    distributed to the taxing districts in the same manner and
17    proportion as the most recent distribution by the county
18    collector to the taxing districts in the economic
19    development project area.
20        (B) After the allocation required pursuant to
21    paragraph (A) of this item (2), the next $5,000,000 of the
22    receipts shall be allocated to the municipality.
23        (C) After the allocations required pursuant to
24    paragraphs (A) and (B) of this item (2), 55% of the
25    remaining receipts shall be allocated to the developer.
26        (D) After the allocations required pursuant to parts

 

 

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1    (A) and (B) of this item (2), 45% of the remaining receipts
2    shall be allocated to the taxing districts located within
3    the economic development project area, excluding the
4    municipality.
5    (3) For real estate taxes paid in 2012 and remitted to the
6developer and the taxing districts in 2013 and prior years, the
7allocation formula contained in any economic development plan
8in effect immediately prior to the effective date of this
9amendatory Act of the 97th General Assembly shall apply.
10    (4) Beginning with real estate taxes paid in 2014 and
11remitted to the developer and the taxing districts in 2015 and
12each year thereafter, if the taxes paid within the economic
13development project area change from the base amount, the
14allocation of the special tax allocation fund shall be as
15follows:
16        (A) If the amount of current year taxes paid is less
17    than the base amount, then the administrative escrow
18    account shall receive the first $350,000 of receipts, the
19    municipality shall receive the next $5,000,000 of
20    receipts, the developer shall receive 55% of receipts over
21    $5,350,000, and the remaining 45% of receipts over
22    $5,350,000 shall be distributed to the taxing districts
23    (excluding the municipality) in the same manner and
24    proportion as the most recent distribution by the county
25    collector to those taxing districts in the economic
26    development project area.

 

 

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1        (B) If the amount of current year taxes paid is greater
2    than the base amount, then 75% of the increase in real
3    estate tax receipts shall be payable to the developer and
4    the remaining 25% of the increase in real estate tax
5    receipts shall be distributed to the taxing districts
6    (including the municipality) pursuant to the formula in
7    this subsection.
8    (5) After (i) all existing obligations and interest thereon
9have been satisfied, (ii) any excess moneys have been
10distributed pursuant to this subsection, and (iii) final
11closing of the books and records of the economic development
12project area has occurred, the municipality shall adopt an
13ordinance dissolving the special tax allocation fund for the
14economic development project area and terminating the
15designation of the economic development project area as an
16economic development project area. All excess moneys in the
17special tax allocation fund shall be distributed to the taxing
18districts in the same manner and proportion as the most recent
19distribution by the county collector to those taxing districts
20in the economic development project area. For the purpose of
21this subsection (g), "existing obligations" means (i) the
22obligations of the developer that existed before the base year,
23as certified by a sworn affidavit of the principal financial
24officer of the developer attesting that the amounts set forth
25are true and correct, (ii) obligations of the municipality
26relating to the payment of the obligations of the developer,

 

 

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1and (iii) any amounts payable by taxing districts to the
2developer for property taxes determined to have been overpaid,
3to the extent that those amounts payable have been carried
4forward as an interest bearing note due to the developer. All
5obligations of the developer due and payable shall be processed
6and paid in the order received, with the oldest notes to be
7processed and paid first. Beginning January 1, 2012, all
8outstanding interest bearing notes shall bear interest at the
9rate of 4% until paid.
10    (h) Beginning on the effective date of this amendatory Act
11of the 97th General Assembly, the taxing districts shall meet
12annually 180 days after the close of the municipal fiscal year,
13or as soon as the economic development project audit for that
14fiscal year becomes available, to review the effectiveness and
15status of the economic development project area up to that
16date.
17(Source: P.A. 86-38.)
 
18    (20 ILCS 620/4.5 new)
19    Sec. 4.5. Recapture.
20    (a) In the event that the developer terminates all of its
21operations and vacates the redevelopment area within 60 months
22after the effective date of this amendatory Act of the 97th
23General Assembly, the developer shall be required to remit to
24the Department an amount equal to the payments disbursed to the
25developer in 2014 and subsequent years under the Agreement.

 

 

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1Within 30 days after receipt, the Department shall remit such
2funds to the county collector. The county collector shall
3thereafter make distribution to the respective taxing
4districts in the same manner and proportion as the most recent
5distribution by the county collector to those taxing districts
6of real property taxes from real property in the economic
7development project area.
8    (b) In the event the developer fails to maintain 4,250 jobs
9at any time before the termination of the economic development
10project area, the developer shall forfeit an amount of its
11allocations from the special tax allocation fund for that time
12period in which the developer failed to maintain 4,250 jobs.
13The amount forfeited shall equal the percentage of the year
14that the developer failed to maintain 4,250 multiplied by the
15amount the developer would have received if they maintained
164,250 jobs for the entire year. Any funds that are forfeited
17shall be distributed to the taxing districts in the same manner
18and proportion as the most recent distribution by the county
19collector to those taxing districts (inclusive of the
20municipality) in the economic development project area.
 
21    (20 ILCS 620/4.7 new)
22    Sec. 4.7. Municipal reports. After the effective date of
23this amendatory Act of the 97th General Assembly, a
24municipality shall submit in an electronic format all of the
25following information for each economic development project

 

 

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1area (i) to the State Comptroller and (ii) to all taxing
2districts overlapping the economic development project area no
3later than 180 days after the close of each municipal fiscal
4year or as soon thereafter as the audited financial statements
5become available:
6        (1) Any amendments to the economic development plan or
7    the economic development project area.
8        (2) Audited financial statements of the special tax
9    allocation fund once a cumulative total of $100,000 has
10    been deposited into the fund.
11        (3) Certification of the Chief Executive Officer of the
12    municipality that the municipality has complied with all of
13    the requirements of this Act during the preceding fiscal
14    year.
15        (4) An opinion of legal counsel that the municipality
16    is in compliance with this Act.
17        (5) An analysis of the special tax allocation fund that
18    sets forth:
19            (A) the balance in the special tax allocation fund
20        at the beginning of the fiscal year;
21            (B) all amounts deposited in the special tax
22        allocation fund by source;
23            (C) an itemized list of all expenditures from the
24        special tax allocation fund by category of permissible
25        economic development project cost; and
26            (D) the balance in the special tax allocation fund

 

 

09700SB0397ham003- 41 -LRB097 04209 WGH 60069 a

1        at the end of the fiscal year, including a breakdown of
2        that balance by source and a breakdown of that balance
3        identifying any portion of the balance that is
4        required, pledged, earmarked, or otherwise designated
5        for payment of or securing of obligations and
6        anticipated economic development project costs; any
7        portion of that ending balance that has not been
8        identified or is not identified as being required,
9        pledged, earmarked, or otherwise designated for
10        payment of or securing of obligations or anticipated
11        economic development projects costs shall be
12        designated as surplus as set forth in Section 8 of this
13        Act.
14        (6) A description of all property purchased by the
15    municipality within the economic development project area
16    including:
17            (A) street address;
18            (B) approximate size or description of property;
19            (C) purchase price; and
20            (D) the seller of the property.
21        (7) A statement setting forth all activities
22    undertaken in furtherance of the objectives of the economic
23    development plan, including:
24            (A) any project implemented in the preceding
25        fiscal year;
26            (B) a description of the economic development

 

 

09700SB0397ham003- 42 -LRB097 04209 WGH 60069 a

1        activities undertaken;
2            (C) a description of any agreements entered into by
3        the municipality with regard to the disposition or
4        redevelopment of any property within the economic
5        development project area;
6            (D) additional information on the use of all funds
7        received under this Act and steps taken by the
8        municipality to achieve the objectives of the economic
9        development plan;
10            (E) information regarding contracts that the
11        municipality's tax increment advisors or consultants
12        have entered into with entities or persons that have
13        received, or are receiving, payments financed by tax
14        increment revenues produced by the same economic
15        development project area; and
16            (F) a review of public and, to the extent possible,
17        private investment actually undertaken on or after the
18        effective date of this amendatory Act of the 97th
19        General Assembly and prior to the date of the report
20        and estimated to be undertaken during the following
21        fiscal year; this review shall, on a project by project
22        basis, set forth the estimated amounts of public and
23        private investment incurred after the effective date
24        of this amendatory Act of the 97th General Assembly and
25        provide the ratio of private investment to public
26        investment to the date of the report and as estimated

 

 

09700SB0397ham003- 43 -LRB097 04209 WGH 60069 a

1        to the completion of the economic development project.
2        (8) With regard to any obligations issued by the
3    municipality:
4            (A) copies of any official statements; and
5            (B) an analysis prepared by financial advisor or
6        underwriter setting forth: (i) the nature and term of
7        those obligations; and (ii) projected debt service
8        including required reserves and debt coverage.
9        (9) For special tax allocation funds that have
10    experienced cumulative deposits of incremental tax
11    revenues of $100,000 or more, a certified audit report
12    reviewing compliance with this Act performed by an
13    independent public accountant certified and licensed by
14    the authority of the State of Illinois. The financial
15    portion of the audit must be conducted in accordance with
16    Standards for Audits of Governmental Organizations,
17    Programs, Activities, and Functions adopted by the
18    Comptroller General of the United States (1981), as
19    amended, or the standards specified by Section 8-8-5 of the
20    Illinois Municipal Auditing Law of the Illinois Municipal
21    Code. The audit report shall contain a letter from the
22    independent certified public accountant indicating
23    compliance or noncompliance with the requirements of
24    subsection (e) of Section 3 of this Act.
25        (10) A list of all intergovernmental agreements in
26    effect during the fiscal year to which the municipality is

 

 

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1    a party and an accounting of any moneys transferred or
2    received by the municipality during that fiscal year
3    pursuant to those intergovernmental agreements.
 
4    (20 ILCS 620/5)  (from Ch. 67 1/2, par. 1005)
5    Sec. 5. Submission to Department; certification by
6Department; limitation on number of permissible economic
7development project areas. (a) The municipality shall submit
8certified copies of any ordinances adopted approving an
9economic development plan, establishing an economic
10development project area, and authorizing tax increment
11allocation financing for such economic development project
12area to the Department, together with (1) a map of the economic
13development project area, (2) a copy of the economic
14development plan as approved, (3) an analysis, and any
15supporting documents and statistics, demonstrating that the
16developer or any of its successor entities and its subsidiaries
17economic development project shall create or retain not less
18than 4,250 2,000 full-time equivalent jobs and that private
19investment in the amount of not less than $100,000,000 shall
20occur in the economic development project area, (4) an estimate
21of the economic impact of the economic development project and
22the use of tax increment allocation financing upon the revenues
23of the municipality and the affected taxing districts, (5) a
24record of all public hearings had in connection with the
25establishment of the economic development project area, and (6)

 

 

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1such other information as the Department by regulation may
2require.
3    (b) Upon receipt of an application from a municipality the
4Department shall review the application to determine whether
5the economic development project area qualifies as an economic
6development project area under this Act. At its discretion, the
7Department may accept or reject the application or may request
8such additional information as it deems necessary or advisable
9to aid its review. If any such area is found to be qualified to
10be an economic development project area, the Department shall
11approve and certify such economic development project area and
12shall provide written notice of its approval and certification
13to the municipality and to the county clerk. In determining
14whether an economic development project area shall be approved
15and certified, the Department shall consider (1) whether,
16without public intervention, the State would suffer
17substantial economic dislocation, such as relocation of a
18commercial business or industrial or manufacturing facility to
19another state, territory or country, or would not otherwise
20benefit from private investment offering substantial
21employment opportunities and economic growth, and (2) the
22impact on the revenues of the municipality and the affected
23taxing districts of the use of tax increment allocation
24financing in connection with the economic development project.
25    (c) On or before the date which is 18 months following the
26date on which this Act becomes law, the Department shall submit

 

 

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1to the General Assembly a report detailing the number of
2economic development project areas it has approved and
3certified, the number and type of jobs created or retained
4therein, the aggregate amount of private investment therein,
5the impact on the revenues of municipalities and affected
6taxing districts of the use of tax increment allocation
7financing therein, and such additional information as the
8Department may determine to be relevant. On or after the date
9which is 20 months following the date on which this Act becomes
10law the authority granted hereunder to municipalities to
11establish economic development project areas and to adopt tax
12increment allocation financing in connection therewith and to
13the Department to approve and certify economic development
14project areas shall expire unless the General Assembly shall
15have authorized municipalities and the Department to continue
16to exercise the powers granted to them hereunder.
17(Source: P.A. 86-38.)
 
18    (20 ILCS 620/8)  (from Ch. 67 1/2, par. 1008)
19    Sec. 8. Issuance of obligations for economic development
20project costs. Obligations secured by the special tax
21allocation fund provided for in Section 7 of this Act for an
22economic development project area may be issued to provide for
23economic development project costs. Those obligations, when so
24issued, shall be retired in the manner provided in the
25ordinance authorizing the issuance of the obligations by the

 

 

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1receipts of taxes levied as specified in Section 6 of this Act
2against the taxable property included in the economic
3development project area and by other revenue designated or
4pledged by the municipality. A municipality may in the
5ordinance pledge all or any part of the funds in and to be
6deposited in the special tax allocation fund created pursuant
7to Section 7 of this Act to the payment of the economic
8development project costs and obligations. Whenever a
9municipality pledges all of the funds to the credit of a
10special tax allocation fund to secure obligations issued or to
11be issued to pay economic development project costs, the
12municipality may specifically provide that funds remaining to
13the credit of such special tax allocation fund after the
14payment of such obligations shall be accounted for annually and
15shall be deemed to be "surplus" funds, and such "surplus" funds
16shall be distributed as hereinafter provided. Whenever a
17municipality pledges less than all of the monies to the credit
18of a special tax allocation fund to secure obligations issued
19or to be issued to pay economic development project costs, the
20municipality shall provide that monies to the credit of the
21special tax allocation fund and not subject to such pledge or
22otherwise encumbered or required for payment of contractual
23obligations for specific economic development project costs
24shall be calculated annually and shall be deemed to be
25"surplus" funds, and such "surplus" funds shall be distributed
26as hereinafter provided. All funds to the credit of a special

 

 

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1tax allocation fund which are deemed to be "surplus" funds
2shall be distributed annually within 180 days of the close of
3the municipality's fiscal year by being paid by the municipal
4treasurer to the county collector. The county collector shall
5thereafter make distribution to the respective taxing
6districts in the same manner and proportion as the most recent
7distribution by the county collector to those taxing districts
8of real property taxes from real property in the economic
9development project area.
10    Without limiting the foregoing in this Section the
11municipality may, in addition to obligations secured by the
12special tax allocation fund, pledge for a period not greater
13than the term of the obligations towards payment of those
14obligations any part or any combination of the following: (i)
15net revenues of all or part of any economic development
16project; (ii) taxes levied and collected on any or all property
17in the municipality, including, specifically, taxes levied or
18imposed by the municipality in a special service area pursuant
19to "An Act to provide the manner of levying or imposing taxes
20for the provision of special services to areas within the
21boundaries of home rule units and non-home rule municipalities
22and counties", approved September 21, 1973, as now or hereafter
23amended; (iii) the full faith and credit of the municipality;
24(iv) a mortgage on part or all of the economic development
25project; or (v) any other taxes or anticipated receipts that
26the municipality may lawfully pledge.

 

 

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1    Such obligations may be issued in one or more series
2bearing interest at such rate or rates as the corporate
3authorities of the municipality shall determine by ordinance,
4which rate or rates may be variable or fixed, without regard to
5any limitations contained in any law now in effect or hereafter
6adopted. Such obligations shall bear such date or dates, mature
7at such time or times not exceeding 38 20 years from their
8respective dates, but in no event exceeding 38 23 years from
9the date of establishment of the economic development project
10area, be in such denomination, be in such form, whether coupon,
11registered or book-entry, carry such registration, conversion
12and exchange privileges, be executed in such manner, be payable
13in such medium of payment at such place or places within or
14without the State of Illinois, contain such covenants, terms
15and conditions, be subject to redemption with or without
16premium, be subject to defeasance upon such terms, and have
17such rank or priority, as such ordinance shall provide.
18Obligations issued pursuant to this Act may be sold at public
19or private sale at such price as shall be determined by the
20corporate authorities of the municipalities. Such obligations
21may, but need not, be issued utilizing the provisions of any
22one or more of the omnibus bond Acts specified in Section 1.33
23of "An Act to revise the law in relation to the construction of
24the statutes", approved March 5, 1874, as now or hereafter
25amended. No referendum approval of the electors shall be
26required as a condition to the issuance of obligations pursuant

 

 

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1to this Act except as provided in this Section.
2    Whenever a municipality issues bonds for the purpose of
3financing economic development project costs, the municipality
4may provide by ordinance for the appointment of a trustee,
5which may be any trust company within the State, and for the
6establishment of the funds or accounts to be maintained by such
7trustee as the municipality shall deem necessary to provide for
8the security and payment of the bonds. If the municipality
9provides for the appointment of a trustee, the trustee shall be
10considered the assignee of any payments assigned by the
11municipality pursuant to the ordinance and this Section. Any
12amounts paid to the trustee as assignee shall be deposited in
13the funds or accounts established pursuant to the trust
14agreement, and shall be held by the trustee in trust for the
15benefit of the holders of the bonds, and the holders shall have
16a lien on and a security interest in those bonds or accounts so
17long as the bonds remain outstanding and unpaid. Upon
18retirement of the bonds, the trustee shall pay over any excess
19amounts held to the municipality for deposit in the special tax
20allocation fund.
21    In the event the municipality authorizes the issuance of
22obligations pursuant to the authority of this Act secured by
23the full faith and credit of the municipality, or pledges ad
24valorem taxes pursuant to clause (ii) of the second paragraph
25of this Section, which obligations are other than obligations
26which may be issued under home rule powers provided by Article

 

 

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1VII, Section 6 of the Illinois Constitution or which ad valorem
2taxes are other than ad valorem taxes which may be pledged
3under home rule powers provided by Article VII, Section 6 of
4the Illinois Constitution or which are levied in a special
5service area pursuant to "An Act to provide the manner of
6levying or imposing taxes for the provision of special services
7to areas within the boundaries of home rule units and non-home
8rule municipalities and counties", approved September 21,
91973, as now or hereafter amended, the ordinance authorizing
10the issuance of those obligations or pledging those taxes shall
11be published within 10 days after the ordinance has been
12adopted, in one or more newspapers having a general circulation
13within the municipality. The publication of the ordinance shall
14be accompanied by a notice of (1) the specific number of voters
15required to sign a petition requesting the question of the
16issuance of the obligations or pledging such ad valorem taxes
17to be submitted to the electors; (2) the time within which the
18petition must be filed; and (3) the date of the prospective
19referendum. The municipal clerk shall provide a petition form
20to any individual requesting one.
21    If no petition is filed with the municipal clerk, as
22hereinafter provided in this Section, within 21 days after the
23publication of the ordinance, the ordinance shall be in effect.
24However, if within that 21 day period a petition is filed with
25the municipal clerk, signed by electors numbering not less than
2615% of the number of electors voting for the mayor or president

 

 

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1at the last general municipal election, asking that the
2question of issuing obligations using full faith and credit of
3the municipality as security for the cost of paying for
4economic development project costs, or of pledging such ad
5valorem taxes for the payment of those obligations, or both, be
6submitted to the electors of the municipality, the municipality
7shall not be authorized to issue obligations of the
8municipality using the full faith and credit of the
9municipality as security or pledging such ad valorem taxes for
10the payment of those obligations, or both, until the
11proposition has been submitted to and approved by a majority of
12the voters voting on the proposition at a regularly scheduled
13election. The municipality shall certify the proposition to the
14proper election authorities for submission in accordance with
15the general election law.
16    The ordinance authorizing the obligations may provide that
17the obligations shall contain a recital that they are issued
18pursuant to this Act, which recital shall be conclusive
19evidence of their validity and of the regularity of their
20issuance.
21    In the event the municipality authorizes issuance of
22obligations pursuant to this Act secured by the full faith and
23credit of the municipality, the ordinance authorizing the
24obligations may provide for the levy and collection of a direct
25annual tax upon all taxable property within the municipality
26sufficient to pay the principal thereof and interest thereon as

 

 

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1it matures, which levy may be in addition to and exclusive of
2the maximum of all other taxes authorized to be levied by the
3municipality, which levy, however, shall be abated to the
4extent that monies from other sources are available for payment
5of the obligations and the municipality certifies the amount of
6those monies available to the county clerk.
7    A certified copy of the ordinance shall be filed with the
8county clerk of each county in which any portion of the
9municipality is situated, and shall constitute the authority
10for the extension and collection of the taxes to be deposited
11in the special tax allocation fund.
12    A municipality may also issue its obligations to refund, in
13whole or in part, obligations theretofore issued by the
14municipality under the authority of this Act, whether at or
15prior to maturity. However, the last maturity of the refunding
16obligations shall not be expressed to mature later than 38 23
17years from the date of the ordinance establishing the economic
18development project area.
19    In the event a municipality issues obligations under home
20rule powers or other legislative authority, the proceeds of
21which are pledged to pay for economic development project
22costs, the municipality may, if it has followed the procedures
23in conformance with this Act, retire those obligations from
24funds in the special tax allocation fund in amounts and in such
25manner as if those obligations had been issued pursuant to the
26provisions of this Act.

 

 

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1    No obligations issued pursuant to this Act shall be
2regarded as indebtedness of the municipality issuing those
3obligations or any other taxing district for the purpose of any
4limitation imposed by law.
5    Obligations issued pursuant to this Act shall not be
6subject to the provisions of "An Act to authorize public
7corporations to issue bonds, other evidences of indebtedness
8and tax anticipation warrants subject to interest rate
9limitations set forth therein", approved May 26, 1970, as
10amended.
11(Source: P.A. 86-38.)
 
