Sen. John J. Cullerton

Filed: 10/24/2011

 

 


 

 


 
09700SB0405sam001LRB097 04252 HLH 58953 a

1
AMENDMENT TO SENATE BILL 405

2    AMENDMENT NO. ______. Amend Senate Bill 405 by replacing
3everything after the enacting clause with the following:
 
4    "Section 5. The Illinois Income Tax Act is amended by
5changing Sections 201 and 304 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    Sec. 201. Tax Imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by

 

 

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

 

 

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1    the taxpayer's net income for the taxable year.
2        (5.1) In the case of an individual, trust, or estate,
3    for taxable years beginning prior to January 1, 2015, and
4    ending after December 31, 2014, an amount equal to the sum
5    of (i) 5% of the taxpayer's net income for the period prior
6    to January 1, 2015, as calculated under Section 202.5, and
7    (ii) 3.75% of the taxpayer's net income for the period
8    after December 31, 2014, as calculated under Section 202.5.
9        (5.2) In the case of an individual, trust, or estate,
10    for taxable years beginning on or after January 1, 2015,
11    and ending prior to January 1, 2025, an amount equal to
12    3.75% of the taxpayer's net income for the taxable year.
13        (5.3) In the case of an individual, trust, or estate,
14    for taxable years beginning prior to January 1, 2025, and
15    ending after December 31, 2024, an amount equal to the sum
16    of (i) 3.75% of the taxpayer's net income for the period
17    prior to January 1, 2025, as calculated under Section
18    202.5, and (ii) 3.25% of the taxpayer's net income for the
19    period after December 31, 2024, as calculated under Section
20    202.5.
21        (5.4) In the case of an individual, trust, or estate,
22    for taxable years beginning on or after January 1, 2025, an
23    amount equal to 3.25% of the taxpayer's net income for the
24    taxable year.
25        (6) In the case of a corporation, for taxable years
26    ending prior to July 1, 1989, an amount equal to 4% of the

 

 

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

 

 

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

 

 

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1Such taxes are imposed on the privilege of earning or receiving
2income in or as a resident of this State. The Personal Property
3Tax Replacement Income Tax shall be in addition to the income
4tax imposed by subsections (a) and (b) of this Section and in
5addition to all other occupation or privilege taxes imposed by
6this State or by any municipal corporation or political
7subdivision thereof.
8    (d) Additional Personal Property Tax Replacement Income
9Tax Rates. The personal property tax replacement income tax
10imposed by this subsection and subsection (c) of this Section
11in the case of a corporation, other than a Subchapter S
12corporation and except as adjusted by subsection (d-1), shall
13be an additional amount equal to 2.85% of such taxpayer's net
14income for the taxable year, except that beginning on January
151, 1981, and thereafter, the rate of 2.85% specified in this
16subsection shall be reduced to 2.5%, and in the case of a
17partnership, trust or a Subchapter S corporation shall be an
18additional amount equal to 1.5% of such taxpayer's net income
19for the taxable year.
20    (d-1) Rate reduction for certain foreign insurers. In the
21case of a foreign insurer, as defined by Section 35A-5 of the
22Illinois Insurance Code, whose state or country of domicile
23imposes on insurers domiciled in Illinois a retaliatory tax
24(excluding any insurer whose premiums from reinsurance assumed
25are 50% or more of its total insurance premiums as determined
26under paragraph (2) of subsection (b) of Section 304, except

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

09700SB0405sam001- 20 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 21 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 22 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 23 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 24 -LRB097 04252 HLH 58953 a