12    (20 ILCS 620/9)  (from Ch. 67 1/2, par. 1009)
13    Sec. 9. Powers of municipalities. In addition to powers
14which it may now have, any municipality has the power under
15this Act:
16    (a) To make and enter into all contracts necessary or
17incidental to the implementation and furtherance of an economic
18development plan.
19    (b) Within an economic development project area, to acquire
20by purchase, donation, lease or eminent domain, and to own,
21convey, lease, mortgage or dispose of land and other real or
22personal property or rights or interests therein; and to grant
23or acquire licenses, easements and options with respect
24thereto, all in the manner and at such price the municipality
25determines is reasonably necessary to achieve the objectives of

 

 

09700SB0397ham003- 55 -LRB097 04209 WGH 60069 a

1the economic development project. No conveyance, lease,
2mortgage, disposition of land or other property acquired by the
3municipality, or agreement relating to the development of
4property, shall be made or executed except pursuant to prior
5official action of the municipality. No conveyance, lease,
6mortgage or other disposition of land, and no agreement
7relating to the development of property, shall be made without
8making public disclosure of the terms and disposition of all
9bids and proposals submitted to the municipality in connection
10therewith.
11    (c) To clear any area within an economic development
12project area by demolition or removal of any existing
13buildings, structures, fixtures, utilities or improvements,
14and to clear and grade land.
15    (d) To install, repair, construct, reconstruct or relocate
16public streets, public utilities, and other public site
17improvements within or without an economic development project
18area which are essential to the preparation of an economic
19development project area for use in accordance with an economic
20development plan.
21    (e) To renovate, rehabilitate, reconstruct, relocate,
22repair or remodel any existing buildings, improvements, and
23fixtures within an economic development project area.
24    (f) To construct, acquire, and operate public
25improvements, including but not limited to, publicly-owned
26buildings, structures, works, utilities or fixtures within any

 

 

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1economic development project area, subject to the restrictions
2of item (5) of subsection (e) of Section 3 of this Act.
3    (g) To issue obligations as provided in this Act provided.
4    (h) To fix, charge and collect fees, rents and charges for
5the use of any building, facility or property or any portion
6thereof owned or leased by the municipality within an economic
7development project area.
8    (i) To accept grants, guarantees, donations of property or
9labor, or any other thing of value for use in connection with
10an economic development project.
11    (j) To pay or cause to be paid economic development project
12costs. Any payments to be made by the municipality to
13developers or other nongovernmental persons for economic
14development project costs incurred by such developer or other
15nongovernmental person shall be made only pursuant to the prior
16official action of the municipality evidencing an intent to pay
17or cause to be paid such economic development project costs. A
18municipality is not required to obtain any right, title or
19interest in any real or personal property in order to pay
20economic development project costs associated with such
21property. The municipality shall adopt such accounting
22procedures as may be necessary to determine that such economic
23development project costs are properly paid.
24    (k) To exercise any and all other powers necessary to
25effectuate the purposes of this Act.
26    (l) To create a commission of not less than 5 or more than

 

 

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115 persons to be appointed by the mayor or president of the
2municipality with the consent of the majority of the corporate
3authorities of the municipality. Members of a commission shall
4be appointed for initial terms of 1, 2, 3, 4, and 5 years,
5respectively, in such numbers as to provide that the terms of
6not more than 1/3 of all such members shall expire in any one
7year. Their successors shall be appointed for a term of 5
8years. The commission, subject to approval of the corporate
9authorities, may exercise the powers enumerated in this
10Section. The commission shall also have the power to hold the
11public hearings required by this Act and make recommendations
12to the corporate authorities concerning the approval of
13economic development plans, the establishment of economic
14development project areas, and the adoption of tax increment
15allocation financing for economic development project areas.
16(Source: P.A. 91-357, eff. 7-29-99.)
 
17    (20 ILCS 620/11)  (from Ch. 67 1/2, par. 1011)
18    Sec. 11. Payment of project costs; revenues from
19governmental municipal property. Revenues received by a taxing
20district municipality from any property, building or facility
21owned, leased or operated by the taxing district municipality
22or any agency or authority established by the taxing district
23municipality may be used to pay economic development project
24costs, or reduce outstanding obligations of the taxing district
25municipality incurred under this Act for economic development

 

 

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1project costs. The taxing district municipality may place those
2revenues in the special tax allocation fund which shall be held
3by the municipal treasurer of the taxing district or other
4person designated by the taxing district municipality. Revenue
5received by a taxing district the municipality from the sale or
6other disposition of real or personal property or rights or
7interests therein acquired by a taxing district the
8municipality with the proceeds of obligations funded by tax
9increment allocation financing may be used to acquire and
10operate other governmental property that is within the economic
11development project area or that provides services within the
12economic development project area, subject to the restrictions
13of item (5) of subsection (e) of Section 3 of this Act. shall
14be deposited by the municipality in the special tax allocation
15fund.
16(Source: P.A. 86-38.)
 
17    Section 15-10. The Illinois Income Tax Act is amended by
18changing Sections 201, 204, 207, 212, 250, 304, 804, and 1501
19as follows:
 
20    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
21    Sec. 201. Tax Imposed.
22    (a) In general. A tax measured by net income is hereby
23imposed on every individual, corporation, trust and estate for
24each taxable year ending after July 31, 1969 on the privilege

 

 

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1of earning or receiving income in or as a resident of this
2State. Such tax shall be in addition to all other occupation or
3privilege taxes imposed by this State or by any municipal
4corporation or political subdivision thereof.
5    (b) Rates. The tax imposed by subsection (a) of this
6Section shall be determined as follows, except as adjusted by
7subsection (d-1):
8        (1) In the case of an individual, trust or estate, for
9    taxable years ending prior to July 1, 1989, an amount equal
10    to 2 1/2% of the taxpayer's net income for the taxable
11    year.
12        (2) In the case of an individual, trust or estate, for
13    taxable years beginning prior to July 1, 1989 and ending
14    after June 30, 1989, an amount equal to the sum of (i) 2
15    1/2% of the taxpayer's net income for the period prior to
16    July 1, 1989, as calculated under Section 202.3, and (ii)
17    3% of the taxpayer's net income for the period after June
18    30, 1989, as calculated under Section 202.3.
19        (3) In the case of an individual, trust or estate, for
20    taxable years beginning after June 30, 1989, and ending
21    prior to January 1, 2011, an amount equal to 3% of the
22    taxpayer's net income for the taxable year.
23        (4) In the case of an individual, trust, or estate, for
24    taxable years beginning prior to January 1, 2011, and
25    ending after December 31, 2010, an amount equal to the sum
26    of (i) 3% of the taxpayer's net income for the period prior

 

 

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1    to January 1, 2011, as calculated under Section 202.5, and
2    (ii) 5% of the taxpayer's net income for the period after
3    December 31, 2010, as calculated under Section 202.5.
4        (5) In the case of an individual, trust, or estate, for
5    taxable years beginning on or after January 1, 2011, and
6    ending prior to January 1, 2015, an amount equal to 5% of
7    the taxpayer's net income for the taxable year.
8        (5.1) In the case of an individual, trust, or estate,
9    for taxable years beginning prior to January 1, 2015, and
10    ending after December 31, 2014, an amount equal to the sum
11    of (i) 5% of the taxpayer's net income for the period prior
12    to January 1, 2015, as calculated under Section 202.5, and
13    (ii) 3.75% of the taxpayer's net income for the period
14    after December 31, 2014, as calculated under Section 202.5.
15        (5.2) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after January 1, 2015,
17    and ending prior to January 1, 2025, an amount equal to
18    3.75% of the taxpayer's net income for the taxable year.
19        (5.3) In the case of an individual, trust, or estate,
20    for taxable years beginning prior to January 1, 2025, and
21    ending after December 31, 2024, an amount equal to the sum
22    of (i) 3.75% of the taxpayer's net income for the period
23    prior to January 1, 2025, as calculated under Section
24    202.5, and (ii) 3.25% of the taxpayer's net income for the
25    period after December 31, 2024, as calculated under Section
26    202.5.

 

 

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1        (5.4) In the case of an individual, trust, or estate,
2    for taxable years beginning on or after January 1, 2025, an
3    amount equal to 3.25% of the taxpayer's net income for the
4    taxable year.
5        (6) In the case of a corporation, for taxable years
6    ending prior to July 1, 1989, an amount equal to 4% of the
7    taxpayer's net income for the taxable year.
8        (7) In the case of a corporation, for taxable years
9    beginning prior to July 1, 1989 and ending after June 30,
10    1989, an amount equal to the sum of (i) 4% of the
11    taxpayer's net income for the period prior to July 1, 1989,
12    as calculated under Section 202.3, and (ii) 4.8% of the
13    taxpayer's net income for the period after June 30, 1989,
14    as calculated under Section 202.3.
15        (8) In the case of a corporation, for taxable years
16    beginning after June 30, 1989, and ending prior to January
17    1, 2011, an amount equal to 4.8% of the taxpayer's net
18    income for the taxable year.
19        (9) In the case of a corporation, for taxable years
20    beginning prior to January 1, 2011, and ending after
21    December 31, 2010, an amount equal to the sum of (i) 4.8%
22    of the taxpayer's net income for the period prior to
23    January 1, 2011, as calculated under Section 202.5, and
24    (ii) 7% of the taxpayer's net income for the period after
25    December 31, 2010, as calculated under Section 202.5.
26        (10) In the case of a corporation, for taxable years

 

 

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1    beginning on or after January 1, 2011, and ending prior to
2    January 1, 2015, an amount equal to 7% of the taxpayer's
3    net income for the taxable year.
4        (11) In the case of a corporation, for taxable years
5    beginning prior to January 1, 2015, and ending after
6    December 31, 2014, an amount equal to the sum of (i) 7% of
7    the taxpayer's net income for the period prior to January
8    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
9    of the taxpayer's net income for the period after December
10    31, 2014, as calculated under Section 202.5.
11        (12) In the case of a corporation, for taxable years
12    beginning on or after January 1, 2015, and ending prior to
13    January 1, 2025, an amount equal to 5.25% of the taxpayer's
14    net income for the taxable year.
15        (13) In the case of a corporation, for taxable years
16    beginning prior to January 1, 2025, and ending after
17    December 31, 2024, an amount equal to the sum of (i) 5.25%
18    of the taxpayer's net income for the period prior to
19    January 1, 2025, as calculated under Section 202.5, and
20    (ii) 4.8% of the taxpayer's net income for the period after
21    December 31, 2024, as calculated under Section 202.5.
22        (14) In the case of a corporation, for taxable years
23    beginning on or after January 1, 2025, an amount equal to
24    4.8% of the taxpayer's net income for the taxable year.
25    The rates under this subsection (b) are subject to the
26provisions of Section 201.5.

 

 

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1    (c) Personal Property Tax Replacement Income Tax.
2Beginning on July 1, 1979 and thereafter, in addition to such
3income tax, there is also hereby imposed the Personal Property
4Tax Replacement Income Tax measured by net income on every
5corporation (including Subchapter S corporations), partnership
6and trust, for each taxable year ending after June 30, 1979.
7Such taxes are imposed on the privilege of earning or receiving
8income in or as a resident of this State. The Personal Property
9Tax Replacement Income Tax shall be in addition to the income
10tax imposed by subsections (a) and (b) of this Section and in
11addition to all other occupation or privilege taxes imposed by
12this State or by any municipal corporation or political
13subdivision thereof.
14    (d) Additional Personal Property Tax Replacement Income
15Tax Rates. The personal property tax replacement income tax
16imposed by this subsection and subsection (c) of this Section
17in the case of a corporation, other than a Subchapter S
18corporation and except as adjusted by subsection (d-1), shall
19be an additional amount equal to 2.85% of such taxpayer's net
20income for the taxable year, except that beginning on January
211, 1981, and thereafter, the rate of 2.85% specified in this
22subsection shall be reduced to 2.5%, and in the case of a
23partnership, trust or a Subchapter S corporation shall be an
24additional amount equal to 1.5% of such taxpayer's net income
25for the taxable year.
26    (d-1) Rate reduction for certain foreign insurers. In the

 

 

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1case of a foreign insurer, as defined by Section 35A-5 of the
2Illinois Insurance Code, whose state or country of domicile
3imposes on insurers domiciled in Illinois a retaliatory tax
4(excluding any insurer whose premiums from reinsurance assumed
5are 50% or more of its total insurance premiums as determined
6under paragraph (2) of subsection (b) of Section 304, except
7that for purposes of this determination premiums from
8reinsurance do not include premiums from inter-affiliate
9reinsurance arrangements), beginning with taxable years ending
10on or after December 31, 1999, the sum of the rates of tax
11imposed by subsections (b) and (d) shall be reduced (but not
12increased) to the rate at which the total amount of tax imposed
13under this Act, net of all credits allowed under this Act,
14shall equal (i) the total amount of tax that would be imposed
15on the foreign insurer's net income allocable to Illinois for
16the taxable year by such foreign insurer's state or country of
17domicile if that net income were subject to all income taxes
18and taxes measured by net income imposed by such foreign
19insurer's state or country of domicile, net of all credits
20allowed or (ii) a rate of zero if no such tax is imposed on such
21income by the foreign insurer's state of domicile. For the
22purposes of this subsection (d-1), an inter-affiliate includes
23a mutual insurer under common management.
24        (1) For the purposes of subsection (d-1), in no event
25    shall the sum of the rates of tax imposed by subsections
26    (b) and (d) be reduced below the rate at which the sum of:

 

 

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

 

 

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

 

 

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1    any credit for qualified property be allowed for any year
2    other than the year in which the property was placed in
3    service in Illinois. For tax years ending on or after
4    December 31, 1987, and on or before December 31, 1988, the
5    credit shall be allowed for the tax year in which the
6    property is placed in service, or, if the amount of the
7    credit exceeds the tax liability for that year, whether it
8    exceeds the original liability or the liability as later
9    amended, such excess may be carried forward and applied to
10    the tax liability of the 5 taxable years following the
11    excess credit years if the taxpayer (i) makes investments
12    which cause the creation of a minimum of 2,000 full-time
13    equivalent jobs in Illinois, (ii) is located in an
14    enterprise zone established pursuant to the Illinois
15    Enterprise Zone Act and (iii) is certified by the
16    Department of Commerce and Community Affairs (now
17    Department of Commerce and Economic Opportunity) as
18    complying with the requirements specified in clause (i) and
19    (ii) by July 1, 1986. The Department of Commerce and
20    Community Affairs (now Department of Commerce and Economic
21    Opportunity) shall notify the Department of Revenue of all
22    such certifications immediately. For tax years ending
23    after December 31, 1988, the credit shall be allowed for
24    the tax year in which the property is placed in service,
25    or, if the amount of the credit exceeds the tax liability
26    for that year, whether it exceeds the original liability or

 

 

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

 

 

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1        on or after July 1, 2006 in a River Edge Redevelopment
2        Zone established pursuant to the River Edge
3        Redevelopment Zone Act; and
4            (E) has not previously been used in Illinois in
5        such a manner and by such a person as would qualify for
6        the credit provided by this subsection (e) or
7        subsection (f).
8        (3) For purposes of this subsection (e),
9    "manufacturing" means the material staging and production
10    of tangible personal property by procedures commonly
11    regarded as manufacturing, processing, fabrication, or
12    assembling which changes some existing material into new
13    shapes, new qualities, or new combinations. For purposes of
14    this subsection (e) the term "mining" shall have the same
15    meaning as the term "mining" in Section 613(c) of the
16    Internal Revenue Code. For purposes of this subsection (e),
17    the term "retailing" means the sale of tangible personal
18    property for use or consumption and not for resale, or
19    services rendered in conjunction with the sale of tangible
20    personal property for use or consumption and not for
21    resale. For purposes of this subsection (e), "tangible
22    personal property" has the same meaning as when that term
23    is used in the Retailers' Occupation Tax Act, and, for
24    taxable years ending after December 31, 2008, does not
25    include the generation, transmission, or distribution of
26    electricity.

 

 

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

 

 

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1        (8) Unless the investment credit is extended by law,
2    the basis of qualified property shall not include costs
3    incurred after December 31, 2018 2013, except for costs
4    incurred pursuant to a binding contract entered into on or
5    before December 31, 2018 2013.
6        (9) Each taxable year ending before December 31, 2000,
7    a partnership may elect to pass through to its partners the
8    credits to which the partnership is entitled under this
9    subsection (e) for the taxable year. A partner may use the
10    credit allocated to him or her under this paragraph only
11    against the tax imposed in subsections (c) and (d) of this
12    Section. If the partnership makes that election, those
13    credits shall be allocated among the partners in the
14    partnership in accordance with the rules set forth in
15    Section 704(b) of the Internal Revenue Code, and the rules
16    promulgated under that Section, and the allocated amount of
17    the credits shall be allowed to the partners for that
18    taxable year. The partnership shall make this election on
19    its Personal Property Tax Replacement Income Tax return for
20    that taxable year. The election to pass through the credits
21    shall be irrevocable.
22        For taxable years ending on or after December 31, 2000,
23    a partner that qualifies its partnership for a subtraction
24    under subparagraph (I) of paragraph (2) of subsection (d)
25    of Section 203 or a shareholder that qualifies a Subchapter
26    S corporation for a subtraction under subparagraph (S) of

 

 

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1    paragraph (2) of subsection (b) of Section 203 shall be
2    allowed a credit under this subsection (e) equal to its
3    share of the credit earned under this subsection (e) during
4    the taxable year by the partnership or Subchapter S
5    corporation, determined in accordance with the
6    determination of income and distributive share of income
7    under Sections 702 and 704 and Subchapter S of the Internal
8    Revenue Code. This paragraph is exempt from the provisions
9    of Section 250.
10    (f) Investment credit; Enterprise Zone; River Edge
11Redevelopment Zone.
12        (1) A taxpayer shall be allowed a credit against the
13    tax imposed by subsections (a) and (b) of this Section for
14    investment in qualified property which is placed in service
15    in an Enterprise Zone created pursuant to the Illinois
16    Enterprise Zone Act or, for property placed in service on
17    or after July 1, 2006, a River Edge Redevelopment Zone
18    established pursuant to the River Edge Redevelopment Zone
19    Act. For partners, shareholders of Subchapter S
20    corporations, and owners of limited liability companies,
21    if the liability company is treated as a partnership for
22    purposes of federal and State income taxation, there shall
23    be allowed a credit under this subsection (f) to be
24    determined in accordance with the determination of income
25    and distributive share of income under Sections 702 and 704
26    and Subchapter S of the Internal Revenue Code. The credit

 

 

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

 

 

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1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code;
3            (D) is used in the Enterprise Zone or River Edge
4        Redevelopment Zone by the taxpayer; and
5            (E) has not been previously used in Illinois in
6        such a manner and by such a person as would qualify for
7        the credit provided by this subsection (f) or
8        subsection (e).
9        (3) The basis of qualified property shall be the basis
10    used to compute the depreciation deduction for federal
11    income tax purposes.
12        (4) If the basis of the property for federal income tax
13    depreciation purposes is increased after it has been placed
14    in service in the Enterprise Zone or River Edge
15    Redevelopment Zone by the taxpayer, the amount of such
16    increase shall be deemed property placed in service on the
17    date of such increase in basis.
18        (5) The term "placed in service" shall have the same
19    meaning as under Section 46 of the Internal Revenue Code.
20        (6) If during any taxable year, any property ceases to
21    be qualified property in the hands of the taxpayer within
22    48 months after being placed in service, or the situs of
23    any qualified property is moved outside the Enterprise Zone
24    or River Edge Redevelopment Zone within 48 months after
25    being placed in service, the tax imposed under subsections
26    (a) and (b) of this Section for such taxable year shall be

 

 

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1    increased. Such increase shall be determined by (i)
2    recomputing the investment credit which would have been
3    allowed for the year in which credit for such property was
4    originally allowed by eliminating such property from such
5    computation, and (ii) subtracting such recomputed credit
6    from the amount of credit previously allowed. For the
7    purposes of this paragraph (6), a reduction of the basis of
8    qualified property resulting from a redetermination of the
9    purchase price shall be deemed a disposition of qualified
10    property to the extent of such reduction.
11        (7) There shall be allowed an additional credit equal
12    to 0.5% of the basis of qualified property placed in
13    service during the taxable year in a River Edge
14    Redevelopment Zone, provided such property is placed in
15    service on or after July 1, 2006, and the taxpayer's base
16    employment within Illinois has increased by 1% or more over
17    the preceding year as determined by the taxpayer's
18    employment records filed with the Illinois Department of
19    Employment Security. Taxpayers who are new to Illinois
20    shall be deemed to have met the 1% growth in base
21    employment for the first year in which they file employment
22    records with the Illinois Department of Employment
23    Security. If, in any year, the increase in base employment
24    within Illinois over the preceding year is less than 1%,
25    the additional credit shall be limited to that percentage
26    times a fraction, the numerator of which is 0.5% and the

 

 

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1    denominator of which is 1%, but shall not exceed 0.5%.
2    (g) Jobs Tax Credit; Enterprise Zone, River Edge
3Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
4        (1) A taxpayer conducting a trade or business in an
5    enterprise zone or a High Impact Business designated by the
6    Department of Commerce and Economic Opportunity or for
7    taxable years ending on or after December 31, 2006, in a
8    River Edge Redevelopment Zone conducting a trade or
9    business in a federally designated Foreign Trade Zone or
10    Sub-Zone shall be allowed a credit against the tax imposed
11    by subsections (a) and (b) of this Section in the amount of
12    $500 per eligible employee hired to work in the zone during
13    the taxable year.
14        (2) To qualify for the credit:
15            (A) the taxpayer must hire 5 or more eligible
16        employees to work in an enterprise zone, River Edge
17        Redevelopment Zone, or federally designated Foreign
18        Trade Zone or Sub-Zone during the taxable year;
19            (B) the taxpayer's total employment within the
20        enterprise zone, River Edge Redevelopment Zone, or
21        federally designated Foreign Trade Zone or Sub-Zone
22        must increase by 5 or more full-time employees beyond
23        the total employed in that zone at the end of the
24        previous tax year for which a jobs tax credit under
25        this Section was taken, or beyond the total employed by
26        the taxpayer as of December 31, 1985, whichever is

 

 

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1        later; and
2            (C) the eligible employees must be employed 180
3        consecutive days in order to be deemed hired for
4        purposes of this subsection.
5        (3) An "eligible employee" means an employee who is:
6            (A) Certified by the Department of Commerce and
7        Economic Opportunity as "eligible for services"
8        pursuant to regulations promulgated in accordance with
9        Title II of the Job Training Partnership Act, Training
10        Services for the Disadvantaged or Title III of the Job
11        Training Partnership Act, Employment and Training
12        Assistance for Dislocated Workers Program.
13            (B) Hired after the enterprise zone, River Edge
14        Redevelopment Zone, or federally designated Foreign
15        Trade Zone or Sub-Zone was designated or the trade or
16        business was located in that zone, whichever is later.
17            (C) Employed in the enterprise zone, River Edge
18        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
19        An employee is employed in an enterprise zone or
20        federally designated Foreign Trade Zone or Sub-Zone if
21        his services are rendered there or it is the base of
22        operations for the services performed.
23            (D) A full-time employee working 30 or more hours
24        per week.
25        (4) For tax years ending on or after December 31, 1985
26    and prior to December 31, 1988, the credit shall be allowed

 

 

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1    for the tax year in which the eligible employees are hired.
2    For tax years ending on or after December 31, 1988, the
3    credit shall be allowed for the tax year immediately
4    following the tax year in which the eligible employees are
5    hired. If the amount of the credit exceeds the tax
6    liability for that year, whether it exceeds the original
7    liability or the liability as later amended, such excess
8    may be carried forward and applied to the tax liability of
9    the 5 taxable years following the excess credit year. The
10    credit shall be applied to the earliest year for which
11    there is a liability. If there is credit from more than one
12    tax year that is available to offset a liability, earlier
13    credit shall be applied first.
14        (5) The Department of Revenue shall promulgate such
15    rules and regulations as may be deemed necessary to carry
16    out the purposes of this subsection (g).
17        (6) The credit shall be available for eligible
18    employees hired on or after January 1, 1986.
19    (h) Investment credit; High Impact Business.
20        (1) Subject to subsections (b) and (b-5) of Section 5.5
21    of the Illinois Enterprise Zone Act, a taxpayer shall be
22    allowed a credit against the tax imposed by subsections (a)
23    and (b) of this Section for investment in qualified
24    property which is placed in service by a Department of
25    Commerce and Economic Opportunity designated High Impact
26    Business. The credit shall be .5% of the basis for such

 

 

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1    property. The credit shall not be available (i) until the
2    minimum investments in qualified property set forth in
3    subdivision (a)(3)(A) of Section 5.5 of the Illinois
4    Enterprise Zone Act have been satisfied or (ii) until the
5    time authorized in subsection (b-5) of the Illinois
6    Enterprise Zone Act for entities designated as High Impact
7    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
8    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
9    Act, and shall not be allowed to the extent that it would
10    reduce a taxpayer's liability for the tax imposed by
11    subsections (a) and (b) of this Section to below zero. The
12    credit applicable to such investments shall be taken in the
13    taxable year in which such investments have been completed.
14    The credit for additional investments beyond the minimum
15    investment by a designated high impact business authorized
16    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
17    Enterprise Zone Act shall be available only in the taxable
18    year in which the property is placed in service and shall
19    not be allowed to the extent that it would reduce a
20    taxpayer's liability for the tax imposed by subsections (a)
21    and (b) of this Section to below zero. For tax years ending
22    on or after December 31, 1987, the credit shall be allowed
23    for the tax year in which the property is placed in
24    service, or, 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, the
6    credit accruing first in time shall be applied first.
7        Changes made in this subdivision (h)(1) by Public Act
8    88-670 restore changes made by Public Act 85-1182 and
9    reflect existing law.
10        (2) The term qualified property means property which:
11            (A) is tangible, whether new or used, including
12        buildings and structural components of buildings;
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        (h);
18            (C) is acquired by purchase as defined in Section
19        179(d) of the Internal Revenue Code; and
20            (D) is not eligible for the Enterprise Zone
21        Investment Credit provided by subsection (f) of this
22        Section.
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income tax

 

 

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

 

 

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1    1996, if a taxpayer qualifies for the credit under this
2    subsection (h) and thereby is granted a tax abatement and
3    the taxpayer relocates its entire facility in violation of
4    the explicit terms and length of the contract under Section
5    18-183 of the Property Tax Code, the tax imposed under
6    subsections (a) and (b) of this Section shall be increased
7    for the taxable year in which the taxpayer relocated its
8    facility by an amount equal to the amount of credit
9    received by the taxpayer under this subsection (h).
10    (i) Credit for Personal Property Tax Replacement Income
11Tax. For tax years ending prior to December 31, 2003, a credit
12shall be allowed against the tax imposed by subsections (a) and
13(b) of this Section for the tax imposed by subsections (c) and
14(d) of this Section. This credit shall be computed by
15multiplying the tax imposed by subsections (c) and (d) of this
16Section by a fraction, the numerator of which is base income
17allocable to Illinois and the denominator of which is Illinois
18base income, and further multiplying the product by the tax
19rate imposed by subsections (a) and (b) of this Section.
20    Any credit earned on or after December 31, 1986 under this
21subsection which is unused in the year the credit is computed
22because it exceeds the tax liability imposed by subsections (a)
23and (b) for that year (whether it exceeds the original
24liability or the liability as later amended) may be carried
25forward and applied to the tax liability imposed by subsections
26(a) and (b) of the 5 taxable years following the excess credit

 

 

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1year, provided that no credit may be carried forward to any
2year ending on or after December 31, 2003. This credit shall be
3applied first to the earliest year for which there is a
4liability. If there is a credit under this subsection from more
5than one tax year that is available to offset a liability the
6earliest credit arising under this subsection shall be applied
7first.
8    If, during any taxable year ending on or after December 31,
91986, the tax imposed by subsections (c) and (d) of this
10Section for which a taxpayer has claimed a credit under this
11subsection (i) is reduced, the amount of credit for such tax
12shall also be reduced. Such reduction shall be determined by
13recomputing the credit to take into account the reduced tax
14imposed by subsections (c) and (d). If any portion of the
15reduced amount of credit has been carried to a different
16taxable year, an amended return shall be filed for such taxable
17year to reduce the amount of credit claimed.
18    (j) Training expense credit. Beginning with tax years
19ending on or after December 31, 1986 and prior to December 31,
202003, a taxpayer shall be allowed a credit against the tax
21imposed by subsections (a) and (b) under this Section for all
22amounts paid or accrued, on behalf of all persons employed by
23the taxpayer in Illinois or Illinois residents employed outside
24of Illinois by a taxpayer, for educational or vocational
25training in semi-technical or technical fields or semi-skilled
26or skilled fields, which were deducted from gross income in the

 

 

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1computation of taxable income. The credit against the tax
2imposed by subsections (a) and (b) shall be 1.6% of such
3training expenses. For partners, shareholders of subchapter S
4corporations, and owners of limited liability companies, if the
5liability company is treated as a partnership for purposes of
6federal and State income taxation, there shall be allowed a
7credit under this subsection (j) to be determined in accordance
8with the determination of income and distributive share of
9income under Sections 702 and 704 and subchapter S of the
10Internal Revenue Code.
11    Any credit allowed under this subsection which is unused in
12the year the credit is earned may be carried forward to each of
13the 5 taxable years following the year for which the credit is
14first computed until it is used. This credit shall be applied
15first to the earliest year for which there is a liability. If
16there is a credit under this subsection from more than one tax
17year that is available to offset a liability the earliest
18credit arising under this subsection shall be applied first. No
19carryforward credit may be claimed in any tax year ending on or
20after December 31, 2003.
21    (k) Research and development credit.
22    For tax years ending after July 1, 1990 and prior to
23December 31, 2003, and beginning again for tax years ending on
24or after December 31, 2004, and ending prior to January 1, 2016
25January 1, 2011, a taxpayer shall be allowed a credit against
26the tax imposed by subsections (a) and (b) of this Section for

 

 

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1increasing research activities in this State. The credit
2allowed against the tax imposed by subsections (a) and (b)
3shall be equal to 6 1/2% of the qualifying expenditures for
4increasing research activities in this State. For partners,
5shareholders of subchapter S corporations, and owners of
6limited liability companies, if the liability company is
7treated as a partnership for purposes of federal and State
8income taxation, there shall be allowed a credit under this
9subsection to be determined in accordance with the
10determination of income and distributive share of income under
11Sections 702 and 704 and subchapter S of the Internal Revenue
12Code.
13    For purposes of this subsection, "qualifying expenditures"
14means the qualifying expenditures as defined for the federal
15credit for increasing research activities which would be
16allowable under Section 41 of the Internal Revenue Code and
17which are conducted in this State, "qualifying expenditures for
18increasing research activities in this State" means the excess
19of qualifying expenditures for the taxable year in which
20incurred over qualifying expenditures for the base period,
21"qualifying expenditures for the base period" means the average
22of the qualifying expenditures for each year in the base
23period, and "base period" means the 3 taxable years immediately
24preceding the taxable year for which the determination is being
25made.
26    Any credit in excess of the tax liability for the taxable

 

 

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1year may be carried forward. A taxpayer may elect to have the
2unused credit shown on its final completed return carried over
3as a credit against the tax liability for the following 5
4taxable years or until it has been fully used, whichever occurs
5first; provided that no credit earned in a tax year ending
6prior to December 31, 2003 may be carried forward to any year
7ending on or after December 31, 2003, and no credit may be
8carried forward to any taxable year ending on or after January
91, 2011.
10    If an unused credit is carried forward to a given year from
112 or more earlier years, that credit arising in the earliest
12year will be applied first against the tax liability for the
13given year. If a tax liability for the given year still
14remains, the credit from the next earliest year will then be
15applied, and so on, until all credits have been used or no tax
16liability for the given year remains. Any remaining unused
17credit or credits then will be carried forward to the next
18following year in which a tax liability is incurred, except
19that no credit can be carried forward to a year which is more
20than 5 years after the year in which the expense for which the
21credit is given was incurred.
22    No inference shall be drawn from this amendatory Act of the
2391st General Assembly in construing this Section for taxable
24years beginning before January 1, 1999.
25    (l) Environmental Remediation Tax Credit.
26        (i) For tax years ending after December 31, 1997 and on

 

 

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1    or before December 31, 2001, a taxpayer shall be allowed a
2    credit against the tax imposed by subsections (a) and (b)
3    of this Section for certain amounts paid for unreimbursed
4    eligible remediation costs, as specified in this
5    subsection. For purposes of this Section, "unreimbursed
6    eligible remediation costs" means costs approved by the
7    Illinois Environmental Protection Agency ("Agency") under
8    Section 58.14 of the Environmental Protection Act that were
9    paid in performing environmental remediation at a site for
10    which a No Further Remediation Letter was issued by the
11    Agency and recorded under Section 58.10 of the
12    Environmental Protection Act. The credit must be claimed
13    for the taxable year in which Agency approval of the
14    eligible remediation costs is granted. The credit is not
15    available to any taxpayer if the taxpayer or any related
16    party caused or contributed to, in any material respect, a
17    release of regulated substances on, in, or under the site
18    that was identified and addressed by the remedial action
19    pursuant to the Site Remediation Program of the
20    Environmental Protection Act. After the Pollution Control
21    Board rules are adopted pursuant to the Illinois
22    Administrative Procedure Act for the administration and
23    enforcement of Section 58.9 of the Environmental
24    Protection Act, determinations as to credit availability
25    for purposes of this Section shall be made consistent with
26    those rules. For purposes of this Section, "taxpayer"

 

 

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1    includes a person whose tax attributes the taxpayer has
2    succeeded to under Section 381 of the Internal Revenue Code
3    and "related party" includes the persons disallowed a
4    deduction for losses by paragraphs (b), (c), and (f)(1) of
5    Section 267 of the Internal Revenue Code by virtue of being
6    a related taxpayer, as well as any of its partners. The
7    credit allowed against the tax imposed by subsections (a)
8    and (b) shall be equal to 25% of the unreimbursed eligible
9    remediation costs in excess of $100,000 per site, except
10    that the $100,000 threshold shall not apply to any site
11    contained in an enterprise zone as determined by the
12    Department of Commerce and Community Affairs (now
13    Department of Commerce and Economic Opportunity). The
14    total credit allowed shall not exceed $40,000 per year with
15    a maximum total of $150,000 per site. For partners and
16    shareholders of subchapter S corporations, there shall be
17    allowed a credit under this subsection to be determined in
18    accordance with the determination of income and
19    distributive share of income under Sections 702 and 704 and
20    subchapter S of the Internal Revenue Code.
21        (ii) A credit allowed under this subsection that is
22    unused in the year the credit is earned may be carried
23    forward to each of the 5 taxable years following the year
24    for which the credit is first earned until it is used. The
25    term "unused credit" does not include any amounts of
26    unreimbursed eligible remediation costs in excess of the

 

 

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

 

 

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1Section for qualified education expenses incurred on behalf of
2the qualifying pupils. The credit shall be equal to 25% of
3qualified education expenses, but in no event may the total
4credit under this subsection claimed by a family that is the
5custodian of qualifying pupils exceed $500. In no event shall a
6credit under this subsection reduce the taxpayer's liability
7under this Act to less than zero. This subsection is exempt
8from the provisions of Section 250 of this Act.
9    For purposes of this subsection:
10    "Qualifying pupils" means individuals who (i) are
11residents of the State of Illinois, (ii) are under the age of
1221 at the close of the school year for which a credit is
13sought, and (iii) during the school year for which a credit is
14sought were full-time pupils enrolled in a kindergarten through
15twelfth grade education program at any school, as defined in
16this subsection.
17    "Qualified education expense" means the amount incurred on
18behalf of a qualifying pupil in excess of $250 for tuition,
19book fees, and lab fees at the school in which the pupil is
20enrolled during the regular school year.
21    "School" means any public or nonpublic elementary or
22secondary school in Illinois that is in compliance with Title
23VI of the Civil Rights Act of 1964 and attendance at which
24satisfies the requirements of Section 26-1 of the School Code,
25except that nothing shall be construed to require a child to
26attend any particular public or nonpublic school to qualify for

 

 

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

 

 

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1    Environmental Protection Act. Determinations as to credit
2    availability for purposes of this Section shall be made
3    consistent with rules adopted by the Pollution Control
4    Board pursuant to the Illinois Administrative Procedure
5    Act for the administration and enforcement of Section 58.9
6    of the Environmental Protection Act. For purposes of this
7    Section, "taxpayer" includes a person whose tax attributes
8    the taxpayer has succeeded to under Section 381 of the
9    Internal Revenue Code and "related party" includes the
10    persons disallowed a deduction for losses by paragraphs
11    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
12    Code by virtue of being a related taxpayer, as well as any
13    of its partners. The credit allowed against the tax imposed
14    by subsections (a) and (b) shall be equal to 25% of the
15    unreimbursed eligible remediation costs in excess of
16    $100,000 per site.
17        (ii) A credit allowed under this subsection that is
18    unused in the year the credit is earned may be carried
19    forward to each of the 5 taxable years following the year
20    for which the credit is first earned until it is used. This
21    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

 

 

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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(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1796-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
181-13-11; 97-2, eff. 5-6-11.)
 
19    (35 ILCS 5/204)  (from Ch. 120, par. 2-204)
20    Sec. 204. Standard Exemption.
21    (a) Allowance of exemption. In computing net income under
22this Act, there shall be allowed as an exemption the sum of the
23amounts determined under subsections (b), (c) and (d),
24multiplied by a fraction the numerator of which is the amount
25of the taxpayer's base income allocable to this State for the

 

 

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1taxable year and the denominator of which is the taxpayer's
2total base income for the taxable year.
3    (b) Basic amount. For the purpose of subsection (a) of this
4Section, except as provided by subsection (a) of Section 205
5and in this subsection, each taxpayer shall be allowed a basic
6amount of $1000, except that for corporations the basic amount
7shall be zero for tax years ending on or after December 31,
82003, and for individuals the basic amount shall be:
9        (1) for taxable years ending on or after December 31,
10    1998 and prior to December 31, 1999, $1,300;
11        (2) for taxable years ending on or after December 31,
12    1999 and prior to December 31, 2000, $1,650;
13        (3) for taxable years ending on or after December 31,
14    2000 and prior to December 31, 2012, $2,000; .
15        (4) for taxable years ending on or after December 31,
16    2012, $2,050.
17For taxable years ending on or after December 31, 1992, a
18taxpayer whose Illinois base income exceeds the basic amount
19and who is claimed as a dependent on another person's tax
20return under the Internal Revenue Code shall not be allowed any
21basic amount under this subsection.
22    (c) Additional amount for individuals. In the case of an
23individual taxpayer, there shall be allowed for the purpose of
24subsection (a), in addition to the basic amount provided by
25subsection (b), an additional exemption equal to the basic
26amount for each exemption in excess of one allowable to such

 

 

09700SB0397ham003- 95 -LRB097 04209 WGH 60069 a

1individual taxpayer for the taxable year under Section 151 of
2the Internal Revenue Code.
3    (d) Additional exemptions for an individual taxpayer and
4his or her spouse. In the case of an individual taxpayer and
5his or her spouse, he or she shall each be allowed additional
6exemptions as follows:
7        (1) Additional exemption for taxpayer or spouse 65
8    years of age or older.
9            (A) For taxpayer. An additional exemption of
10        $1,000 for the taxpayer if he or she has attained the
11        age of 65 before the end of the taxable year.
12            (B) For spouse when a joint return is not filed. An
13        additional exemption of $1,000 for the spouse of the
14        taxpayer if a joint return is not made by the taxpayer
15        and his spouse, and if the spouse has attained the age
16        of 65 before the end of such taxable year, and, for the
17        calendar year in which the taxable year of the taxpayer
18        begins, has no gross income and is not the dependent of
19        another taxpayer.
20        (2) Additional exemption for blindness of taxpayer or
21    spouse.
22            (A) For taxpayer. An additional exemption of
23        $1,000 for the taxpayer if he or she is blind at the
24        end of the taxable year.
25            (B) For spouse when a joint return is not filed. An
26        additional exemption of $1,000 for the spouse of the

 

 

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1        taxpayer if a separate return is made by the taxpayer,
2        and if the spouse is blind and, for the calendar year
3        in which the taxable year of the taxpayer begins, has
4        no gross income and is not the dependent of another
5        taxpayer. For purposes of this paragraph, the
6        determination of whether the spouse is blind shall be
7        made as of the end of the taxable year of the taxpayer;
8        except that if the spouse dies during such taxable year
9        such determination shall be made as of the time of such
10        death.
11            (C) Blindness defined. For purposes of this
12        subsection, an individual is blind only if his or her
13        central visual acuity does not exceed 20/200 in the
14        better eye with correcting lenses, or if his or her
15        visual acuity is greater than 20/200 but is accompanied
16        by a limitation in the fields of vision such that the
17        widest diameter of the visual fields subtends an angle
18        no greater than 20 degrees.
19    (e) Cross reference. See Article 3 for the manner of
20determining base income allocable to this State.
21    (f) Application of Section 250. Section 250 does not apply
22to the amendments to this Section made by Public Act 90-613.
23(Source: P.A. 97-507, eff. 8-23-11.)
 
24    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
25    Sec. 207. Net Losses.

 

 

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1    (a) If after applying all of the (i) modifications provided
2for in paragraph (2) of Section 203(b), paragraph (2) of
3Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
4allocation and apportionment provisions of Article 3 of this
5Act and subsection (c) of this Section, the taxpayer's net
6income results in a loss;
7        (1) for any taxable year ending prior to December 31,
8    1999, such loss shall be allowed as a carryover or
9    carryback deduction in the manner allowed under Section 172
10    of the Internal Revenue Code;
11        (2) for any taxable year ending on or after December
12    31, 1999 and prior to December 31, 2003, such loss shall be
13    allowed as a carryback to each of the 2 taxable years
14    preceding the taxable year of such loss and shall be a net
15    operating loss carryover to each of the 20 taxable years
16    following the taxable year of such loss; and
17        (3) for any taxable year ending on or after December
18    31, 2003, such loss shall be allowed as a net operating
19    loss carryover to each of the 12 taxable years following
20    the taxable year of such loss, except as provided in
21    subsection (d).
22    (a-5) Election to relinquish carryback and order of
23application of losses.
24            (A) For losses incurred in tax years ending prior
25        to December 31, 2003, the taxpayer may elect to
26        relinquish the entire carryback period with respect to

 

 

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1        such loss. Such election shall be made in the form and
2        manner prescribed by the Department and shall be made
3        by the due date (including extensions of time) for
4        filing the taxpayer's return for the taxable year in
5        which such loss is incurred, and such election, once
6        made, shall be irrevocable.
7            (B) The entire amount of such loss shall be carried
8        to the earliest taxable year to which such loss may be
9        carried. The amount of such loss which shall be carried
10        to each of the other taxable years shall be the excess,
11        if any, of the amount of such loss over the sum of the
12        deductions for carryback or carryover of such loss
13        allowable for each of the prior taxable years to which
14        such loss may be carried.
15    (b) Any loss determined under subsection (a) of this
16Section must be carried back or carried forward in the same
17manner for purposes of subsections (a) and (b) of Section 201
18of this Act as for purposes of subsections (c) and (d) of
19Section 201 of this Act.
20    (c) Notwithstanding any other provision of this Act, for
21each taxable year ending on or after December 31, 2008, for
22purposes of computing the loss for the taxable year under
23subsection (a) of this Section and the deduction taken into
24account for the taxable year for a net operating loss carryover
25under paragraphs (1), (2), and (3) of subsection (a) of this
26Section, the loss and net operating loss carryover shall be

 

 

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1reduced in an amount equal to the reduction to the net
2operating loss and net operating loss carryover to the taxable
3year, respectively, required under Section 108(b)(2)(A) of the
4Internal Revenue Code, multiplied by a fraction, the numerator
5of which is the amount of discharge of indebtedness income that
6is excluded from gross income for the taxable year (but only if
7the taxable year ends on or after December 31, 2008) under
8Section 108(a) of the Internal Revenue Code and that would have
9been allocated and apportioned to this State under Article 3 of
10this Act but for that exclusion, and the denominator of which
11is the total amount of discharge of indebtedness income
12excluded from gross income under Section 108(a) of the Internal
13Revenue Code for the taxable year. The reduction required under
14this subsection (c) shall be made after the determination of
15Illinois net income for the taxable year in which the
16indebtedness is discharged.
17    (d) In the case of a corporation (other than a Subchapter S
18corporation), no carryover deduction shall be allowed under
19this Section for any taxable year ending after December 31,
202010 and prior to December 31, 2012, and no carryover deduction
21shall exceed $100,000 for any taxable year ending on or after
22December 31, 2012 and prior to December 31, 2014; provided
23that, for purposes of determining the taxable years to which a
24net loss may be carried under subsection (a) of this Section,
25no taxable year for which a deduction is disallowed under this
26subsection, or for which the deduction would exceed $100,000 if

 

 

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1not for this subsection, shall be counted.
2    (e) In the case of a residual interest holder in a real
3estate mortgage investment conduit subject to Section 860E of
4the Internal Revenue Code, the net loss in subsection (a) shall
5be equal to:
6        (1) the amount computed under subsection (a), without
7    regard to this subsection (e), or if that amount is
8    positive, zero;
9        (2) minus an amount equal to the amount computed under
10    subsection (a), without regard to this subsection (e),
11    minus the amount that would be computed under subsection
12    (a) if the taxpayer's federal taxable income were computed
13    without regard to Section 860E of the Internal Revenue Code
14    and without regard to this subsection (e).
15    The modification in this subsection (e) is exempt from the
16provisions of Section 250.
17(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11.)
 