1    meaning as under Section 46 of the Internal Revenue Code.
2        (6) If during any taxable year ending on or before
3    December 31, 1996, any property ceases to be qualified
4    property in the hands of the taxpayer within 48 months
5    after being placed in service, or the situs of any
6    qualified property is moved outside Illinois within 48
7    months after being placed in service, the tax imposed under
8    subsections (a) and (b) of this Section for such taxable
9    year shall be increased. Such increase shall be determined
10    by (i) recomputing the investment credit which would have
11    been allowed for the year in which credit for such property
12    was originally allowed by eliminating such property from
13    such computation, and (ii) subtracting such recomputed
14    credit from the amount of credit previously allowed. For
15    the purposes of this paragraph (6), a reduction of the
16    basis of qualified property resulting from a
17    redetermination of the purchase price shall be deemed a
18    disposition of qualified property to the extent of such
19    reduction.
20        (7) Beginning with tax years ending after December 31,
21    1996, if a taxpayer qualifies for the credit under this
22    subsection (h) and thereby is granted a tax abatement and
23    the taxpayer relocates its entire facility in violation of
24    the explicit terms and length of the contract under Section
25    18-183 of the Property Tax Code, the tax imposed under
26    subsections (a) and (b) of this Section shall be increased

 

 

09700SB0405sam001- 25 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 26 -LRB097 04252 HLH 58953 a

1first.
2    If, during any taxable year ending on or after December 31,
31986, the tax imposed by subsections (c) and (d) of this
4Section for which a taxpayer has claimed a credit under this
5subsection (i) is reduced, the amount of credit for such tax
6shall also be reduced. Such reduction shall be determined by
7recomputing the credit to take into account the reduced tax
8imposed by subsections (c) and (d). If any portion of the
9reduced amount of credit has been carried to a different
10taxable year, an amended return shall be filed for such taxable
11year to reduce the amount of credit claimed.
12    (j) Training expense credit. Beginning with tax years
13ending on or after December 31, 1986 and prior to December 31,
142003, a taxpayer shall be allowed a credit against the tax
15imposed by subsections (a) and (b) under this Section for all
16amounts paid or accrued, on behalf of all persons employed by
17the taxpayer in Illinois or Illinois residents employed outside
18of Illinois by a taxpayer, for educational or vocational
19training in semi-technical or technical fields or semi-skilled
20or skilled fields, which were deducted from gross income in the
21computation of taxable income. The credit against the tax
22imposed by subsections (a) and (b) shall be 1.6% of such
23training expenses. For partners, shareholders of subchapter S
24corporations, and owners of limited liability companies, if the
25liability company is treated as a partnership for purposes of
26federal and State income taxation, there shall be allowed a

 

 

09700SB0405sam001- 27 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 28 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 29 -LRB097 04252 HLH 58953 a

1ending on or after December 31, 2003, and no credit may be
2carried forward to any taxable year ending on or after January
31, 2016 January 1, 2011.
4    If an unused credit is carried forward to a given year from
52 or more earlier years, that credit arising in the earliest
6year will be applied first against the tax liability for the
7given year. If a tax liability for the given year still
8remains, the credit from the next earliest year will then be
9applied, and so on, until all credits have been used or no tax
10liability for the given year remains. Any remaining unused
11credit or credits then will be carried forward to the next
12following year in which a tax liability is incurred, except
13that no credit can be carried forward to a year which is more
14than 5 years after the year in which the expense for which the
15credit is given was incurred.
16    No inference shall be drawn from this amendatory Act of the
1791st General Assembly in construing this Section for taxable
18years beginning before January 1, 1999.
19    (l) Environmental Remediation Tax Credit.
20        (i) For tax years ending after December 31, 1997 and on
21    or before December 31, 2001, a taxpayer shall be allowed a
22    credit against the tax imposed by subsections (a) and (b)
23    of this Section for certain amounts paid for unreimbursed
24    eligible remediation costs, as specified in this
25    subsection. For purposes of this Section, "unreimbursed
26    eligible remediation costs" means costs approved by the

 

 

09700SB0405sam001- 30 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 31 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 32 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 33 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 34 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 35 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 36 -LRB097 04252 HLH 58953 a

1    the Director of the Illinois Department of Revenue of the
2    assignor's intent to sell the remediation site and the
3    amount of the tax credit to be transferred as a portion of
4    the sale. In no event may a credit be transferred to any
5    taxpayer if the taxpayer or a related party would not be
6    eligible under the provisions of subsection (i).
7        (iii) For purposes of this Section, the term "site"
8    shall have the same meaning as under Section 58.2 of the
9    Environmental Protection Act.
10(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1196-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
121-13-11; 97-2, eff. 5-6-11.)
 