18    (35 ILCS 5/212)
19    Sec. 212. Earned income tax credit.
20    (a) With respect to the federal earned income tax credit
21allowed for the taxable year under Section 32 of the federal
22Internal Revenue Code, 26 U.S.C. 32, each individual taxpayer
23is entitled to a credit against the tax imposed by subsections
24(a) and (b) of Section 201 in an amount equal to (i) 5% of the
25federal tax credit for each taxable year beginning on or after

 

 

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1January 1, 2000 and ending prior to December 31, 2012 and (ii)
27.5% of the federal tax credit for each taxable year beginning
3on or after January 1, 2012.
4    For a non-resident or part-year resident, the amount of the
5credit under this Section shall be in proportion to the amount
6of income attributable to this State.
7    (b) For taxable years beginning before January 1, 2003, in
8no event shall a credit under this Section reduce the
9taxpayer's liability to less than zero. For each taxable year
10beginning on or after January 1, 2003, if the amount of the
11credit exceeds the income tax liability for the applicable tax
12year, then the excess credit shall be refunded to the taxpayer.
13The amount of a refund shall not be included in the taxpayer's
14income or resources for the purposes of determining eligibility
15or benefit level in any means-tested benefit program
16administered by a governmental entity unless required by
17federal law.
18    (c) This Section is exempt from the provisions of Section
19250.
20(Source: P.A. 95-333, eff. 8-21-07.)
 
21    (35 ILCS 5/250)
22    Sec. 250. Sunset of exemptions, credits, and deductions.
23    (a) The application of every exemption, credit, and
24deduction against tax imposed by this Act that becomes law
25after the effective date of this amendatory Act of 1994 shall

 

 

09700SB0397ham003- 102 -LRB097 04209 WGH 60069 a

1be limited by a reasonable and appropriate sunset date. A
2taxpayer is not entitled to take the exemption, credit, or
3deduction for tax years beginning on or after the sunset date.
4Except as provided in subsection (b) of this Section, if If a
5reasonable and appropriate sunset date is not specified in the
6Public Act that creates the exemption, credit, or deduction, a
7taxpayer shall not be entitled to take the exemption, credit,
8or deduction for tax years beginning on or after 5 years after
9the effective date of the Public Act creating the exemption,
10credit, or deduction and thereafter; provided, however, that in
11the case of any Public Act authorizing the issuance of
12tax-exempt obligations that does not specify a sunset date for
13the exemption or deduction of income derived from the
14obligations, the exemption or deduction shall not terminate
15until after the obligations have been paid by the issuer.
16    (b) Notwithstanding the provisions of subsection (a) of
17this Section, the sunset date of any exemption, credit, or
18deduction that is scheduled to expire in 2011, 2012, or 2013 by
19operation of this Section shall be extended by 5 years.
20(Source: P.A. 88-660, eff. 9-16-94; 89-460, eff. 5-24-96.)
 
21    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
22    Sec. 304. Business income of persons other than residents.
23    (a) In general. The business income of a person other than
24a resident shall be allocated to this State if such person's
25business income is derived solely from this State. If a person

 

 

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1other than a resident derives business income from this State
2and one or more other states, then, for tax years ending on or
3before December 30, 1998, and except as otherwise provided by
4this Section, such person's business income shall be
5apportioned to this State by multiplying the income by a
6fraction, the numerator of which is the sum of the property
7factor (if any), the payroll factor (if any) and 200% of the
8sales factor (if any), and the denominator of which is 4
9reduced by the number of factors other than the sales factor
10which have a denominator of zero and by an additional 2 if the
11sales factor has a denominator of zero. For tax years ending on
12or after December 31, 1998, and except as otherwise provided by
13this Section, persons other than residents who derive business
14income from this State and one or more other states shall
15compute their apportionment factor by weighting their
16property, payroll, and sales factors as provided in subsection
17(h) of this Section.
18    (1) Property factor.
19        (A) The property factor is a fraction, the numerator of
20    which is the average value of the person's real and
21    tangible personal property owned or rented and used in the
22    trade or business in this State during the taxable year and
23    the denominator of which is the average value of all the
24    person's real and tangible personal property owned or
25    rented and used in the trade or business during the taxable
26    year.

 

 

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1        (B) Property owned by the person is valued at its
2    original cost. Property rented by the person is valued at 8
3    times the net annual rental rate. Net annual rental rate is
4    the annual rental rate paid by the person less any annual
5    rental rate received by the person from sub-rentals.
6        (C) The average value of property shall be determined
7    by averaging the values at the beginning and ending of the
8    taxable year but the Director may require the averaging of
9    monthly values during the taxable year if reasonably
10    required to reflect properly the average value of the
11    person's property.
12    (2) Payroll factor.
13        (A) The payroll factor is a fraction, the numerator of
14    which is the total amount paid in this State during the
15    taxable year by the person for compensation, and the
16    denominator of which is the total compensation paid
17    everywhere during the taxable year.
18        (B) Compensation is paid in this State if:
19            (i) The individual's service is performed entirely
20        within this State;
21            (ii) The individual's service is performed both
22        within and without this State, but the service
23        performed without this State is incidental to the
24        individual's service performed within this State; or
25            (iii) Some of the service is performed within this
26        State and either the base of operations, or if there is

 

 

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1        no base of operations, the place from which the service
2        is directed or controlled is within this State, or the
3        base of operations or the place from which the service
4        is directed or controlled is not in any state in which
5        some part of the service is performed, but the
6        individual's residence is in this State.
7            (iv) Compensation paid to nonresident professional
8        athletes.
9            (a) General. The Illinois source income of a
10        nonresident individual who is a member of a
11        professional athletic team includes the portion of the
12        individual's total compensation for services performed
13        as a member of a professional athletic team during the
14        taxable year which the number of duty days spent within
15        this State performing services for the team in any
16        manner during the taxable year bears to the total
17        number of duty days spent both within and without this
18        State during the taxable year.
19            (b) Travel days. Travel days that do not involve
20        either a game, practice, team meeting, or other similar
21        team event are not considered duty days spent in this
22        State. However, such travel days are considered in the
23        total duty days spent both within and without this
24        State.
25            (c) Definitions. For purposes of this subpart
26        (iv):

 

 

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1                (1) The term "professional athletic team"
2            includes, but is not limited to, any professional
3            baseball, basketball, football, soccer, or hockey
4            team.
5                (2) The term "member of a professional
6            athletic team" includes those employees who are
7            active players, players on the disabled list, and
8            any other persons required to travel and who travel
9            with and perform services on behalf of a
10            professional athletic team on a regular basis.
11            This includes, but is not limited to, coaches,
12            managers, and trainers.
13                (3) Except as provided in items (C) and (D) of
14            this subpart (3), the term "duty days" means all
15            days during the taxable year from the beginning of
16            the professional athletic team's official
17            pre-season training period through the last game
18            in which the team competes or is scheduled to
19            compete. Duty days shall be counted for the year in
20            which they occur, including where a team's
21            official pre-season training period through the
22            last game in which the team competes or is
23            scheduled to compete, occurs during more than one
24            tax year.
25                    (A) Duty days shall also include days on
26                which a member of a professional athletic team

 

 

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1                performs service for a team on a date that does
2                not fall within the foregoing period (e.g.,
3                participation in instructional leagues, the
4                "All Star Game", or promotional "caravans").
5                Performing a service for a professional
6                athletic team includes conducting training and
7                rehabilitation activities, when such
8                activities are conducted at team facilities.
9                    (B) Also included in duty days are game
10                days, practice days, days spent at team
11                meetings, promotional caravans, preseason
12                training camps, and days served with the team
13                through all post-season games in which the team
14                competes or is scheduled to compete.
15                    (C) Duty days for any person who joins a
16                team during the period from the beginning of
17                the professional athletic team's official
18                pre-season training period through the last
19                game in which the team competes, or is
20                scheduled to compete, shall begin on the day
21                that person joins the team. Conversely, duty
22                days for any person who leaves a team during
23                this period shall end on the day that person
24                leaves the team. Where a person switches teams
25                during a taxable year, a separate duty-day
26                calculation shall be made for the period the

 

 

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1                person was with each team.
2                    (D) Days for which a member of a
3                professional athletic team is not compensated
4                and is not performing services for the team in
5                any manner, including days when such member of
6                a professional athletic team has been
7                suspended without pay and prohibited from
8                performing any services for the team, shall not
9                be treated as duty days.
10                    (E) Days for which a member of a
11                professional athletic team is on the disabled
12                list and does not conduct rehabilitation
13                activities at facilities of the team, and is
14                not otherwise performing services for the team
15                in Illinois, shall not be considered duty days
16                spent in this State. All days on the disabled
17                list, however, are considered to be included in
18                total duty days spent both within and without
19                this State.
20                (4) The term "total compensation for services
21            performed as a member of a professional athletic
22            team" means the total compensation received during
23            the taxable year for services performed:
24                    (A) from the beginning of the official
25                pre-season training period through the last
26                game in which the team competes or is scheduled

 

 

09700SB0397ham003- 109 -LRB097 04209 WGH 60069 a

1                to compete during that taxable year; and
2                    (B) during the taxable year on a date which
3                does not fall within the foregoing period
4                (e.g., participation in instructional leagues,
5                the "All Star Game", or promotional caravans).
6                This compensation shall include, but is not
7            limited to, salaries, wages, bonuses as described
8            in this subpart, and any other type of compensation
9            paid during the taxable year to a member of a
10            professional athletic team for services performed
11            in that year. This compensation does not include
12            strike benefits, severance pay, termination pay,
13            contract or option year buy-out payments,
14            expansion or relocation payments, or any other
15            payments not related to services performed for the
16            team.
17                For purposes of this subparagraph, "bonuses"
18            included in "total compensation for services
19            performed as a member of a professional athletic
20            team" subject to the allocation described in
21            Section 302(c)(1) are: bonuses earned as a result
22            of play (i.e., performance bonuses) during the
23            season, including bonuses paid for championship,
24            playoff or "bowl" games played by a team, or for
25            selection to all-star league or other honorary
26            positions; and bonuses paid for signing a

 

 

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1            contract, unless the payment of the signing bonus
2            is not conditional upon the signee playing any
3            games for the team or performing any subsequent
4            services for the team or even making the team, the
5            signing bonus is payable separately from the
6            salary and any other compensation, and the signing
7            bonus is nonrefundable.
8    (3) Sales factor.
9        (A) The sales factor is a fraction, the numerator of
10    which is the total sales of the person in this State during
11    the taxable year, and the denominator of which is the total
12    sales of the person everywhere during the taxable year.
13        (B) Sales of tangible personal property are in this
14    State if:
15            (i) The property is delivered or shipped to a
16        purchaser, other than the United States government,
17        within this State regardless of the f. o. b. point or
18        other conditions of the sale; or
19            (ii) The property is shipped from an office, store,
20        warehouse, factory or other place of storage in this
21        State and either the purchaser is the United States
22        government or the person is not taxable in the state of
23        the purchaser; provided, however, that premises owned
24        or leased by a person who has independently contracted
25        with the seller for the printing of newspapers,
26        periodicals or books shall not be deemed to be an

 

 

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1        office, store, warehouse, factory or other place of
2        storage for purposes of this Section. Sales of tangible
3        personal property are not in this State if the seller
4        and purchaser would be members of the same unitary
5        business group but for the fact that either the seller
6        or purchaser is a person with 80% or more of total
7        business activity outside of the United States and the
8        property is purchased for resale.
9        (B-1) Patents, copyrights, trademarks, and similar
10    items of intangible personal property.
11            (i) Gross receipts from the licensing, sale, or
12        other disposition of a patent, copyright, trademark,
13        or similar item of intangible personal property, other
14        than gross receipts governed by paragraph (B-7) of this
15        item (3), are in this State to the extent the item is
16        utilized in this State during the year the gross
17        receipts are included in gross income.
18            (ii) Place of utilization.
19                (I) A patent is utilized in a state to the
20            extent that it is employed in production,
21            fabrication, manufacturing, or other processing in
22            the state or to the extent that a patented product
23            is produced in the state. If a patent is utilized
24            in more than one state, the extent to which it is
25            utilized in any one state shall be a fraction equal
26            to the gross receipts of the licensee or purchaser

 

 

09700SB0397ham003- 112 -LRB097 04209 WGH 60069 a

1            from sales or leases of items produced,
2            fabricated, manufactured, or processed within that
3            state using the patent and of patented items
4            produced within that state, divided by the total of
5            such gross receipts for all states in which the
6            patent is utilized.
7                (II) A copyright is utilized in a state to the
8            extent that printing or other publication
9            originates in the state. If a copyright is utilized
10            in more than one state, the extent to which it is
11            utilized in any one state shall be a fraction equal
12            to the gross receipts from sales or licenses of
13            materials printed or published in that state
14            divided by the total of such gross receipts for all
15            states in which the copyright is utilized.
16                (III) Trademarks and other items of intangible
17            personal property governed by this paragraph (B-1)
18            are utilized in the state in which the commercial
19            domicile of the licensee or purchaser is located.
20            (iii) If the state of utilization of an item of
21        property governed by this paragraph (B-1) cannot be
22        determined from the taxpayer's books and records or
23        from the books and records of any person related to the
24        taxpayer within the meaning of Section 267(b) of the
25        Internal Revenue Code, 26 U.S.C. 267, the gross
26        receipts attributable to that item shall be excluded

 

 

09700SB0397ham003- 113 -LRB097 04209 WGH 60069 a

1        from both the numerator and the denominator of the
2        sales factor.
3        (B-2) Gross receipts from the license, sale, or other
4    disposition of patents, copyrights, trademarks, and
5    similar items of intangible personal property, other than
6    gross receipts governed by paragraph (B-7) of this item
7    (3), may be included in the numerator or denominator of the
8    sales factor only if gross receipts from licenses, sales,
9    or other disposition of such items comprise more than 50%
10    of the taxpayer's total gross receipts included in gross
11    income during the tax year and during each of the 2
12    immediately preceding tax years; provided that, when a
13    taxpayer is a member of a unitary business group, such
14    determination shall be made on the basis of the gross
15    receipts of the entire unitary business group.
16        (B-5) For taxable years ending on or after December 31,
17    2008, except as provided in subsections (ii) through (vii),
18    receipts from the sale of telecommunications service or
19    mobile telecommunications service are in this State if the
20    customer's service address is in this State.
21            (i) For purposes of this subparagraph (B-5), the
22        following terms have the following meanings:
23            "Ancillary services" means services that are
24        associated with or incidental to the provision of
25        "telecommunications services", including but not
26        limited to "detailed telecommunications billing",

 

 

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1        "directory assistance", "vertical service", and "voice
2        mail services".
3            "Air-to-Ground Radiotelephone service" means a
4        radio service, as that term is defined in 47 CFR 22.99,
5        in which common carriers are authorized to offer and
6        provide radio telecommunications service for hire to
7        subscribers in aircraft.
8            "Call-by-call Basis" means any method of charging
9        for telecommunications services where the price is
10        measured by individual calls.
11            "Communications Channel" means a physical or
12        virtual path of communications over which signals are
13        transmitted between or among customer channel
14        termination points.
15            "Conference bridging service" means an "ancillary
16        service" that links two or more participants of an
17        audio or video conference call and may include the
18        provision of a telephone number. "Conference bridging
19        service" does not include the "telecommunications
20        services" used to reach the conference bridge.
21            "Customer Channel Termination Point" means the
22        location where the customer either inputs or receives
23        the communications.
24            "Detailed telecommunications billing service"
25        means an "ancillary service" of separately stating
26        information pertaining to individual calls on a

 

 

09700SB0397ham003- 115 -LRB097 04209 WGH 60069 a

1        customer's billing statement.
2            "Directory assistance" means an "ancillary
3        service" of providing telephone number information,
4        and/or address information.
5            "Home service provider" means the facilities based
6        carrier or reseller with which the customer contracts
7        for the provision of mobile telecommunications
8        services.
9            "Mobile telecommunications service" means
10        commercial mobile radio service, as defined in Section
11        20.3 of Title 47 of the Code of Federal Regulations as
12        in effect on June 1, 1999.
13            "Place of primary use" means the street address
14        representative of where the customer's use of the
15        telecommunications service primarily occurs, which
16        must be the residential street address or the primary
17        business street address of the customer. In the case of
18        mobile telecommunications services, "place of primary
19        use" must be within the licensed service area of the
20        home service provider.
21            "Post-paid telecommunication service" means the
22        telecommunications service obtained by making a
23        payment on a call-by-call basis either through the use
24        of a credit card or payment mechanism such as a bank
25        card, travel card, credit card, or debit card, or by
26        charge made to a telephone number which is not

 

 

09700SB0397ham003- 116 -LRB097 04209 WGH 60069 a

1        associated with the origination or termination of the
2        telecommunications service. A post-paid calling
3        service includes telecommunications service, except a
4        prepaid wireless calling service, that would be a
5        prepaid calling service except it is not exclusively a
6        telecommunication service.
7            "Prepaid telecommunication service" means the
8        right to access exclusively telecommunications
9        services, which must be paid for in advance and which
10        enables the origination of calls using an access number
11        or authorization code, whether manually or
12        electronically dialed, and that is sold in
13        predetermined units or dollars of which the number
14        declines with use in a known amount.
15            "Prepaid Mobile telecommunication service" means a
16        telecommunications service that provides the right to
17        utilize mobile wireless service as well as other
18        non-telecommunication services, including but not
19        limited to ancillary services, which must be paid for
20        in advance that is sold in predetermined units or
21        dollars of which the number declines with use in a
22        known amount.
23            "Private communication service" means a
24        telecommunication service that entitles the customer
25        to exclusive or priority use of a communications
26        channel or group of channels between or among

 

 

09700SB0397ham003- 117 -LRB097 04209 WGH 60069 a

1        termination points, regardless of the manner in which
2        such channel or channels are connected, and includes
3        switching capacity, extension lines, stations, and any
4        other associated services that are provided in
5        connection with the use of such channel or channels.
6            "Service address" means:
7                (a) The location of the telecommunications
8            equipment to which a customer's call is charged and
9            from which the call originates or terminates,
10            regardless of where the call is billed or paid;
11                (b) If the location in line (a) is not known,
12            service address means the origination point of the
13            signal of the telecommunications services first
14            identified by either the seller's
15            telecommunications system or in information
16            received by the seller from its service provider
17            where the system used to transport such signals is
18            not that of the seller; and
19                (c) If the locations in line (a) and line (b)
20            are not known, the service address means the
21            location of the customer's place of primary use.
22            "Telecommunications service" means the electronic
23        transmission, conveyance, or routing of voice, data,
24        audio, video, or any other information or signals to a
25        point, or between or among points. The term
26        "telecommunications service" includes such

 

 

09700SB0397ham003- 118 -LRB097 04209 WGH 60069 a

1        transmission, conveyance, or routing in which computer
2        processing applications are used to act on the form,
3        code or protocol of the content for purposes of
4        transmission, conveyance or routing without regard to
5        whether such service is referred to as voice over
6        Internet protocol services or is classified by the
7        Federal Communications Commission as enhanced or value
8        added. "Telecommunications service" does not include:
9                (a) Data processing and information services
10            that allow data to be generated, acquired, stored,
11            processed, or retrieved and delivered by an
12            electronic transmission to a purchaser when such
13            purchaser's primary purpose for the underlying
14            transaction is the processed data or information;
15                (b) Installation or maintenance of wiring or
16            equipment on a customer's premises;
17                (c) Tangible personal property;
18                (d) Advertising, including but not limited to
19            directory advertising.
20                (e) Billing and collection services provided
21            to third parties;
22                (f) Internet access service;
23                (g) Radio and television audio and video
24            programming services, regardless of the medium,
25            including the furnishing of transmission,
26            conveyance and routing of such services by the

 

 

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1            programming service provider. Radio and television
2            audio and video programming services shall include
3            but not be limited to cable service as defined in
4            47 USC 522(6) and audio and video programming
5            services delivered by commercial mobile radio
6            service providers, as defined in 47 CFR 20.3;
7                (h) "Ancillary services"; or
8                (i) Digital products "delivered
9            electronically", including but not limited to
10            software, music, video, reading materials or ring
11            tones.
12            "Vertical service" means an "ancillary service"
13        that is offered in connection with one or more
14        "telecommunications services", which offers advanced
15        calling features that allow customers to identify
16        callers and to manage multiple calls and call
17        connections, including "conference bridging services".
18            "Voice mail service" means an "ancillary service"
19        that enables the customer to store, send or receive
20        recorded messages. "Voice mail service" does not
21        include any "vertical services" that the customer may
22        be required to have in order to utilize the "voice mail
23        service".
24            (ii) Receipts from the sale of telecommunications
25        service sold on an individual call-by-call basis are in
26        this State if either of the following applies:

 

 

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1                (a) The call both originates and terminates in
2            this State.
3                (b) The call either originates or terminates
4            in this State and the service address is located in
5            this State.
6            (iii) Receipts from the sale of postpaid
7        telecommunications service at retail are in this State
8        if the origination point of the telecommunication
9        signal, as first identified by the service provider's
10        telecommunication system or as identified by
11        information received by the seller from its service
12        provider if the system used to transport
13        telecommunication signals is not the seller's, is
14        located in this State.
15            (iv) Receipts from the sale of prepaid
16        telecommunications service or prepaid mobile
17        telecommunications service at retail are in this State
18        if the purchaser obtains the prepaid card or similar
19        means of conveyance at a location in this State.
20        Receipts from recharging a prepaid telecommunications
21        service or mobile telecommunications service is in
22        this State if the purchaser's billing information
23        indicates a location in this State.
24            (v) Receipts from the sale of private
25        communication services are in this State as follows:
26                (a) 100% of receipts from charges imposed at

 

 

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1            each channel termination point in this State.
2                (b) 100% of receipts from charges for the total
3            channel mileage between each channel termination
4            point in this State.
5                (c) 50% of the total receipts from charges for
6            service segments when those segments are between 2
7            customer channel termination points, 1 of which is
8            located in this State and the other is located
9            outside of this State, which segments are
10            separately charged.
11                (d) The receipts from charges for service
12            segments with a channel termination point located
13            in this State and in two or more other states, and
14            which segments are not separately billed, are in
15            this State based on a percentage determined by
16            dividing the number of customer channel
17            termination points in this State by the total
18            number of customer channel termination points.
19            (vi) Receipts from charges for ancillary services
20        for telecommunications service sold to customers at
21        retail are in this State if the customer's primary
22        place of use of telecommunications services associated
23        with those ancillary services is in this State. If the
24        seller of those ancillary services cannot determine
25        where the associated telecommunications are located,
26        then the ancillary services shall be based on the

 

 

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1        location of the purchaser.
2            (vii) Receipts to access a carrier's network or
3        from the sale of telecommunication services or
4        ancillary services for resale are in this State as
5        follows:
6                (a) 100% of the receipts from access fees
7            attributable to intrastate telecommunications
8            service that both originates and terminates in
9            this State.
10                (b) 50% of the receipts from access fees
11            attributable to interstate telecommunications
12            service if the interstate call either originates
13            or terminates in this State.
14                (c) 100% of the receipts from interstate end
15            user access line charges, if the customer's
16            service address is in this State. As used in this
17            subdivision, "interstate end user access line
18            charges" includes, but is not limited to, the
19            surcharge approved by the federal communications
20            commission and levied pursuant to 47 CFR 69.
21                (d) Gross receipts from sales of
22            telecommunication services or from ancillary
23            services for telecommunications services sold to
24            other telecommunication service providers for
25            resale shall be sourced to this State using the
26            apportionment concepts used for non-resale

 

 

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1            receipts of telecommunications services if the
2            information is readily available to make that
3            determination. If the information is not readily
4            available, then the taxpayer may use any other
5            reasonable and consistent method.
6        (B-7) For taxable years ending on or after December 31,
7    2008, receipts from the sale of broadcasting services are
8    in this State if the broadcasting services are received in
9    this State. For purposes of this paragraph (B-7), the
10    following terms have the following meanings:
11            "Advertising revenue" means consideration received
12        by the taxpayer in exchange for broadcasting services
13        or allowing the broadcasting of commercials or
14        announcements in connection with the broadcasting of
15        film or radio programming, from sponsorships of the
16        programming, or from product placements in the
17        programming.
18            "Audience factor" means the ratio that the
19        audience or subscribers located in this State of a
20        station, a network, or a cable system bears to the
21        total audience or total subscribers for that station,
22        network, or cable system. The audience factor for film
23        or radio programming shall be determined by reference
24        to the books and records of the taxpayer or by
25        reference to published rating statistics provided the
26        method used by the taxpayer is consistently used from

 

 

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1        year to year for this purpose and fairly represents the
2        taxpayer's activity in this State.
3            "Broadcast" or "broadcasting" or "broadcasting
4        services" means the transmission or provision of film
5        or radio programming, whether through the public
6        airwaves, by cable, by direct or indirect satellite
7        transmission, or by any other means of communication,
8        either through a station, a network, or a cable system.
9            "Film" or "film programming" means the broadcast
10        on television of any and all performances, events, or
11        productions, including but not limited to news,
12        sporting events, plays, stories, or other literary,
13        commercial, educational, or artistic works, either
14        live or through the use of video tape, disc, or any
15        other type of format or medium. Each episode of a
16        series of films produced for television shall
17        constitute separate "film" notwithstanding that the
18        series relates to the same principal subject and is
19        produced during one or more tax periods.
20            "Radio" or "radio programming" means the broadcast
21        on radio of any and all performances, events, or
22        productions, including but not limited to news,
23        sporting events, plays, stories, or other literary,
24        commercial, educational, or artistic works, either
25        live or through the use of an audio tape, disc, or any
26        other format or medium. Each episode in a series of

 

 

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1        radio programming produced for radio broadcast shall
2        constitute a separate "radio programming"
3        notwithstanding that the series relates to the same
4        principal subject and is produced during one or more
5        tax periods.
6                (i) In the case of advertising revenue from
7            broadcasting, the customer is the advertiser and
8            the service is received in this State if the
9            commercial domicile of the advertiser is in this
10            State.
11                (ii) In the case where film or radio
12            programming is broadcast by a station, a network,
13            or a cable system for a fee or other remuneration
14            received from the recipient of the broadcast, the
15            portion of the service that is received in this
16            State is measured by the portion of the recipients
17            of the broadcast located in this State.
18            Accordingly, the fee or other remuneration for
19            such service that is included in the Illinois
20            numerator of the sales factor is the total of those
21            fees or other remuneration received from
22            recipients in Illinois. For purposes of this
23            paragraph, a taxpayer may determine the location
24            of the recipients of its broadcast using the
25            address of the recipient shown in its contracts
26            with the recipient or using the billing address of

 

 

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1            the recipient in the taxpayer's records.
2                (iii) In the case where film or radio
3            programming is broadcast by a station, a network,
4            or a cable system for a fee or other remuneration
5            from the person providing the programming, the
6            portion of the broadcast service that is received
7            by such station, network, or cable system in this
8            State is measured by the portion of recipients of
9            the broadcast located in this State. Accordingly,
10            the amount of revenue related to such an
11            arrangement that is included in the Illinois
12            numerator of the sales factor is the total fee or
13            other total remuneration from the person providing
14            the programming related to that broadcast
15            multiplied by the Illinois audience factor for
16            that broadcast.
17                (iv) In the case where film or radio
18            programming is provided by a taxpayer that is a
19            network or station to a customer for broadcast in
20            exchange for a fee or other remuneration from that
21            customer the broadcasting service is received at
22            the location of the office of the customer from
23            which the services were ordered in the regular
24            course of the customer's trade or business.
25            Accordingly, in such a case the revenue derived by
26            the taxpayer that is included in the taxpayer's

 

 

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1            Illinois numerator of the sales factor is the
2            revenue from such customers who receive the
3            broadcasting service in Illinois.
4                (v) In the case where film or radio programming
5            is provided by a taxpayer that is not a network or
6            station to another person for broadcasting in
7            exchange for a fee or other remuneration from that
8            person, the broadcasting service is received at
9            the location of the office of the customer from
10            which the services were ordered in the regular
11            course of the customer's trade or business.
12            Accordingly, in such a case the revenue derived by
13            the taxpayer that is included in the taxpayer's
14            Illinois numerator of the sales factor is the
15            revenue from such customers who receive the
16            broadcasting service in Illinois.
17        (C) For taxable years ending before December 31, 2008,
18    sales, other than sales governed by paragraphs (B), (B-1),
19    and (B-2), are in this State if:
20            (i) The income-producing activity is performed in
21        this State; or
22            (ii) The income-producing activity is performed
23        both within and without this State and a greater
24        proportion of the income-producing activity is
25        performed within this State than without this State,
26        based on performance costs.

 

 

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1        (C-5) For taxable years ending on or after December 31,
2    2008, sales, other than sales governed by paragraphs (B),
3    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
4    the following criteria are met:
5            (i) Sales from the sale or lease of real property
6        are in this State if the property is located in this
7        State.
8            (ii) Sales from the lease or rental of tangible
9        personal property are in this State if the property is
10        located in this State during the rental period. Sales
11        from the lease or rental of tangible personal property
12        that is characteristically moving property, including,
13        but not limited to, motor vehicles, rolling stock,
14        aircraft, vessels, or mobile equipment are in this
15        State to the extent that the property is used in this
16        State.
17            (iii) In the case of interest, net gains (but not
18        less than zero) and other items of income from
19        intangible personal property, the sale is in this State
20        if:
21                (a) in the case of a taxpayer who is a dealer
22            in the item of intangible personal property within
23            the meaning of Section 475 of the Internal Revenue
24            Code, the income or gain is received from a
25            customer in this State. For purposes of this
26            subparagraph, a customer is in this State if the

 

 

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1            customer is an individual, trust or estate who is a
2            resident of this State and, for all other
3            customers, if the customer's commercial domicile
4            is in this State. Unless the dealer has actual
5            knowledge of the residence or commercial domicile
6            of a customer during a taxable year, the customer
7            shall be deemed to be a customer in this State if
8            the billing address of the customer, as shown in
9            the records of the dealer, is in this State; or
10                (b) in all other cases, if the
11            income-producing activity of the taxpayer is
12            performed in this State or, if the
13            income-producing activity of the taxpayer is
14            performed both within and without this State, if a
15            greater proportion of the income-producing
16            activity of the taxpayer is performed within this
17            State than in any other state, based on performance
18            costs.
19            (iv) Sales of services are in this State if the
20        services are received in this State. For the purposes
21        of this section, gross receipts from the performance of
22        services provided to a corporation, partnership, or
23        trust may only be attributed to a state where that
24        corporation, partnership, or trust has a fixed place of
25        business. If the state where the services are received
26        is not readily determinable or is a state where the

 

 

09700SB0397ham003- 130 -LRB097 04209 WGH 60069 a

1        corporation, partnership, or trust receiving the
2        service does not have a fixed place of business, the
3        services shall be deemed to be received at the location
4        of the office of the customer from which the services
5        were ordered in the regular course of the customer's
6        trade or business. If the ordering office cannot be
7        determined, the services shall be deemed to be received
8        at the office of the customer to which the services are
9        billed. If the taxpayer is not taxable in the state in
10        which the services are received, the sale must be
11        excluded from both the numerator and the denominator of
12        the sales factor. The Department shall adopt rules
13        prescribing where specific types of service are
14        received, including, but not limited to, publishing,
15        and utility service.
16        (D) For taxable years ending on or after December 31,
17    1995, the following items of income shall not be included
18    in the numerator or denominator of the sales factor:
19    dividends; amounts included under Section 78 of the
20    Internal Revenue Code; and Subpart F income as defined in
21    Section 952 of the Internal Revenue Code. No inference
22    shall be drawn from the enactment of this paragraph (D) in
23    construing this Section for taxable years ending before
24    December 31, 1995.
25        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
26    ending on or after December 31, 1999, provided that a

 

 

09700SB0397ham003- 131 -LRB097 04209 WGH 60069 a

1    taxpayer may elect to apply the provisions of these
2    paragraphs to prior tax years. Such election shall be made
3    in the form and manner prescribed by the Department, shall
4    be irrevocable, and shall apply to all tax years; provided
5    that, if a taxpayer's Illinois income tax liability for any
6    tax year, as assessed under Section 903 prior to January 1,
7    1999, was computed in a manner contrary to the provisions
8    of paragraphs (B-1) or (B-2), no refund shall be payable to
9    the taxpayer for that tax year to the extent such refund is
10    the result of applying the provisions of paragraph (B-1) or
11    (B-2) retroactively. In the case of a unitary business
12    group, such election shall apply to all members of such
13    group for every tax year such group is in existence, but
14    shall not apply to any taxpayer for any period during which
15    that taxpayer is not a member of such group.
16    (b) Insurance companies.
17        (1) In general. Except as otherwise provided by
18    paragraph (2), business income of an insurance company for
19    a taxable year shall be apportioned to this State by
20    multiplying such income by a fraction, the numerator of
21    which is the direct premiums written for insurance upon
22    property or risk in this State, and the denominator of
23    which is the direct premiums written for insurance upon
24    property or risk everywhere. For purposes of this
25    subsection, the term "direct premiums written" means the
26    total amount of direct premiums written, assessments and

 

 

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1    annuity considerations as reported for the taxable year on
2    the annual statement filed by the company with the Illinois
3    Director of Insurance in the form approved by the National
4    Convention of Insurance Commissioners or such other form as
5    may be prescribed in lieu thereof.
6        (2) Reinsurance. If the principal source of premiums
7    written by an insurance company consists of premiums for
8    reinsurance accepted by it, the business income of such
9    company shall be apportioned to this State by multiplying
10    such income by a fraction, the numerator of which is the
11    sum of (i) direct premiums written for insurance upon
12    property or risk in this State, plus (ii) premiums written
13    for reinsurance accepted in respect of property or risk in
14    this State, and the denominator of which is the sum of
15    (iii) direct premiums written for insurance upon property
16    or risk everywhere, plus (iv) premiums written for
17    reinsurance accepted in respect of property or risk
18    everywhere. For purposes of this paragraph, premiums
19    written for reinsurance accepted in respect of property or
20    risk in this State, whether or not otherwise determinable,
21    may, at the election of the company, be determined on the
22    basis of the proportion which premiums written for
23    reinsurance accepted from companies commercially domiciled
24    in Illinois bears to premiums written for reinsurance
25    accepted from all sources, or, alternatively, in the
26    proportion which the sum of the direct premiums written for

 

 

09700SB0397ham003- 133 -LRB097 04209 WGH 60069 a

1    insurance upon property or risk in this State by each
2    ceding company from which reinsurance is accepted bears to
3    the sum of the total direct premiums written by each such
4    ceding company for the taxable year. The election made by a
5    company under this paragraph for its first taxable year
6    ending on or after December 31, 2011, shall be binding for
7    that company for that taxable year and for all subsequent
8    taxable years, and may be altered only with the written
9    permission of the Department, which shall not be
10    unreasonably withheld.
11    (c) Financial organizations.
12        (1) In general. For taxable years ending before
13    December 31, 2008, business income of a financial
14    organization shall be apportioned to this State by
15    multiplying such income by a fraction, the numerator of
16    which is its business income from sources within this
17    State, and the denominator of which is its business income
18    from all sources. For the purposes of this subsection, the
19    business income of a financial organization from sources
20    within this State is the sum of the amounts referred to in
21    subparagraphs (A) through (E) following, but excluding the
22    adjusted income of an international banking facility as
23    determined in paragraph (2):
24            (A) Fees, commissions or other compensation for
25        financial services rendered within this State;
26            (B) Gross profits from trading in stocks, bonds or

 

 

09700SB0397ham003- 134 -LRB097 04209 WGH 60069 a

1        other securities managed within this State;
2            (C) Dividends, and interest from Illinois
3        customers, which are received within this State;
4            (D) Interest charged to customers at places of
5        business maintained within this State for carrying
6        debit balances of margin accounts, without deduction
7        of any costs incurred in carrying such accounts; and
8            (E) Any other gross income resulting from the
9        operation as a financial organization within this
10        State. In computing the amounts referred to in
11        paragraphs (A) through (E) of this subsection, any
12        amount received by a member of an affiliated group
13        (determined under Section 1504(a) of the Internal
14        Revenue Code but without reference to whether any such
15        corporation is an "includible corporation" under
16        Section 1504(b) of the Internal Revenue Code) from
17        another member of such group shall be included only to
18        the extent such amount exceeds expenses of the
19        recipient directly related thereto.
20        (2) International Banking Facility. For taxable years
21    ending before December 31, 2008:
22            (A) Adjusted Income. The adjusted income of an
23        international banking facility is its income reduced
24        by the amount of the floor amount.
25            (B) Floor Amount. The floor amount shall be the
26        amount, if any, determined by multiplying the income of

 

 

09700SB0397ham003- 135 -LRB097 04209 WGH 60069 a

1        the international banking facility by a fraction, not
2        greater than one, which is determined as follows:
3                (i) The numerator shall be:
4                The average aggregate, determined on a
5            quarterly basis, of the financial organization's
6            loans to banks in foreign countries, to foreign
7            domiciled borrowers (except where secured
8            primarily by real estate) and to foreign
9            governments and other foreign official
10            institutions, as reported for its branches,
11            agencies and offices within the state on its
12            "Consolidated Report of Condition", Schedule A,
13            Lines 2.c., 5.b., and 7.a., which was filed with
14            the Federal Deposit Insurance Corporation and
15            other regulatory authorities, for the year 1980,
16            minus
17                The average aggregate, determined on a
18            quarterly basis, of such loans (other than loans of
19            an international banking facility), as reported by
20            the financial institution for its branches,
21            agencies and offices within the state, on the
22            corresponding Schedule and lines of the
23            Consolidated Report of Condition for the current
24            taxable year, provided, however, that in no case
25            shall the amount determined in this clause (the
26            subtrahend) exceed the amount determined in the

 

 

09700SB0397ham003- 136 -LRB097 04209 WGH 60069 a

1            preceding clause (the minuend); and
2                (ii) the denominator shall be the average
3            aggregate, determined on a quarterly basis, of the
4            international banking facility's loans to banks in
5            foreign countries, to foreign domiciled borrowers
6            (except where secured primarily by real estate)
7            and to foreign governments and other foreign
8            official institutions, which were recorded in its
9            financial accounts for the current taxable year.
10            (C) Change to Consolidated Report of Condition and
11        in Qualification. In the event the Consolidated Report
12        of Condition which is filed with the Federal Deposit
13        Insurance Corporation and other regulatory authorities
14        is altered so that the information required for
15        determining the floor amount is not found on Schedule
16        A, lines 2.c., 5.b. and 7.a., the financial institution
17        shall notify the Department and the Department may, by
18        regulations or otherwise, prescribe or authorize the
19        use of an alternative source for such information. The
20        financial institution shall also notify the Department
21        should its international banking facility fail to
22        qualify as such, in whole or in part, or should there
23        be any amendment or change to the Consolidated Report
24        of Condition, as originally filed, to the extent such
25        amendment or change alters the information used in
26        determining the floor amount.