13    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
14    Sec. 304. Business income of persons other than residents.
15    (a) In general. The business income of a person other than
16a resident shall be allocated to this State if such person's
17business income is derived solely from this State. If a person
18other than a resident derives business income from this State
19and one or more other states, then, for tax years ending on or
20before December 30, 1998, and except as otherwise provided by
21this Section, such person's business income shall be
22apportioned to this State by multiplying the income by a
23fraction, the numerator of which is the sum of the property
24factor (if any), the payroll factor (if any) and 200% of the
25sales factor (if any), and the denominator of which is 4

 

 

09700SB0405sam001- 37 -LRB097 04252 HLH 58953 a

1reduced by the number of factors other than the sales factor
2which have a denominator of zero and by an additional 2 if the
3sales factor has a denominator of zero. For tax years ending on
4or after December 31, 1998, and except as otherwise provided by
5this Section, persons other than residents who derive business
6income from this State and one or more other states shall
7compute their apportionment factor by weighting their
8property, payroll, and sales factors as provided in subsection
9(h) of this Section.
10    (1) Property factor.
11        (A) The property factor is a fraction, the numerator of
12    which is the average value of the person's real and
13    tangible personal property owned or rented and used in the
14    trade or business in this State during the taxable year and
15    the denominator of which is the average value of all the
16    person's real and tangible personal property owned or
17    rented and used in the trade or business during the taxable
18    year.
19        (B) Property owned by the person is valued at its
20    original cost. Property rented by the person is valued at 8
21    times the net annual rental rate. Net annual rental rate is
22    the annual rental rate paid by the person less any annual
23    rental rate received by the person from sub-rentals.
24        (C) The average value of property shall be determined
25    by averaging the values at the beginning and ending of the
26    taxable year but the Director may require the averaging of

 

 

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1    monthly values during the taxable year if reasonably
2    required to reflect properly the average value of the
3    person's property.
4    (2) Payroll factor.
5        (A) The payroll factor is a fraction, the numerator of
6    which is the total amount paid in this State during the
7    taxable year by the person for compensation, and the
8    denominator of which is the total compensation paid
9    everywhere during the taxable year.
10        (B) Compensation is paid in this State if:
11            (i) The individual's service is performed entirely
12        within this State;
13            (ii) The individual's service is performed both
14        within and without this State, but the service
15        performed without this State is incidental to the
16        individual's service performed within this State; or
17            (iii) Some of the service is performed within this
18        State and either the base of operations, or if there is
19        no base of operations, the place from which the service
20        is directed or controlled is within this State, or the
21        base of operations or the place from which the service
22        is directed or controlled is not in any state in which
23        some part of the service is performed, but the
24        individual's residence is in this State.
25            (iv) Compensation paid to nonresident professional
26        athletes.

 

 

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1            (a) General. The Illinois source income of a
2        nonresident individual who is a member of a
3        professional athletic team includes the portion of the
4        individual's total compensation for services performed
5        as a member of a professional athletic team during the
6        taxable year which the number of duty days spent within
7        this State performing services for the team in any
8        manner during the taxable year bears to the total
9        number of duty days spent both within and without this
10        State during the taxable year.
11            (b) Travel days. Travel days that do not involve
12        either a game, practice, team meeting, or other similar
13        team event are not considered duty days spent in this
14        State. However, such travel days are considered in the
15        total duty days spent both within and without this
16        State.
17            (c) Definitions. For purposes of this subpart
18        (iv):
19                (1) The term "professional athletic team"
20            includes, but is not limited to, any professional
21            baseball, basketball, football, soccer, or hockey
22            team.
23                (2) The term "member of a professional
24            athletic team" includes those employees who are
25            active players, players on the disabled list, and
26            any other persons required to travel and who travel

 

 

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1            with and perform services on behalf of a
2            professional athletic team on a regular basis.
3            This includes, but is not limited to, coaches,
4            managers, and trainers.
5                (3) Except as provided in items (C) and (D) of
6            this subpart (3), the term "duty days" means all
7            days during the taxable year from the beginning of
8            the professional athletic team's official
9            pre-season training period through the last game
10            in which the team competes or is scheduled to
11            compete. Duty days shall be counted for the year in
12            which they occur, including where a team's
13            official pre-season training period through the
14            last game in which the team competes or is
15            scheduled to compete, occurs during more than one
16            tax year.
17                    (A) Duty days shall also include days on
18                which a member of a professional athletic team
19                performs service for a team on a date that does
20                not fall within the foregoing period (e.g.,
21                participation in instructional leagues, the
22                "All Star Game", or promotional "caravans").
23                Performing a service for a professional
24                athletic team includes conducting training and
25                rehabilitation activities, when such
26                activities are conducted at team facilities.