 

 

09700SB0397ham003- 137 -LRB097 04209 WGH 60069 a

1        (3) For taxable years ending on or after December 31,
2    2008, the business income of a financial organization shall
3    be apportioned to this State by multiplying such income by
4    a fraction, the numerator of which is its gross receipts
5    from sources in this State or otherwise attributable to
6    this State's marketplace and the denominator of which is
7    its gross receipts everywhere during the taxable year.
8    "Gross receipts" for purposes of this subparagraph (3)
9    means gross income, including net taxable gain on
10    disposition of assets, including securities and money
11    market instruments, when derived from transactions and
12    activities in the regular course of the financial
13    organization's trade or business. The following examples
14    are illustrative:
15            (i) Receipts from the lease or rental of real or
16        tangible personal property are in this State if the
17        property is located in this State during the rental
18        period. Receipts from the lease or rental of tangible
19        personal property that is characteristically moving
20        property, including, but not limited to, motor
21        vehicles, rolling stock, aircraft, vessels, or mobile
22        equipment are from sources in this State to the extent
23        that the property is used in this State.
24            (ii) Interest income, commissions, fees, gains on
25        disposition, and other receipts from assets in the
26        nature of loans that are secured primarily by real

 

 

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1        estate or tangible personal property are from sources
2        in this State if the security is located in this State.
3            (iii) Interest income, commissions, fees, gains on
4        disposition, and other receipts from consumer loans
5        that are not secured by real or tangible personal
6        property are from sources in this State if the debtor
7        is a resident of this State.
8            (iv) Interest income, commissions, fees, gains on
9        disposition, and other receipts from commercial loans
10        and installment obligations that are not secured by
11        real or tangible personal property are from sources in
12        this State if the proceeds of the loan are to be
13        applied in this State. If it cannot be determined where
14        the funds are to be applied, the income and receipts
15        are from sources in this State if the office of the
16        borrower from which the loan was negotiated in the
17        regular course of business is located in this State. If
18        the location of this office cannot be determined, the
19        income and receipts shall be excluded from the
20        numerator and denominator of the sales factor.
21            (v) Interest income, fees, gains on disposition,
22        service charges, merchant discount income, and other
23        receipts from credit card receivables are from sources
24        in this State if the card charges are regularly billed
25        to a customer in this State.
26            (vi) Receipts from the performance of services,

 

 

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1        including, but not limited to, fiduciary, advisory,
2        and brokerage services, are in this State if the
3        services are received in this State within the meaning
4        of subparagraph (a)(3)(C-5)(iv) of this Section.
5            (vii) Receipts from the issuance of travelers
6        checks and money orders are from sources in this State
7        if the checks and money orders are issued from a
8        location within this State.
9            (viii) Receipts from investment assets and
10        activities and trading assets and activities are
11        included in the receipts factor as follows:
12                (1) Interest, dividends, net gains (but not
13            less than zero) and other income from investment
14            assets and activities from trading assets and
15            activities shall be included in the receipts
16            factor. Investment assets and activities and
17            trading assets and activities include but are not
18            limited to: investment securities; trading account
19            assets; federal funds; securities purchased and
20            sold under agreements to resell or repurchase;
21            options; futures contracts; forward contracts;
22            notional principal contracts such as swaps;
23            equities; and foreign currency transactions. With
24            respect to the investment and trading assets and
25            activities described in subparagraphs (A) and (B)
26            of this paragraph, the receipts factor shall

 

 

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1            include the amounts described in such
2            subparagraphs.
3                    (A) The receipts factor shall include the
4                amount by which interest from federal funds
5                sold and securities purchased under resale
6                agreements exceeds interest expense on federal
7                funds purchased and securities sold under
8                repurchase agreements.
9                    (B) The receipts factor shall include the
10                amount by which interest, dividends, gains and
11                other income from trading assets and
12                activities, including but not limited to
13                assets and activities in the matched book, in
14                the arbitrage book, and foreign currency
15                transactions, exceed amounts paid in lieu of
16                interest, amounts paid in lieu of dividends,
17                and losses from such assets and activities.
18                (2) The numerator of the receipts factor
19            includes interest, dividends, net gains (but not
20            less than zero), and other income from investment
21            assets and activities and from trading assets and
22            activities described in paragraph (1) of this
23            subsection that are attributable to this State.
24                    (A) The amount of interest, dividends, net
25                gains (but not less than zero), and other
26                income from investment assets and activities

 

 

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1                in the investment account to be attributed to
2                this State and included in the numerator is
3                determined by multiplying all such income from
4                such assets and activities by a fraction, the
5                numerator of which is the gross income from
6                such assets and activities which are properly
7                assigned to a fixed place of business of the
8                taxpayer within this State and the denominator
9                of which is the gross income from all such
10                assets and activities.
11                    (B) The amount of interest from federal
12                funds sold and purchased and from securities
13                purchased under resale agreements and
14                securities sold under repurchase agreements
15                attributable to this State and included in the
16                numerator is determined by multiplying the
17                amount described in subparagraph (A) of
18                paragraph (1) of this subsection from such
19                funds and such securities by a fraction, the
20                numerator of which is the gross income from
21                such funds and such securities which are
22                properly assigned to a fixed place of business
23                of the taxpayer within this State and the
24                denominator of which is the gross income from
25                all such funds and such securities.
26                    (C) The amount of interest, dividends,

 

 

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1                gains, and other income from trading assets and
2                activities, including but not limited to
3                assets and activities in the matched book, in
4                the arbitrage book and foreign currency
5                transactions (but excluding amounts described
6                in subparagraphs (A) or (B) of this paragraph),
7                attributable to this State and included in the
8                numerator is determined by multiplying the
9                amount described in subparagraph (B) of
10                paragraph (1) of this subsection by a fraction,
11                the numerator of which is the gross income from
12                such trading assets and activities which are
13                properly assigned to a fixed place of business
14                of the taxpayer within this State and the
15                denominator of which is the gross income from
16                all such assets and activities.
17                    (D) Properly assigned, for purposes of
18                this paragraph (2) of this subsection, means
19                the investment or trading asset or activity is
20                assigned to the fixed place of business with
21                which it has a preponderance of substantive
22                contacts. An investment or trading asset or
23                activity assigned by the taxpayer to a fixed
24                place of business without the State shall be
25                presumed to have been properly assigned if:
26                        (i) the taxpayer has assigned, in the

 

 

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1                    regular course of its business, such asset
2                    or activity on its records to a fixed place
3                    of business consistent with federal or
4                    state regulatory requirements;
5                        (ii) such assignment on its records is
6                    based upon substantive contacts of the
7                    asset or activity to such fixed place of
8                    business; and
9                        (iii) the taxpayer uses such records
10                    reflecting assignment of such assets or
11                    activities for the filing of all state and
12                    local tax returns for which an assignment
13                    of such assets or activities to a fixed
14                    place of business is required.
15                    (E) The presumption of proper assignment
16                of an investment or trading asset or activity
17                provided in subparagraph (D) of paragraph (2)
18                of this subsection may be rebutted upon a
19                showing by the Department, supported by a
20                preponderance of the evidence, that the
21                preponderance of substantive contacts
22                regarding such asset or activity did not occur
23                at the fixed place of business to which it was
24                assigned on the taxpayer's records. If the
25                fixed place of business that has a
26                preponderance of substantive contacts cannot

 

 

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1                be determined for an investment or trading
2                asset or activity to which the presumption in
3                subparagraph (D) of paragraph (2) of this
4                subsection does not apply or with respect to
5                which that presumption has been rebutted, that
6                asset or activity is properly assigned to the
7                state in which the taxpayer's commercial
8                domicile is located. For purposes of this
9                subparagraph (E), it shall be presumed,
10                subject to rebuttal, that taxpayer's
11                commercial domicile is in the state of the
12                United States or the District of Columbia to
13                which the greatest number of employees are
14                regularly connected with the management of the
15                investment or trading income or out of which
16                they are working, irrespective of where the
17                services of such employees are performed, as of
18                the last day of the taxable year.
19        (4) (Blank).
20        (5) (Blank).
21    (c-1) Federally-regulated exchanges. For taxable years
22ending on or after December 31, 2012, business income of a
23federally-regulated exchange shall, at the option of the
24federally-regulated exchange, be apportioned to this State by
25multiplying such income by a fraction, the numerator of which
26is its business income from sources within this State, and the

 

 

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1denominator of which is its business income from all sources.
2For purposes of this subsection, the business income within
3this State of a federally-regulated exchange is the sum of the
4following:
5        (1) Receipts attributable to transactions executed on
6    a physical trading floor if that physical trading floor is
7    located in this State.
8        (2) Receipts attributable to all other matching,
9    execution, or clearing transactions, including without
10    limitation receipts from the provision of matching,
11    execution, or clearing services to another entity,
12    multiplied by (i) for taxable years ending on or after
13    December 31, 2012 but before December 31, 2013, 63.77%; and
14    (ii) for taxable years ending on or after December 31,
15    2013, 27.54%.
16        (3) Receipts from all other sales of services if the
17    services are received in this State. For the purposes of
18    this subsection, gross receipts from the performance of
19    services provided to a corporation, partnership, or trust
20    may only be attributed to a state where that corporation,
21    partnership, or trust has a fixed place of business. If the
22    state where the services are received is not readily
23    determinable or is a state where the corporation,
24    partnership, or trust receiving the service does not have a
25    fixed place of business, the services shall be deemed to be
26    received at the location of the office of the customer from

 

 

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1    which the services were ordered in the regular course of
2    the customer's trade or business. If the ordering office
3    cannot be determined, the services shall be deemed to be
4    received at the office of the customer to whom the services
5    are billed.
6        (4) All other receipts not governed by subparagraphs
7    (1), (2), or (3) of this subsection (c-1), to the extent
8    the receipts would be characterized as "sales in this
9    State" under item (3) of subsection (a) of this Section.
10    "Federally-regulated exchange" means (i) a "registered
11entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
12or (C), (ii) an "exchange" or "clearing agency" within the
13meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
14entities regulated under any successor regulatory structure to
15the foregoing, and (iv) all taxpayers who are members of the
16same unitary business group as a federally-regulated exchange,
17determined without regard to the prohibition in Section
181501(a)(27) of this Act against including in a unitary business
19group taxpayers who are ordinarily required to apportion
20business income under different subsections of this Section;
21provided that this subparagraph (iv) shall apply only if 50% or
22more of the business receipts of the unitary business group
23determined by application of this subparagraph (iv) for the
24taxable year are attributable to the matching, execution, or
25clearing of transactions conducted by an entity described in
26subparagraph (i), (ii), or (iii) of this paragraph.

 

 

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1    In no event shall the Illinois apportionment percentage
2computed in accordance with this subsection (c-1) for any
3taxpayer for any tax year be less than the Illinois
4apportionment percentage computed under this subsection (c-1)
5for that taxpayer for the first full tax year ending on or
6after December 31, 2013 for which this subsection (c-1) applied
7to the taxpayer.
8    (d) Transportation services. For taxable years ending
9before December 31, 2008, business income derived from
10furnishing transportation services shall be apportioned to
11this State in accordance with paragraphs (1) and (2):
12        (1) Such business income (other than that derived from
13    transportation by pipeline) shall be apportioned to this
14    State by multiplying such income by a fraction, the
15    numerator of which is the revenue miles of the person in
16    this State, and the denominator of which is the revenue
17    miles of the person everywhere. For purposes of this
18    paragraph, a revenue mile is the transportation of 1
19    passenger or 1 net ton of freight the distance of 1 mile
20    for a consideration. Where a person is engaged in the
21    transportation of both passengers and freight, the
22    fraction above referred to shall be determined by means of
23    an average of the passenger revenue mile fraction and the
24    freight revenue mile fraction, weighted to reflect the
25    person's
26            (A) relative railway operating income from total

 

 

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1        passenger and total freight service, as reported to the
2        Interstate Commerce Commission, in the case of
3        transportation by railroad, and
4            (B) relative gross receipts from passenger and
5        freight transportation, in case of transportation
6        other than by railroad.
7        (2) Such business income derived from transportation
8    by pipeline shall be apportioned to this State by
9    multiplying such income by a fraction, the numerator of
10    which is the revenue miles of the person in this State, and
11    the denominator of which is the revenue miles of the person
12    everywhere. For the purposes of this paragraph, a revenue
13    mile is the transportation by pipeline of 1 barrel of oil,
14    1,000 cubic feet of gas, or of any specified quantity of
15    any other substance, the distance of 1 mile for a
16    consideration.
17        (3) For taxable years ending on or after December 31,
18    2008, business income derived from providing
19    transportation services other than airline services shall
20    be apportioned to this State by using a fraction, (a) the
21    numerator of which shall be (i) all receipts from any
22    movement or shipment of people, goods, mail, oil, gas, or
23    any other substance (other than by airline) that both
24    originates and terminates in this State, plus (ii) that
25    portion of the person's gross receipts from movements or
26    shipments of people, goods, mail, oil, gas, or any other

 

 

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1    substance (other than by airline) that originates in one
2    state or jurisdiction and terminates in another state or
3    jurisdiction, that is determined by the ratio that the
4    miles traveled in this State bears to total miles
5    everywhere and (b) the denominator of which shall be all
6    revenue derived from the movement or shipment of people,
7    goods, mail, oil, gas, or any other substance (other than
8    by airline). Where a taxpayer is engaged in the
9    transportation of both passengers and freight, the
10    fraction above referred to shall first be determined
11    separately for passenger miles and freight miles. Then an
12    average of the passenger miles fraction and the freight
13    miles fraction shall be weighted to reflect the taxpayer's:
14            (A) relative railway operating income from total
15        passenger and total freight service, as reported to the
16        Surface Transportation Board, in the case of
17        transportation by railroad; and
18            (B) relative gross receipts from passenger and
19        freight transportation, in case of transportation
20        other than by railroad.
21        (4) For taxable years ending on or after December 31,
22    2008, business income derived from furnishing airline
23    transportation services shall be apportioned to this State
24    by multiplying such income by a fraction, the numerator of
25    which is the revenue miles of the person in this State, and
26    the denominator of which is the revenue miles of the person

 

 

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1    everywhere. For purposes of this paragraph, a revenue mile
2    is the transportation of one passenger or one net ton of
3    freight the distance of one mile for a consideration. If a
4    person is engaged in the transportation of both passengers
5    and freight, the fraction above referred to shall be
6    determined by means of an average of the passenger revenue
7    mile fraction and the freight revenue mile fraction,
8    weighted to reflect the person's relative gross receipts
9    from passenger and freight airline transportation.
10    (e) Combined apportionment. Where 2 or more persons are
11engaged in a unitary business as described in subsection
12(a)(27) of Section 1501, a part of which is conducted in this
13State by one or more members of the group, the business income
14attributable to this State by any such member or members shall
15be apportioned by means of the combined apportionment method.
16    (f) Alternative allocation. If the allocation and
17apportionment provisions of subsections (a) through (e) and of
18subsection (h) do not fairly represent the extent of a person's
19business activity in this State, the person may petition for,
20or the Director may, without a petition, permit or require, in
21respect of all or any part of the person's business activity,
22if reasonable:
23        (1) Separate accounting;
24        (2) The exclusion of any one or more factors;
25        (3) The inclusion of one or more additional factors
26    which will fairly represent the person's business

 

 

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1    activities in this State; or
2        (4) The employment of any other method to effectuate an
3    equitable allocation and apportionment of the person's
4    business income.
5    (g) Cross reference. For allocation of business income by
6residents, see Section 301(a).
7    (h) For tax years ending on or after December 31, 1998, the
8apportionment factor of persons who apportion their business
9income to this State under subsection (a) shall be equal to:
10        (1) for tax years ending on or after December 31, 1998
11    and before December 31, 1999, 16 2/3% of the property
12    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
13    the sales factor;
14        (2) for tax years ending on or after December 31, 1999
15    and before December 31, 2000, 8 1/3% of the property factor
16    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
17    factor;
18        (3) for tax years ending on or after December 31, 2000,
19    the sales factor.
20If, in any tax year ending on or after December 31, 1998 and
21before December 31, 2000, the denominator of the payroll,
22property, or sales factor is zero, the apportionment factor
23computed in paragraph (1) or (2) of this subsection for that
24year shall be divided by an amount equal to 100% minus the
25percentage weight given to each factor whose denominator is
26equal to zero.

 

 

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1(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11.)
 
2    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
3    Sec. 804. Failure to Pay Estimated Tax.
4    (a) In general. In case of any underpayment of estimated
5tax by a taxpayer, except as provided in subsection (d) or (e),
6the taxpayer shall be liable to a penalty in an amount
7determined at the rate prescribed by Section 3-3 of the Uniform
8Penalty and Interest Act upon the amount of the underpayment
9(determined under subsection (b)) for each required
10installment.
11    (b) Amount of underpayment. For purposes of subsection (a),
12the amount of the underpayment shall be the excess of:
13        (1) the amount of the installment which would be
14    required to be paid under subsection (c), over
15        (2) the amount, if any, of the installment paid on or
16    before the last date prescribed for payment.
17    (c) Amount of Required Installments.
18        (1) Amount.
19            (A) In General. Except as provided in paragraphs
20        paragraph (2) and (3), the amount of any required
21        installment shall be 25% of the required annual
22        payment.
23            (B) Required Annual Payment. For purposes of
24        subparagraph (A), the term "required annual payment"
25        means the lesser of:

 

 

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1                (i) 90% of the tax shown on the return for the
2            taxable year, or if no return is filed, 90% of the
3            tax for such year; ,
4                (ii) for installments due prior to February 1,
5            2011, and after January 31, 2012, 100% of the tax
6            shown on the return of the taxpayer for the
7            preceding taxable year if a return showing a
8            liability for tax was filed by the taxpayer for the
9            preceding taxable year and such preceding year was
10            a taxable year of 12 months; or
11                (iii) for installments due after January 31,
12            2011, and prior to February 1, 2012, 150% of the
13            tax shown on the return of the taxpayer for the
14            preceding taxable year if a return showing a
15            liability for tax was filed by the taxpayer for the
16            preceding taxable year and such preceding year was
17            a taxable year of 12 months.
18        (2) Lower Required Installment where Annualized Income
19    Installment is Less Than Amount Determined Under Paragraph
20    (1).
21            (A) In General. In the case of any required
22        installment if a taxpayer establishes that the
23        annualized income installment is less than the amount
24        determined under paragraph (1),
25                (i) the amount of such required installment
26            shall be the annualized income installment, and

 

 

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1                (ii) any reduction in a required installment
2            resulting from the application of this
3            subparagraph shall be recaptured by increasing the
4            amount of the next required installment determined
5            under paragraph (1) by the amount of such
6            reduction, and by increasing subsequent required
7            installments to the extent that the reduction has
8            not previously been recaptured under this clause.
9            (B) Determination of Annualized Income
10        Installment. In the case of any required installment,
11        the annualized income installment is the excess, if
12        any, of:
13                (i) an amount equal to the applicable
14            percentage of the tax for the taxable year computed
15            by placing on an annualized basis the net income
16            for months in the taxable year ending before the
17            due date for the installment, over
18                (ii) the aggregate amount of any prior
19            required installments for the taxable year.
20            (C) Applicable Percentage.
21        In the case of the followingThe applicable
22        required installments:percentage is:
23        1st ...............................22.5%
24        2nd ...............................45%
25        3rd ...............................67.5%
26        4th ...............................90%

 

 

09700SB0397ham003- 155 -LRB097 04209 WGH 60069 a

1            (D) Annualized Net Income; Individuals. For
2        individuals, net income shall be placed on an
3        annualized basis by:
4                (i) multiplying by 12, or in the case of a
5            taxable year of less than 12 months, by the number
6            of months in the taxable year, the net income
7            computed without regard to the standard exemption
8            for the months in the taxable year ending before
9            the month in which the installment is required to
10            be paid;
11                (ii) dividing the resulting amount by the
12            number of months in the taxable year ending before
13            the month in which such installment date falls; and
14                (iii) deducting from such amount the standard
15            exemption allowable for the taxable year, such
16            standard exemption being determined as of the last
17            date prescribed for payment of the installment.
18            (E) Annualized Net Income; Corporations. For
19        corporations, net income shall be placed on an
20        annualized basis by multiplying by 12 the taxable
21        income
22                (i) for the first 3 months of the taxable year,
23            in the case of the installment required to be paid
24            in the 4th month,
25                (ii) for the first 3 months or for the first 5
26            months of the taxable year, in the case of the

 

 

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1            installment required to be paid in the 6th month,
2                (iii) for the first 6 months or for the first 8
3            months of the taxable year, in the case of the
4            installment required to be paid in the 9th month,
5            and
6                (iv) for the first 9 months or for the first 11
7            months of the taxable year, in the case of the
8            installment required to be paid in the 12th month
9            of the taxable year,
10        then dividing the resulting amount by the number of
11        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
12        case may be).
13        (3) Notwithstanding any other provision of this
14    subsection (c), in the case of a federally-regulated
15    exchange that elects to apportion its income under Section
16    304(c-1) of this Act, the amount of each required
17    installment due prior to June 30 of the first taxable year
18    to which the election applies shall be 25% of the tax that
19    would have been shown on the return for that taxable year
20    if the taxpayer had not made such election.
21    (d) Exceptions. Notwithstanding the provisions of the
22preceding subsections, the penalty imposed by subsection (a)
23shall not be imposed if the taxpayer was not required to file
24an Illinois income tax return for the preceding taxable year,
25or, for individuals, if the taxpayer had no tax liability for
26the preceding taxable year and such year was a taxable year of

 

 

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112 months. The penalty imposed by subsection (a) shall also not
2be imposed on any underpayments of estimated tax due before the
3effective date of this amendatory Act of 1998 which
4underpayments are solely attributable to the change in
5apportionment from subsection (a) to subsection (h) of Section
6304. The provisions of this amendatory Act of 1998 apply to tax
7years ending on or after December 31, 1998.
8    (e) The penalty imposed for underpayment of estimated tax
9by subsection (a) of this Section shall not be imposed to the
10extent that the Director or his or her designate determines,
11pursuant to Section 3-8 of the Uniform Penalty and Interest Act
12that the penalty should not be imposed.
13    (f) Definition of tax. For purposes of subsections (b) and
14(c), the term "tax" means the excess of the tax imposed under
15Article 2 of this Act, over the amounts credited against such
16tax under Sections 601(b) (3) and (4).
17    (g) Application of Section in case of tax withheld under
18Article 7. For purposes of applying this Section:
19        (1) tax withheld from compensation for the taxable year
20    shall be deemed a payment of estimated tax, and an equal
21    part of such amount shall be deemed paid on each
22    installment date for such taxable year, unless the taxpayer
23    establishes the dates on which all amounts were actually
24    withheld, in which case the amounts so withheld shall be
25    deemed payments of estimated tax on the dates on which such
26    amounts were actually withheld;

 

 

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1        (2) amounts timely paid by a partnership, Subchapter S
2    corporation, or trust on behalf of a partner, shareholder,
3    or beneficiary pursuant to subsection (f) of Section 502 or
4    Section 709.5 and claimed as a payment of estimated tax
5    shall be deemed a payment of estimated tax made on the last
6    day of the taxable year of the partnership, Subchapter S
7    corporation, or trust for which the income from the
8    withholding is made was computed; and
9        (3) all other amounts pursuant to Article 7 shall be
10    deemed a payment of estimated tax on the date the payment
11    is made to the taxpayer of the amount from which the tax is
12    withheld.
13    (g-5) Amounts withheld under the State Salary and Annuity
14Withholding Act. An individual who has amounts withheld under
15paragraph (10) of Section 4 of the State Salary and Annuity
16Withholding Act may elect to have those amounts treated as
17payments of estimated tax made on the dates on which those
18amounts are actually withheld.
19    (i) Short taxable year. The application of this Section to
20taxable years of less than 12 months shall be in accordance
21with regulations prescribed by the Department.
22    The changes in this Section made by Public Act 84-127 shall
23apply to taxable years ending on or after January 1, 1986.
24(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
25revised 11-18-11.)
 

 

 

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1    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
2    Sec. 1501. Definitions.
3    (a) In general. When used in this Act, where not otherwise
4distinctly expressed or manifestly incompatible with the
5intent thereof:
6        (1) Business income. The term "business income" means
7    all income that may be treated as apportionable business
8    income under the Constitution of the United States.
9    Business income is net of the deductions allocable thereto.
10    Such term does not include compensation or the deductions
11    allocable thereto. For each taxable year beginning on or
12    after January 1, 2003, a taxpayer may elect to treat all
13    income other than compensation as business income. This
14    election shall be made in accordance with rules adopted by
15    the Department and, once made, shall be irrevocable.
16        (1.5) Captive real estate investment trust:
17            (A) The term "captive real estate investment
18        trust" means a corporation, trust, or association:
19                (i) that is considered a real estate
20            investment trust for the taxable year under
21            Section 856 of the Internal Revenue Code;
22                (ii) the certificates of beneficial interest
23            or shares of which are not regularly traded on an
24            established securities market; and
25                (iii) of which more than 50% of the voting
26            power or value of the beneficial interest or

 

 

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1            shares, at any time during the last half of the
2            taxable year, is owned or controlled, directly,
3            indirectly, or constructively, by a single
4            corporation.
5            (B) The term "captive real estate investment
6        trust" does not include:
7                (i) a real estate investment trust of which
8            more than 50% of the voting power or value of the
9            beneficial interest or shares is owned or
10            controlled, directly, indirectly, or
11            constructively, by:
12                    (a) a real estate investment trust, other
13                than a captive real estate investment trust;
14                    (b) a person who is exempt from taxation
15                under Section 501 of the Internal Revenue Code,
16                and who is not required to treat income
17                received from the real estate investment trust
18                as unrelated business taxable income under
19                Section 512 of the Internal Revenue Code;
20                    (c) a listed Australian property trust, if
21                no more than 50% of the voting power or value
22                of the beneficial interest or shares of that
23                trust, at any time during the last half of the
24                taxable year, is owned or controlled, directly
25                or indirectly, by a single person;
26                    (d) an entity organized as a trust,

 

 

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1                provided a listed Australian property trust
2                described in subparagraph (c) owns or
3                controls, directly or indirectly, or
4                constructively, 75% or more of the voting power
5                or value of the beneficial interests or shares
6                of such entity; or
7                    (e) an entity that is organized outside of
8                the laws of the United States and that
9                satisfies all of the following criteria:
10                        (1) at least 75% of the entity's total
11                    asset value at the close of its taxable
12                    year is represented by real estate assets
13                    (as defined in Section 856(c)(5)(B) of the
14                    Internal Revenue Code, thereby including
15                    shares or certificates of beneficial
16                    interest in any real estate investment
17                    trust), cash and cash equivalents, and
18                    U.S. Government securities;
19                        (2) the entity is not subject to tax on
20                    amounts that are distributed to its
21                    beneficial owners or is exempt from
22                    entity-level taxation;
23                        (3) the entity distributes at least
24                    85% of its taxable income (as computed in
25                    the jurisdiction in which it is organized)
26                    to the holders of its shares or

 

 

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1                    certificates of beneficial interest on an
2                    annual basis;
3                        (4) either (i) the shares or
4                    beneficial interests of the entity are
5                    regularly traded on an established
6                    securities market or (ii) not more than 10%
7                    of the voting power or value in the entity
8                    is held, directly, indirectly, or
9                    constructively, by a single entity or
10                    individual; and
11                        (5) the entity is organized in a
12                    country that has entered into a tax treaty
13                    with the United States; or
14                (ii) during its first taxable year for which it
15            elects to be treated as a real estate investment
16            trust under Section 856(c)(1) of the Internal
17            Revenue Code, a real estate investment trust the
18            certificates of beneficial interest or shares of
19            which are not regularly traded on an established
20            securities market, but only if the certificates of
21            beneficial interest or shares of the real estate
22            investment trust are regularly traded on an
23            established securities market prior to the earlier
24            of the due date (including extensions) for filing
25            its return under this Act for that first taxable
26            year or the date it actually files that return.

 

 

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1            (C) For the purposes of this subsection (1.5), the
2        constructive ownership rules prescribed under Section
3        318(a) of the Internal Revenue Code, as modified by
4        Section 856(d)(5) of the Internal Revenue Code, apply
5        in determining the ownership of stock, assets, or net
6        profits of any person.
7        (2) Commercial domicile. The term "commercial
8    domicile" means the principal place from which the trade or
9    business of the taxpayer is directed or managed.
10        (3) Compensation. The term "compensation" means wages,
11    salaries, commissions and any other form of remuneration
12    paid to employees for personal services.
13        (4) Corporation. The term "corporation" includes
14    associations, joint-stock companies, insurance companies
15    and cooperatives. Any entity, including a limited
16    liability company formed under the Illinois Limited
17    Liability Company Act, shall be treated as a corporation if
18    it is so classified for federal income tax purposes.
19        (5) Department. The term "Department" means the
20    Department of Revenue of this State.
21        (6) Director. The term "Director" means the Director of
22    Revenue of this State.
23        (7) Fiduciary. The term "fiduciary" means a guardian,
24    trustee, executor, administrator, receiver, or any person
25    acting in any fiduciary capacity for any person.
26        (8) Financial organization.

 

 

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1            (A) The term "financial organization" means any
2        bank, bank holding company, trust company, savings
3        bank, industrial bank, land bank, safe deposit
4        company, private banker, savings and loan association,
5        building and loan association, credit union, currency
6        exchange, cooperative bank, small loan company, sales
7        finance company, investment company, or any person
8        which is owned by a bank or bank holding company. For
9        the purpose of this Section a "person" will include
10        only those persons which a bank holding company may
11        acquire and hold an interest in, directly or
12        indirectly, under the provisions of the Bank Holding
13        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
14        where interests in any person must be disposed of
15        within certain required time limits under the Bank
16        Holding Company Act of 1956.
17            (B) For purposes of subparagraph (A) of this
18        paragraph, the term "bank" includes (i) any entity that
19        is regulated by the Comptroller of the Currency under
20        the National Bank Act, or by the Federal Reserve Board,
21        or by the Federal Deposit Insurance Corporation and
22        (ii) any federally or State chartered bank operating as
23        a credit card bank.
24            (C) For purposes of subparagraph (A) of this
25        paragraph, the term "sales finance company" has the
26        meaning provided in the following item (i) or (ii):

 

 

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1                (i) A person primarily engaged in one or more
2            of the following businesses: the business of
3            purchasing customer receivables, the business of
4            making loans upon the security of customer
5            receivables, the business of making loans for the
6            express purpose of funding purchases of tangible
7            personal property or services by the borrower, or
8            the business of finance leasing. For purposes of
9            this item (i), "customer receivable" means:
10                    (a) a retail installment contract or
11                retail charge agreement within the meaning of
12                the Sales Finance Agency Act, the Retail
13                Installment Sales Act, or the Motor Vehicle
14                Retail Installment Sales Act;
15                    (b) an installment, charge, credit, or
16                similar contract or agreement arising from the
17                sale of tangible personal property or services
18                in a transaction involving a deferred payment
19                price payable in one or more installments
20                subsequent to the sale; or
21                    (c) the outstanding balance of a contract
22                or agreement described in provisions (a) or (b)
23                of this item (i).
24                A customer receivable need not provide for
25            payment of interest on deferred payments. A sales
26            finance company may purchase a customer receivable

 

 

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1            from, or make a loan secured by a customer
2            receivable to, the seller in the original
3            transaction or to a person who purchased the
4            customer receivable directly or indirectly from
5            that seller.
6                (ii) A corporation meeting each of the
7            following criteria:
8                    (a) the corporation must be a member of an
9                "affiliated group" within the meaning of
10                Section 1504(a) of the Internal Revenue Code,
11                determined without regard to Section 1504(b)
12                of the Internal Revenue Code;
13                    (b) more than 50% of the gross income of
14                the corporation for the taxable year must be
15                interest income derived from qualifying loans.
16                A "qualifying loan" is a loan made to a member
17                of the corporation's affiliated group that
18                originates customer receivables (within the
19                meaning of item (i)) or to whom customer
20                receivables originated by a member of the
21                affiliated group have been transferred, to the
22                extent the average outstanding balance of
23                loans from that corporation to members of its
24                affiliated group during the taxable year do not
25                exceed the limitation amount for that
26                corporation. The "limitation amount" for a

 

 

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1                corporation is the average outstanding
2                balances during the taxable year of customer
3                receivables (within the meaning of item (i))
4                originated by all members of the affiliated
5                group. If the average outstanding balances of
6                the loans made by a corporation to members of
7                its affiliated group exceed the limitation
8                amount, the interest income of that
9                corporation from qualifying loans shall be
10                equal to its interest income from loans to
11                members of its affiliated groups times a
12                fraction equal to the limitation amount
13                divided by the average outstanding balances of
14                the loans made by that corporation to members
15                of its affiliated group;
16                    (c) the total of all shareholder's equity
17                (including, without limitation, paid-in
18                capital on common and preferred stock and
19                retained earnings) of the corporation plus the
20                total of all of its loans, advances, and other
21                obligations payable or owed to members of its
22                affiliated group may not exceed 20% of the
23                total assets of the corporation at any time
24                during the tax year; and
25                    (d) more than 50% of all interest-bearing
26                obligations of the affiliated group payable to

 

 

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1                persons outside the group determined in
2                accordance with generally accepted accounting
3                principles must be obligations of the
4                corporation.
5            This amendatory Act of the 91st General Assembly is
6        declaratory of existing law.
7            (D) Subparagraphs (B) and (C) of this paragraph are
8        declaratory of existing law and apply retroactively,
9        for all tax years beginning on or before December 31,
10        1996, to all original returns, to all amended returns
11        filed no later than 30 days after the effective date of
12        this amendatory Act of 1996, and to all notices issued
13        on or before the effective date of this amendatory Act
14        of 1996 under subsection (a) of Section 903, subsection
15        (a) of Section 904, subsection (e) of Section 909, or
16        Section 912. A taxpayer that is a "financial
17        organization" that engages in any transaction with an
18        affiliate shall be a "financial organization" for all
19        purposes of this Act.
20            (E) For all tax years beginning on or before
21        December 31, 1996, a taxpayer that falls within the
22        definition of a "financial organization" under
23        subparagraphs (B) or (C) of this paragraph, but who
24        does not fall within the definition of a "financial
25        organization" under the Proposed Regulations issued by
26        the Department of Revenue on July 19, 1996, may

 

 

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1        irrevocably elect to apply the Proposed Regulations
2        for all of those years as though the Proposed
3        Regulations had been lawfully promulgated, adopted,
4        and in effect for all of those years. For purposes of
5        applying subparagraphs (B) or (C) of this paragraph to
6        all of those years, the election allowed by this
7        subparagraph applies only to the taxpayer making the
8        election and to those members of the taxpayer's unitary
9        business group who are ordinarily required to
10        apportion business income under the same subsection of
11        Section 304 of this Act as the taxpayer making the
12        election. No election allowed by this subparagraph
13        shall be made under a claim filed under subsection (d)
14        of Section 909 more than 30 days after the effective
15        date of this amendatory Act of 1996.
16            (F) Finance Leases. For purposes of this
17        subsection, a finance lease shall be treated as a loan
18        or other extension of credit, rather than as a lease,
19        regardless of how the transaction is characterized for
20        any other purpose, including the purposes of any
21        regulatory agency to which the lessor is subject. A
22        finance lease is any transaction in the form of a lease
23        in which the lessee is treated as the owner of the
24        leased asset entitled to any deduction for
25        depreciation allowed under Section 167 of the Internal
26        Revenue Code.

 

 

09700SB0397ham003- 170 -LRB097 04209 WGH 60069 a

1        (9) Fiscal year. The term "fiscal year" means an
2    accounting period of 12 months ending on the last day of
3    any month other than December.
4        (9.5) Fixed place of business. The term "fixed place of
5    business" has the same meaning as that term is given in
6    Section 864 of the Internal Revenue Code and the related
7    Treasury regulations.
8        (10) Includes and including. The terms "includes" and
9    "including" when used in a definition contained in this Act
10    shall not be deemed to exclude other things otherwise
11    within the meaning of the term defined.
12        (11) Internal Revenue Code. The term "Internal Revenue
13    Code" means the United States Internal Revenue Code of 1954
14    or any successor law or laws relating to federal income
15    taxes in effect for the taxable year.
16        (11.5) Investment partnership.
17            (A) The term "investment partnership" means any
18        entity that is treated as a partnership for federal
19        income tax purposes that meets the following
20        requirements:
21                (i) no less than 90% of the partnership's cost
22            of its total assets consists of qualifying
23            investment securities, deposits at banks or other
24            financial institutions, and office space and
25            equipment reasonably necessary to carry on its
26            activities as an investment partnership;

 

 

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1                (ii) no less than 90% of its gross income
2            consists of interest, dividends, and gains from
3            the sale or exchange of qualifying investment
4            securities; and
5                (iii) the partnership is not a dealer in
6            qualifying investment securities.
7            (B) For purposes of this paragraph (11.5), the term
8        "qualifying investment securities" includes all of the
9        following:
10                (i) common stock, including preferred or debt
11            securities convertible into common stock, and
12            preferred stock;
13                (ii) bonds, debentures, and other debt
14            securities;
15                (iii) foreign and domestic currency deposits
16            secured by federal, state, or local governmental
17            agencies;
18                (iv) mortgage or asset-backed securities
19            secured by federal, state, or local governmental
20            agencies;
21                (v) repurchase agreements and loan
22            participations;
23                (vi) foreign currency exchange contracts and
24            forward and futures contracts on foreign
25            currencies;
26                (vii) stock and bond index securities and

 

 

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1            futures contracts and other similar financial
2            securities and futures contracts on those
3            securities;
4                (viii) options for the purchase or sale of any
5            of the securities, currencies, contracts, or
6            financial instruments described in items (i) to
7            (vii), inclusive;
8                (ix) regulated futures contracts;
9                (x) commodities (not described in Section
10            1221(a)(1) of the Internal Revenue Code) or
11            futures, forwards, and options with respect to
12            such commodities, provided, however, that any item
13            of a physical commodity to which title is actually
14            acquired in the partnership's capacity as a dealer
15            in such commodity shall not be a qualifying
16            investment security;
17                (xi) derivatives; and
18                (xii) a partnership interest in another
19            partnership that is an investment partnership.
20        (12) Mathematical error. The term "mathematical error"
21    includes the following types of errors, omissions, or
22    defects in a return filed by a taxpayer which prevents
23    acceptance of the return as filed for processing:
24            (A) arithmetic errors or incorrect computations on
25        the return or supporting schedules;
26            (B) entries on the wrong lines;

 

 

09700SB0397ham003- 173 -LRB097 04209 WGH 60069 a

1            (C) omission of required supporting forms or
2        schedules or the omission of the information in whole
3        or in part called for thereon; and
4            (D) an attempt to claim, exclude, deduct, or
5        improperly report, in a manner directly contrary to the
6        provisions of the Act and regulations thereunder any
7        item of income, exemption, deduction, or credit.
8        (13) Nonbusiness income. The term "nonbusiness income"
9    means all income other than business income or
10    compensation.
11        (14) Nonresident. The term "nonresident" means a
12    person who is not a resident.
13        (15) Paid, incurred and accrued. The terms "paid",
14    "incurred" and "accrued" shall be construed according to
15    the method of accounting upon the basis of which the
16    person's base income is computed under this Act.
17        (16) Partnership and partner. The term "partnership"
18    includes a syndicate, group, pool, joint venture or other
19    unincorporated organization, through or by means of which
20    any business, financial operation, or venture is carried
21    on, and which is not, within the meaning of this Act, a
22    trust or estate or a corporation; and the term "partner"
23    includes a member in such syndicate, group, pool, joint
24    venture or organization.
25        The term "partnership" includes any entity, including
26    a limited liability company formed under the Illinois

 

 

09700SB0397ham003- 174 -LRB097 04209 WGH 60069 a

1    Limited Liability Company Act, classified as a partnership
2    for federal income tax purposes.
3        The term "partnership" does not include a syndicate,
4    group, pool, joint venture, or other unincorporated
5    organization established for the sole purpose of playing
6    the Illinois State Lottery.
7        (17) Part-year resident. The term "part-year resident"
8    means an individual who became a resident during the
9    taxable year or ceased to be a resident during the taxable
10    year. Under Section 1501(a)(20)(A)(i) residence commences
11    with presence in this State for other than a temporary or
12    transitory purpose and ceases with absence from this State
13    for other than a temporary or transitory purpose. Under
14    Section 1501(a)(20)(A)(ii) residence commences with the
15    establishment of domicile in this State and ceases with the
16    establishment of domicile in another State.
17        (18) Person. The term "person" shall be construed to
18    mean and include an individual, a trust, estate,
19    partnership, association, firm, company, corporation,
20    limited liability company, or fiduciary. For purposes of
21    Section 1301 and 1302 of this Act, a "person" means (i) an
22    individual, (ii) a corporation, (iii) an officer, agent, or
23    employee of a corporation, (iv) a member, agent or employee
24    of a partnership, or (v) a member, manager, employee,
25    officer, director, or agent of a limited liability company
26    who in such capacity commits an offense specified in

 

 

09700SB0397ham003- 175 -LRB097 04209 WGH 60069 a

1    Section 1301 and 1302.
2        (18A) Records. The term "records" includes all data
3    maintained by the taxpayer, whether on paper, microfilm,
4    microfiche, or any type of machine-sensible data
5    compilation.
6        (19) Regulations. The term "regulations" includes
7    rules promulgated and forms prescribed by the Department.
8        (20) Resident. The term "resident" means:
9            (A) an individual (i) who is in this State for
10        other than a temporary or transitory purpose during the
11        taxable year; or (ii) who is domiciled in this State
12        but is absent from the State for a temporary or
13        transitory purpose during the taxable year;
14            (B) The estate of a decedent who at his or her
15        death was domiciled in this State;
16            (C) A trust created by a will of a decedent who at
17        his death was domiciled in this State; and
18            (D) An irrevocable trust, the grantor of which was
19        domiciled in this State at the time such trust became
20        irrevocable. For purpose of this subparagraph, a trust
21        shall be considered irrevocable to the extent that the
22        grantor is not treated as the owner thereof under
23        Sections 671 through 678 of the Internal Revenue Code.
24        (21) Sales. The term "sales" means all gross receipts
25    of the taxpayer not allocated under Sections 301, 302 and
26    303.

 

 

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1        (22) State. The term "state" when applied to a
2    jurisdiction other than this State means any state of the
3    United States, the District of Columbia, the Commonwealth
4    of Puerto Rico, any Territory or Possession of the United
5    States, and any foreign country, or any political
6    subdivision of any of the foregoing. For purposes of the
7    foreign tax credit under Section 601, the term "state"
8    means any state of the United States, the District of
9    Columbia, the Commonwealth of Puerto Rico, and any
10    territory or possession of the United States, or any
11    political subdivision of any of the foregoing, effective
12    for tax years ending on or after December 31, 1989.
13        (23) Taxable year. The term "taxable year" means the
14    calendar year, or the fiscal year ending during such
15    calendar year, upon the basis of which the base income is
16    computed under this Act. "Taxable year" means, in the case
17    of a return made for a fractional part of a year under the
18    provisions of this Act, the period for which such return is
19    made.
20        (24) Taxpayer. The term "taxpayer" means any person
21    subject to the tax imposed by this Act.
22        (25) International banking facility. The term
23    international banking facility shall have the same meaning
24    as is set forth in the Illinois Banking Act or as is set
25    forth in the laws of the United States or regulations of
26    the Board of Governors of the Federal Reserve System.

 

 

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1        (26) Income Tax Return Preparer.
2            (A) The term "income tax return preparer" means any
3        person who prepares for compensation, or who employs
4        one or more persons to prepare for compensation, any
5        return of tax imposed by this Act or any claim for
6        refund of tax imposed by this Act. The preparation of a
7        substantial portion of a return or claim for refund
8        shall be treated as the preparation of that return or
9        claim for refund.
10            (B) A person is not an income tax return preparer
11        if all he or she does is
12                (i) furnish typing, reproducing, or other
13            mechanical assistance;
14                (ii) prepare returns or claims for refunds for
15            the employer by whom he or she is regularly and
16            continuously employed;
17                (iii) prepare as a fiduciary returns or claims
18            for refunds for any person; or
19                (iv) prepare claims for refunds for a taxpayer
20            in response to any notice of deficiency issued to
21            that taxpayer or in response to any waiver of
22            restriction after the commencement of an audit of
23            that taxpayer or of another taxpayer if a
24            determination in the audit of the other taxpayer
25            directly or indirectly affects the tax liability
26            of the taxpayer whose claims he or she is

 

 

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1            preparing.
2        (27) Unitary business group.
3            (A) The term "unitary business group" means a group
4        of persons related through common ownership whose
5        business activities are integrated with, dependent
6        upon and contribute to each other. The group will not
7        include those members whose business activity outside
8        the United States is 80% or more of any such member's
9        total business activity; for purposes of this
10        paragraph and clause (a)(3)(B)(ii) of Section 304,
11        business activity within the United States shall be
12        measured by means of the factors ordinarily applicable
13        under subsections (a), (b), (c), (d), or (h) of Section
14        304 except that, in the case of members ordinarily
15        required to apportion business income by means of the 3
16        factor formula of property, payroll and sales
17        specified in subsection (a) of Section 304, including
18        the formula as weighted in subsection (h) of Section
19        304, such members shall not use the sales factor in the
20        computation and the results of the property and payroll
21        factor computations of subsection (a) of Section 304
22        shall be divided by 2 (by one if either the property or
23        payroll factor has a denominator of zero). The
24        computation required by the preceding sentence shall,
25        in each case, involve the division of the member's
26        property, payroll, or revenue miles in the United

 

 

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1        States, insurance premiums on property or risk in the
2        United States, or financial organization business
3        income from sources within the United States, as the
4        case may be, by the respective worldwide figures for
5        such items. Common ownership in the case of
6        corporations is the direct or indirect control or
7        ownership of more than 50% of the outstanding voting
8        stock of the persons carrying on unitary business
9        activity. Unitary business activity can ordinarily be
10        illustrated where the activities of the members are:
11        (1) in the same general line (such as manufacturing,
12        wholesaling, retailing of tangible personal property,
13        insurance, transportation or finance); or (2) are
14        steps in a vertically structured enterprise or process
15        (such as the steps involved in the production of
16        natural resources, which might include exploration,
17        mining, refining, and marketing); and, in either
18        instance, the members are functionally integrated
19        through the exercise of strong centralized management
20        (where, for example, authority over such matters as
21        purchasing, financing, tax compliance, product line,
22        personnel, marketing and capital investment is not
23        left to each member).
24            (B) In no event, shall any unitary business group
25        include members which are ordinarily required to
26        apportion business income under different subsections

 

 

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1        of Section 304 except that for tax years ending on or
2        after December 31, 1987 this prohibition shall not
3        apply to a holding company that would otherwise be a
4        member of a unitary business group with taxpayers that
5        apportion business income under any of subsections
6        (b), (c), (c-1), or (d) of Section 304. If a unitary
7        business group would, but for the preceding sentence,
8        include members that are ordinarily required to
9        apportion business income under different subsections
10        of Section 304, then for each subsection of Section 304
11        for which there are two or more members, there shall be
12        a separate unitary business group composed of such
13        members. For purposes of the preceding two sentences, a
14        member is "ordinarily required to apportion business
15        income" under a particular subsection of Section 304 if
16        it would be required to use the apportionment method
17        prescribed by such subsection except for the fact that
18        it derives business income solely from Illinois. As
19        used in this paragraph, the phrase "United States"
20        means only the 50 states and the District of Columbia,
21        but does not include any territory or possession of the
22        United States or any area over which the United States
23        has asserted jurisdiction or claimed exclusive rights
24        with respect to the exploration for or exploitation of
25        natural resources.
26            (C) Holding companies.