 

 

09700SB0405sam001- 41 -LRB097 04252 HLH 58953 a

1                    (B) Also included in duty days are game
2                days, practice days, days spent at team
3                meetings, promotional caravans, preseason
4                training camps, and days served with the team
5                through all post-season games in which the team
6                competes or is scheduled to compete.
7                    (C) Duty days for any person who joins a
8                team during the period from the beginning of
9                the professional athletic team's official
10                pre-season training period through the last
11                game in which the team competes, or is
12                scheduled to compete, shall begin on the day
13                that person joins the team. Conversely, duty
14                days for any person who leaves a team during
15                this period shall end on the day that person
16                leaves the team. Where a person switches teams
17                during a taxable year, a separate duty-day
18                calculation shall be made for the period the
19                person was with each team.
20                    (D) Days for which a member of a
21                professional athletic team is not compensated
22                and is not performing services for the team in
23                any manner, including days when such member of
24                a professional athletic team has been
25                suspended without pay and prohibited from
26                performing any services for the team, shall not

 

 

09700SB0405sam001- 42 -LRB097 04252 HLH 58953 a

1                be treated as duty days.
2                    (E) Days for which a member of a
3                professional athletic team is on the disabled
4                list and does not conduct rehabilitation
5                activities at facilities of the team, and is
6                not otherwise performing services for the team
7                in Illinois, shall not be considered duty days
8                spent in this State. All days on the disabled
9                list, however, are considered to be included in
10                total duty days spent both within and without
11                this State.
12                (4) The term "total compensation for services
13            performed as a member of a professional athletic
14            team" means the total compensation received during
15            the taxable year for services performed:
16                    (A) from the beginning of the official
17                pre-season training period through the last
18                game in which the team competes or is scheduled
19                to compete during that taxable year; and
20                    (B) during the taxable year on a date which
21                does not fall within the foregoing period
22                (e.g., participation in instructional leagues,
23                the "All Star Game", or promotional caravans).
24                This compensation shall include, but is not
25            limited to, salaries, wages, bonuses as described
26            in this subpart, and any other type of compensation

 

 

09700SB0405sam001- 43 -LRB097 04252 HLH 58953 a

1            paid during the taxable year to a member of a
2            professional athletic team for services performed
3            in that year. This compensation does not include
4            strike benefits, severance pay, termination pay,
5            contract or option year buy-out payments,
6            expansion or relocation payments, or any other
7            payments not related to services performed for the
8            team.
9                For purposes of this subparagraph, "bonuses"
10            included in "total compensation for services
11            performed as a member of a professional athletic
12            team" subject to the allocation described in
13            Section 302(c)(1) are: bonuses earned as a result
14            of play (i.e., performance bonuses) during the
15            season, including bonuses paid for championship,
16            playoff or "bowl" games played by a team, or for
17            selection to all-star league or other honorary
18            positions; and bonuses paid for signing a
19            contract, unless the payment of the signing bonus
20            is not conditional upon the signee playing any
21            games for the team or performing any subsequent
22            services for the team or even making the team, the
23            signing bonus is payable separately from the
24            salary and any other compensation, and the signing
25            bonus is nonrefundable.
26    (3) Sales factor.