 

 

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1                (i) For purposes of this subparagraph, a
2            "holding company" is a corporation (other than a
3            corporation that is a financial organization under
4            paragraph (8) of this subsection (a) of Section
5            1501 because it is a bank holding company under the
6            provisions of the Bank Holding Company Act of 1956
7            (12 U.S.C. 1841, et seq.) or because it is owned by
8            a bank or a bank holding company) that owns a
9            controlling interest in one or more other
10            taxpayers ("controlled taxpayers"); that, during
11            the period that includes the taxable year and the 2
12            immediately preceding taxable years or, if the
13            corporation was formed during the current or
14            immediately preceding taxable year, the taxable
15            years in which the corporation has been in
16            existence, derived substantially all its gross
17            income from dividends, interest, rents, royalties,
18            fees or other charges received from controlled
19            taxpayers for the provision of services, and gains
20            on the sale or other disposition of interests in
21            controlled taxpayers or in property leased or
22            licensed to controlled taxpayers or used by the
23            taxpayer in providing services to controlled
24            taxpayers; and that incurs no substantial expenses
25            other than expenses (including interest and other
26            costs of borrowing) incurred in connection with

 

 

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1            the acquisition and holding of interests in
2            controlled taxpayers and in the provision of
3            services to controlled taxpayers or in the leasing
4            or licensing of property to controlled taxpayers.
5                (ii) The income of a holding company which is a
6            member of more than one unitary business group
7            shall be included in each unitary business group of
8            which it is a member on a pro rata basis, by
9            including in each unitary business group that
10            portion of the base income of the holding company
11            that bears the same proportion to the total base
12            income of the holding company as the gross receipts
13            of the unitary business group bears to the combined
14            gross receipts of all unitary business groups (in
15            both cases without regard to the holding company)
16            or on any other reasonable basis, consistently
17            applied.
18                (iii) A holding company shall apportion its
19            business income under the subsection of Section
20            304 used by the other members of its unitary
21            business group. The apportionment factors of a
22            holding company which would be a member of more
23            than one unitary business group shall be included
24            with the apportionment factors of each unitary
25            business group of which it is a member on a pro
26            rata basis using the same method used in clause

 

 

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1            (ii).
2                (iv) The provisions of this subparagraph (C)
3            are intended to clarify existing law.
4            (D) If including the base income and factors of a
5        holding company in more than one unitary business group
6        under subparagraph (C) does not fairly reflect the
7        degree of integration between the holding company and
8        one or more of the unitary business groups, the
9        dependence of the holding company and one or more of
10        the unitary business groups upon each other, or the
11        contributions between the holding company and one or
12        more of the unitary business groups, the holding
13        company may petition the Director, under the
14        procedures provided under Section 304(f), for
15        permission to include all base income and factors of
16        the holding company only with members of a unitary
17        business group apportioning their business income
18        under one subsection of subsections (a), (b), (c), or
19        (d) of Section 304. If the petition is granted, the
20        holding company shall be included in a unitary business
21        group only with persons apportioning their business
22        income under the selected subsection of Section 304
23        until the Director grants a petition of the holding
24        company either to be included in more than one unitary
25        business group under subparagraph (C) or to include its
26        base income and factors only with members of a unitary

 

 

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1        business group apportioning their business income
2        under a different subsection of Section 304.
3            (E) If the unitary business group members'
4        accounting periods differ, the common parent's
5        accounting period or, if there is no common parent, the
6        accounting period of the member that is expected to
7        have, on a recurring basis, the greatest Illinois
8        income tax liability must be used to determine whether
9        to use the apportionment method provided in subsection
10        (a) or subsection (h) of Section 304. The prohibition
11        against membership in a unitary business group for
12        taxpayers ordinarily required to apportion income
13        under different subsections of Section 304 does not
14        apply to taxpayers required to apportion income under
15        subsection (a) and subsection (h) of Section 304. The
16        provisions of this amendatory Act of 1998 apply to tax
17        years ending on or after December 31, 1998.
18        (28) Subchapter S corporation. The term "Subchapter S
19    corporation" means a corporation for which there is in
20    effect an election under Section 1362 of the Internal
21    Revenue Code, or for which there is a federal election to
22    opt out of the provisions of the Subchapter S Revision Act
23    of 1982 and have applied instead the prior federal
24    Subchapter S rules as in effect on July 1, 1982.
25        (30) Foreign person. The term "foreign person" means
26    any person who is a nonresident alien individual and any

 

 

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1    nonindividual entity, regardless of where created or
2    organized, whose business activity outside the United
3    States is 80% or more of the entity's total business
4    activity.
 
5    (b) Other definitions.
6        (1) Words denoting number, gender, and so forth, when
7    used in this Act, where not otherwise distinctly expressed
8    or manifestly incompatible with the intent thereof:
9            (A) Words importing the singular include and apply
10        to several persons, parties or things;
11            (B) Words importing the plural include the
12        singular; and
13            (C) Words importing the masculine gender include
14        the feminine as well.
15        (2) "Company" or "association" as including successors
16    and assigns. The word "company" or "association", when used
17    in reference to a corporation, shall be deemed to embrace
18    the words "successors and assigns of such company or
19    association", and in like manner as if these last-named
20    words, or words of similar import, were expressed.
21        (3) Other terms. Any term used in any Section of this
22    Act with respect to the application of, or in connection
23    with, the provisions of any other Section of this Act shall
24    have the same meaning as in such other Section.
25(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11.)
 

 

 

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1    Section 15-15. The Economic Development for a Growing
2Economy Tax Credit Act is amended by changing Section 5-15 as
3follows:
 
4    (35 ILCS 10/5-15)
5    Sec. 5-15. Tax Credit Awards. Subject to the conditions set
6forth in this Act, a Taxpayer is entitled to a Credit against
7or, as described in subsection (g) of this Section, a payment
8towards taxes imposed pursuant to subsections (a) and (b) of
9Section 201 of the Illinois Income Tax Act that may be imposed
10on the Taxpayer for a taxable year beginning on or after
11January 1, 1999, if the Taxpayer is awarded a Credit by the
12Department under this Act for that taxable year.
13    (a) The Department shall make Credit awards under this Act
14to foster job creation and retention in Illinois.
15    (b) A person that proposes a project to create new jobs in
16Illinois must enter into an Agreement with the Department for
17the Credit under this Act.
18    (c) The Credit shall be claimed for the taxable years
19specified in the Agreement.
20    (d) The Credit shall not exceed the Incremental Income Tax
21attributable to the project that is the subject of the
22Agreement.
23    (e) Nothing herein shall prohibit a Tax Credit Award to an
24Applicant that uses a PEO if all other award criteria are

 

 

09700SB0397ham003- 187 -LRB097 04209 WGH 60069 a

1satisfied.
2    (f) In lieu of the Credit allowed under this Act against
3the taxes imposed pursuant to subsections (a) and (b) of
4Section 201 of the Illinois Income Tax Act for any taxable year
5ending on or after December 31, 2009, the Taxpayer may elect to
6claim the Credit against its obligation to pay over withholding
7under Section 704A of the Illinois Income Tax Act.
8        (1) The election under this subsection (f) may be made
9    only by a Taxpayer that (i) is primarily engaged in one of
10    the following business activities: water purification and
11    treatment, motor vehicle metal stamping, automobile
12    manufacturing, automobile and light duty motor vehicle
13    manufacturing, motor vehicle manufacturing, light truck
14    and utility vehicle manufacturing, heavy duty truck
15    manufacturing, motor vehicle body manufacturing, cable
16    television infrastructure design or manufacturing, or
17    wireless telecommunication or computing terminal device
18    design or manufacturing for use on public networks and (ii)
19    meets the following criteria:
20            (A) the Taxpayer (i) had an Illinois net loss or an
21        Illinois net loss deduction under Section 207 of the
22        Illinois Income Tax Act for the taxable year in which
23        the Credit is awarded, (ii) employed a minimum of 1,000
24        full-time employees in this State during the taxable
25        year in which the Credit is awarded, (iii) has an
26        Agreement under this Act on December 14, 2009 (the

 

 

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1        effective date of Public Act 96-834), and (iv) is in
2        compliance with all provisions of that Agreement;
3            (B) the Taxpayer (i) had an Illinois net loss or an
4        Illinois net loss deduction under Section 207 of the
5        Illinois Income Tax Act for the taxable year in which
6        the Credit is awarded, (ii) employed a minimum of 1,000
7        full-time employees in this State during the taxable
8        year in which the Credit is awarded, and (iii) has
9        applied for an Agreement within 365 days after December
10        14, 2009 (the effective date of Public Act 96-834);
11            (C) the Taxpayer (i) had an Illinois net operating
12        loss carryforward under Section 207 of the Illinois
13        Income Tax Act in a taxable year ending during calendar
14        year 2008, (ii) has applied for an Agreement within 150
15        days after the effective date of this amendatory Act of
16        the 96th General Assembly, (iii) creates at least 400
17        new jobs in Illinois, (iv) retains at least 2,000 jobs
18        in Illinois that would have been at risk of relocation
19        out of Illinois over a 10-year period, and (v) makes a
20        capital investment of at least $75,000,000;
21            (D) the Taxpayer (i) had an Illinois net operating
22        loss carryforward under Section 207 of the Illinois
23        Income Tax Act in a taxable year ending during calendar
24        year 2009, (ii) has applied for an Agreement within 150
25        days after the effective date of this amendatory Act of
26        the 96th General Assembly, (iii) creates at least 150

 

 

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1        new jobs, (iv) retains at least 1,000 jobs in Illinois
2        that would have been at risk of relocation out of
3        Illinois over a 10-year period, and (v) makes a capital
4        investment of at least $57,000,000; or
5            (E) the Taxpayer (i) employed at least 2,500
6        full-time employees in the State during the year in
7        which the Credit is awarded, (ii) commits to make at
8        least $500,000,000 in combined capital improvements
9        and project costs under the Agreement, (iii) applies
10        for an Agreement between January 1, 2011 and June 30,
11        2011, (iv) executes an Agreement for the Credit during
12        calendar year 2011, and (v) was incorporated no more
13        than 5 years before the filing of an application for an
14        Agreement.
15        (1.5) The election under this subsection (f) may also
16    be made by a Taxpayer for any Credit awarded pursuant to an
17    agreement that was executed between January 1, 2011 and
18    June 30, 2011, if the Taxpayer (i) is primarily engaged in
19    the manufacture of inner tubes or tires, or both, from
20    natural and synthetic rubber, (ii) employs a minimum of
21    2,400 full-time employees in Illinois at the time of
22    application, (iii) creates at least 350 full-time jobs and
23    retains at least 250 full-time jobs in Illinois that would
24    have been at risk of being created or retained outside of
25    Illinois, and (iv) makes a capital investment of at least
26    $200,000,000 at the project location.

 

 

09700SB0397ham003- 190 -LRB097 04209 WGH 60069 a

1        (1.6) The election under this subsection (f) may also
2    be made by a Taxpayer for any Credit awarded pursuant to an
3    agreement that was executed within 150 days after the
4    effective date of this amendatory Act of the 97th General
5    Assembly, if the Taxpayer (i) is primarily engaged in the
6    operation of a discount department store, (ii) maintains
7    its corporate headquarters in Illinois, (iii) employs a
8    minimum of 4,250 full time employees at its corporate
9    headquarters in Illinois at the time of application, (iv)
10    retains at least 4,250 full time jobs in Illinois that
11    would have been at risk of being relocated outside of
12    Illinois, (v) had a minimum of $40,000,000,000 in total
13    revenue in 2010, and (vi) makes a capital investment of at
14    least $300,000,000 at the project location.
15        (2) An election under this subsection shall allow the
16    credit to be taken against payments otherwise due under
17    Section 704A of the Illinois Income Tax Act during the
18    first calendar year beginning after the end of the taxable
19    year in which the credit is awarded under this Act.
20        (3) The election shall be made in the form and manner
21    required by the Illinois Department of Revenue and, once
22    made, shall be irrevocable.
23        (4) If a Taxpayer who meets the requirements of
24    subparagraph (A) of paragraph (1) of this subsection (f)
25    elects to claim the Credit against its withholdings as
26    provided in this subsection (f), then, on and after the

 

 

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1    date of the election, the terms of the Agreement between
2    the Taxpayer and the Department may not be further amended
3    during the term of the Agreement.
4    (g) A pass-through entity that has been awarded a credit
5under this Act, its shareholders, or its partners may treat
6some or all of the credit awarded pursuant to this Act as a tax
7payment for purposes of the Illinois Income Tax Act. The term
8"tax payment" means a payment as described in Article 6 or
9Article 8 of the Illinois Income Tax Act or a composite payment
10made by a pass-through entity on behalf of any of its
11shareholders or partners to satisfy such shareholders' or
12partners' taxes imposed pursuant to subsections (a) and (b) of
13Section 201 of the Illinois Income Tax Act. In no event shall
14the amount of the award credited pursuant to this Act exceed
15the Illinois income tax liability of the pass-through entity or
16its shareholders or partners for the taxable year.
17(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
1896-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
193-4-11; 97-2, eff. 5-6-11.)
 
20    Section 15-20. The Use Tax Act is amended by changing
21Sections 3-10 and 3-90 as follows:
 
22    (35 ILCS 105/3-10)
23    Sec. 3-10. Rate of tax. Unless otherwise provided in this
24Section, the tax imposed by this Act is at the rate of 6.25% of

 

 

09700SB0397ham003- 192 -LRB097 04209 WGH 60069 a

1either the selling price or the fair market value, if any, of
2the tangible personal property. In all cases where property
3functionally used or consumed is the same as the property that
4was purchased at retail, then the tax is imposed on the selling
5price of the property. In all cases where property functionally
6used or consumed is a by-product or waste product that has been
7refined, manufactured, or produced from property purchased at
8retail, then the tax is imposed on the lower of the fair market
9value, if any, of the specific property so used in this State
10or on the selling price of the property purchased at retail.
11For purposes of this Section "fair market value" means the
12price at which property would change hands between a willing
13buyer and a willing seller, neither being under any compulsion
14to buy or sell and both having reasonable knowledge of the
15relevant facts. The fair market value shall be established by
16Illinois sales by the taxpayer of the same property as that
17functionally used or consumed, or if there are no such sales by
18the taxpayer, then comparable sales or purchases of property of
19like kind and character in Illinois.
20    Beginning on July 1, 2000 and through December 31, 2000,
21with respect to motor fuel, as defined in Section 1.1 of the
22Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
23the Use Tax Act, the tax is imposed at the rate of 1.25%.
24    Beginning on August 6, 2010 through August 15, 2010, with
25respect to sales tax holiday items as defined in Section 3-6 of
26this Act, the tax is imposed at the rate of 1.25%.

 

 

09700SB0397ham003- 193 -LRB097 04209 WGH 60069 a

1    With respect to gasohol, the tax imposed by this Act
2applies to (i) 70% of the proceeds of sales made on or after
3January 1, 1990, and before July 1, 2003, (ii) 80% of the
4proceeds of sales made on or after July 1, 2003 and on or
5before December 31, 2018 2013, and (iii) 100% of the proceeds
6of sales made thereafter. If, at any time, however, the tax
7under this Act on sales of gasohol is imposed at the rate of
81.25%, then the tax imposed by this Act applies to 100% of the
9proceeds of sales of gasohol made during that time.
10    With respect to majority blended ethanol fuel, the tax
11imposed by this Act does not apply to the proceeds of sales
12made on or after July 1, 2003 and on or before December 31,
132018 2013 but applies to 100% of the proceeds of sales made
14thereafter.
15    With respect to biodiesel blends with no less than 1% and
16no more than 10% biodiesel, the tax imposed by this Act applies
17to (i) 80% of the proceeds of sales made on or after July 1,
182003 and on or before December 31, 2018 2013 and (ii) 100% of
19the proceeds of sales made thereafter. If, at any time,
20however, the tax under this Act on sales of biodiesel blends
21with no less than 1% and no more than 10% biodiesel is imposed
22at the rate of 1.25%, then the tax imposed by this Act applies
23to 100% of the proceeds of sales of biodiesel blends with no
24less than 1% and no more than 10% biodiesel made during that
25time.
26    With respect to 100% biodiesel and biodiesel blends with

 

 

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1more than 10% but no more than 99% biodiesel, the tax imposed
2by this Act does not apply to the proceeds of sales made on or
3after July 1, 2003 and on or before December 31, 2018 2013 but
4applies to 100% of the proceeds of sales made thereafter.
5    With respect to food for human consumption that is to be
6consumed off the premises where it is sold (other than
7alcoholic beverages, soft drinks, and food that has been
8prepared for immediate consumption) and prescription and
9nonprescription medicines, drugs, medical appliances,
10modifications to a motor vehicle for the purpose of rendering
11it usable by a disabled person, and insulin, urine testing
12materials, syringes, and needles used by diabetics, for human
13use, the tax is imposed at the rate of 1%. For the purposes of
14this Section, until September 1, 2009: the term "soft drinks"
15means any complete, finished, ready-to-use, non-alcoholic
16drink, whether carbonated or not, including but not limited to
17soda water, cola, fruit juice, vegetable juice, carbonated
18water, and all other preparations commonly known as soft drinks
19of whatever kind or description that are contained in any
20closed or sealed bottle, can, carton, or container, regardless
21of size; but "soft drinks" does not include coffee, tea,
22non-carbonated water, infant formula, milk or milk products as
23defined in the Grade A Pasteurized Milk and Milk Products Act,
24or drinks containing 50% or more natural fruit or vegetable
25juice.
26    Notwithstanding any other provisions of this Act,

 

 

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1beginning September 1, 2009, "soft drinks" means non-alcoholic
2beverages that contain natural or artificial sweeteners. "Soft
3drinks" do not include beverages that contain milk or milk
4products, soy, rice or similar milk substitutes, or greater
5than 50% of vegetable or fruit juice by volume.
6    Until August 1, 2009, and notwithstanding any other
7provisions of this Act, "food for human consumption that is to
8be consumed off the premises where it is sold" includes all
9food sold through a vending machine, except soft drinks and
10food products that are dispensed hot from a vending machine,
11regardless of the location of the vending machine. Beginning
12August 1, 2009, and notwithstanding any other provisions of
13this Act, "food for human consumption that is to be consumed
14off the premises where it is sold" includes all food sold
15through a vending machine, except soft drinks, candy, and food
16products that are dispensed hot from a vending machine,
17regardless of the location of the vending machine.
18    Notwithstanding any other provisions of this Act,
19beginning September 1, 2009, "food for human consumption that
20is to be consumed off the premises where it is sold" does not
21include candy. For purposes of this Section, "candy" means a
22preparation of sugar, honey, or other natural or artificial
23sweeteners in combination with chocolate, fruits, nuts or other
24ingredients or flavorings in the form of bars, drops, or
25pieces. "Candy" does not include any preparation that contains
26flour or requires refrigeration.

 

 

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1    Notwithstanding any other provisions of this Act,
2beginning September 1, 2009, "nonprescription medicines and
3drugs" does not include grooming and hygiene products. For
4purposes of this Section, "grooming and hygiene products"
5includes, but is not limited to, soaps and cleaning solutions,
6shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
7lotions and screens, unless those products are available by
8prescription only, regardless of whether the products meet the
9definition of "over-the-counter-drugs". For the purposes of
10this paragraph, "over-the-counter-drug" means a drug for human
11use that contains a label that identifies the product as a drug
12as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
13label includes:
14        (A) A "Drug Facts" panel; or
15        (B) A statement of the "active ingredient(s)" with a
16    list of those ingredients contained in the compound,
17    substance or preparation.
18    If the property that is purchased at retail from a retailer
19is acquired outside Illinois and used outside Illinois before
20being brought to Illinois for use here and is taxable under
21this Act, the "selling price" on which the tax is computed
22shall be reduced by an amount that represents a reasonable
23allowance for depreciation for the period of prior out-of-state
24use.
25(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
26eff. 7-13-09; 96-1000, eff. 7-2-10; 96-1012, eff. 7-7-10.)