 

 

09700SB0405sam001- 44 -LRB097 04252 HLH 58953 a

1        (A) The sales factor is a fraction, the numerator of
2    which is the total sales of the person in this State during
3    the taxable year, and the denominator of which is the total
4    sales of the person everywhere during the taxable year.
5        (B) Sales of tangible personal property are in this
6    State if:
7            (i) The property is delivered or shipped to a
8        purchaser, other than the United States government,
9        within this State regardless of the f. o. b. point or
10        other conditions of the sale; or
11            (ii) The property is shipped from an office, store,
12        warehouse, factory or other place of storage in this
13        State and either the purchaser is the United States
14        government or the person is not taxable in the state of
15        the purchaser; provided, however, that premises owned
16        or leased by a person who has independently contracted
17        with the seller for the printing of newspapers,
18        periodicals or books shall not be deemed to be an
19        office, store, warehouse, factory or other place of
20        storage for purposes of this Section. Sales of tangible
21        personal property are not in this State if the seller
22        and purchaser would be members of the same unitary
23        business group but for the fact that either the seller
24        or purchaser is a person with 80% or more of total
25        business activity outside of the United States and the
26        property is purchased for resale.

 

 

09700SB0405sam001- 45 -LRB097 04252 HLH 58953 a

1        (B-1) Patents, copyrights, trademarks, and similar
2    items of intangible personal property.
3            (i) Gross receipts from the licensing, sale, or
4        other disposition of a patent, copyright, trademark,
5        or similar item of intangible personal property, other
6        than gross receipts governed by paragraph (B-7) of this
7        item (3), are in this State to the extent the item is
8        utilized in this State during the year the gross
9        receipts are included in gross income.
10            (ii) Place of utilization.
11                (I) A patent is utilized in a state to the
12            extent that it is employed in production,
13            fabrication, manufacturing, or other processing in
14            the state or to the extent that a patented product
15            is produced in the state. If a patent is utilized
16            in more than one state, the extent to which it is
17            utilized in any one state shall be a fraction equal
18            to the gross receipts of the licensee or purchaser
19            from sales or leases of items produced,
20            fabricated, manufactured, or processed within that
21            state using the patent and of patented items
22            produced within that state, divided by the total of
23            such gross receipts for all states in which the
24            patent is utilized.
25                (II) A copyright is utilized in a state to the
26            extent that printing or other publication

 

 

09700SB0405sam001- 46 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 47 -LRB097 04252 HLH 58953 a

1    or other disposition of such items comprise more than 50%
2    of the taxpayer's total gross receipts included in gross
3    income during the tax year and during each of the 2
4    immediately preceding tax years; provided that, when a
5    taxpayer is a member of a unitary business group, such
6    determination shall be made on the basis of the gross
7    receipts of the entire unitary business group.
8        (B-5) For taxable years ending on or after December 31,
9    2008, except as provided in subsections (ii) through (vii),
10    receipts from the sale of telecommunications service or
11    mobile telecommunications service are in this State if the
12    customer's service address is in this State.
13            (i) For purposes of this subparagraph (B-5), the
14        following terms have the following meanings:
15            "Ancillary services" means services that are
16        associated with or incidental to the provision of
17        "telecommunications services", including but not
18        limited to "detailed telecommunications billing",
19        "directory assistance", "vertical service", and "voice
20        mail services".
21            "Air-to-Ground Radiotelephone service" means a
22        radio service, as that term is defined in 47 CFR 22.99,
23        in which common carriers are authorized to offer and
24        provide radio telecommunications service for hire to
25        subscribers in aircraft.
26            "Call-by-call Basis" means any method of charging

 

 

09700SB0405sam001- 48 -LRB097 04252 HLH 58953 a

1        for telecommunications services where the price is
2        measured by individual calls.
3            "Communications Channel" means a physical or
4        virtual path of communications over which signals are
5        transmitted between or among customer channel
6        termination points.
7            "Conference bridging service" means an "ancillary
8        service" that links two or more participants of an
9        audio or video conference call and may include the
10        provision of a telephone number. "Conference bridging
11        service" does not include the "telecommunications
12        services" used to reach the conference bridge.
13            "Customer Channel Termination Point" means the
14        location where the customer either inputs or receives
15        the communications.
16            "Detailed telecommunications billing service"
17        means an "ancillary service" of separately stating
18        information pertaining to individual calls on a
19        customer's billing statement.
20            "Directory assistance" means an "ancillary
21        service" of providing telephone number information,
22        and/or address information.
23            "Home service provider" means the facilities based
24        carrier or reseller with which the customer contracts
25        for the provision of mobile telecommunications
26        services.

 

 

09700SB0405sam001- 49 -LRB097 04252 HLH 58953 a

1            "Mobile telecommunications service" means
2        commercial mobile radio service, as defined in Section
3        20.3 of Title 47 of the Code of Federal Regulations as
4        in effect on June 1, 1999.
5            "Place of primary use" means the street address
6        representative of where the customer's use of the
7        telecommunications service primarily occurs, which
8        must be the residential street address or the primary
9        business street address of the customer. In the case of
10        mobile telecommunications services, "place of primary
11        use" must be within the licensed service area of the
12        home service provider.
13            "Post-paid telecommunication service" means the
14        telecommunications service obtained by making a
15        payment on a call-by-call basis either through the use
16        of a credit card or payment mechanism such as a bank
17        card, travel card, credit card, or debit card, or by
18        charge made to a telephone number which is not
19        associated with the origination or termination of the
20        telecommunications service. A post-paid calling
21        service includes telecommunications service, except a
22        prepaid wireless calling service, that would be a
23        prepaid calling service except it is not exclusively a
24        telecommunication service.
25            "Prepaid telecommunication service" means the
26        right to access exclusively telecommunications

 

 

09700SB0405sam001- 50 -LRB097 04252 HLH 58953 a

1        services, which must be paid for in advance and which
2        enables the origination of calls using an access number
3        or authorization code, whether manually or
4        electronically dialed, and that is sold in
5        predetermined units or dollars of which the number
6        declines with use in a known amount.
7            "Prepaid Mobile telecommunication service" means a
8        telecommunications service that provides the right to
9        utilize mobile wireless service as well as other
10        non-telecommunication services, including but not
11        limited to ancillary services, which must be paid for
12        in advance that is sold in predetermined units or
13        dollars of which the number declines with use in a
14        known amount.
15            "Private communication service" means a
16        telecommunication service that entitles the customer
17        to exclusive or priority use of a communications
18        channel or group of channels between or among
19        termination points, regardless of the manner in which
20        such channel or channels are connected, and includes
21        switching capacity, extension lines, stations, and any
22        other associated services that are provided in
23        connection with the use of such channel or channels.
24            "Service address" means:
25                (a) The location of the telecommunications
26            equipment to which a customer's call is charged and

 

 

09700SB0405sam001- 51 -LRB097 04252 HLH 58953 a

1            from which the call originates or terminates,
2            regardless of where the call is billed or paid;
3                (b) If the location in line (a) is not known,
4            service address means the origination point of the
5            signal of the telecommunications services first
6            identified by either the seller's
7            telecommunications system or in information
8            received by the seller from its service provider
9            where the system used to transport such signals is
10            not that of the seller; and
11                (c) If the locations in line (a) and line (b)
12            are not known, the service address means the
13            location of the customer's place of primary use.
14            "Telecommunications service" means the electronic
15        transmission, conveyance, or routing of voice, data,
16        audio, video, or any other information or signals to a
17        point, or between or among points. The term
18        "telecommunications service" includes such
19        transmission, conveyance, or routing in which computer
20        processing applications are used to act on the form,
21        code or protocol of the content for purposes of
22        transmission, conveyance or routing without regard to
23        whether such service is referred to as voice over
24        Internet protocol services or is classified by the
25        Federal Communications Commission as enhanced or value
26        added. "Telecommunications service" does not include:

 

 

09700SB0405sam001- 52 -LRB097 04252 HLH 58953 a

1                (a) Data processing and information services
2            that allow data to be generated, acquired, stored,
3            processed, or retrieved and delivered by an
4            electronic transmission to a purchaser when such
5            purchaser's primary purpose for the underlying
6            transaction is the processed data or information;
7                (b) Installation or maintenance of wiring or
8            equipment on a customer's premises;
9                (c) Tangible personal property;
10                (d) Advertising, including but not limited to
11            directory advertising.
12                (e) Billing and collection services provided
13            to third parties;
14                (f) Internet access service;
15                (g) Radio and television audio and video
16            programming services, regardless of the medium,
17            including the furnishing of transmission,
18            conveyance and routing of such services by the
19            programming service provider. Radio and television
20            audio and video programming services shall include
21            but not be limited to cable service as defined in
22            47 USC 522(6) and audio and video programming
23            services delivered by commercial mobile radio
24            service providers, as defined in 47 CFR 20.3;
25                (h) "Ancillary services"; or
26                (i) Digital products "delivered

 

 

09700SB0405sam001- 53 -LRB097 04252 HLH 58953 a

1            electronically", including but not limited to
2            software, music, video, reading materials or ring
3            tones.
4            "Vertical service" means an "ancillary service"
5        that is offered in connection with one or more
6        "telecommunications services", which offers advanced
7        calling features that allow customers to identify
8        callers and to manage multiple calls and call
9        connections, including "conference bridging services".
10            "Voice mail service" means an "ancillary service"
11        that enables the customer to store, send or receive
12        recorded messages. "Voice mail service" does not
13        include any "vertical services" that the customer may
14        be required to have in order to utilize the "voice mail
15        service".
16            (ii) Receipts from the sale of telecommunications
17        service sold on an individual call-by-call basis are in
18        this State if either of the following applies:
19                (a) The call both originates and terminates in
20            this State.
21                (b) The call either originates or terminates
22            in this State and the service address is located in
23            this State.
24            (iii) Receipts from the sale of postpaid
25        telecommunications service at retail are in this State
26        if the origination point of the telecommunication

 

 

09700SB0405sam001- 54 -LRB097 04252 HLH 58953 a

1        signal, as first identified by the service provider's
2        telecommunication system or as identified by
3        information received by the seller from its service
4        provider if the system used to transport
5        telecommunication signals is not the seller's, is
6        located in this State.
7            (iv) Receipts from the sale of prepaid
8        telecommunications service or prepaid mobile
9        telecommunications service at retail are in this State
10        if the purchaser obtains the prepaid card or similar
11        means of conveyance at a location in this State.
12        Receipts from recharging a prepaid telecommunications
13        service or mobile telecommunications service is in
14        this State if the purchaser's billing information
15        indicates a location in this State.
16            (v) Receipts from the sale of private
17        communication services are in this State as follows:
18                (a) 100% of receipts from charges imposed at
19            each channel termination point in this State.
20                (b) 100% of receipts from charges for the total
21            channel mileage between each channel termination
22            point in this State.
23                (c) 50% of the total receipts from charges for
24            service segments when those segments are between 2
25            customer channel termination points, 1 of which is
26            located in this State and the other is located

 

 

09700SB0405sam001- 55 -LRB097 04252 HLH 58953 a

1            outside of this State, which segments are
2            separately charged.
3                (d) The receipts from charges for service
4            segments with a channel termination point located
5            in this State and in two or more other states, and
6            which segments are not separately billed, are in
7            this State based on a percentage determined by
8            dividing the number of customer channel
9            termination points in this State by the total
10            number of customer channel termination points.
11            (vi) Receipts from charges for ancillary services
12        for telecommunications service sold to customers at
13        retail are in this State if the customer's primary
14        place of use of telecommunications services associated
15        with those ancillary services is in this State. If the
16        seller of those ancillary services cannot determine
17        where the associated telecommunications are located,
18        then the ancillary services shall be based on the
19        location of the purchaser.
20            (vii) Receipts to access a carrier's network or
21        from the sale of telecommunication services or
22        ancillary services for resale are in this State as
23        follows:
24                (a) 100% of the receipts from access fees
25            attributable to intrastate telecommunications
26            service that both originates and terminates in

 

 

09700SB0405sam001- 56 -LRB097 04252 HLH 58953 a

1            this State.
2                (b) 50% of the receipts from access fees
3            attributable to interstate telecommunications
4            service if the interstate call either originates
5            or terminates in this State.
6                (c) 100% of the receipts from interstate end
7            user access line charges, if the customer's
8            service address is in this State. As used in this
9            subdivision, "interstate end user access line
10            charges" includes, but is not limited to, the
11            surcharge approved by the federal communications
12            commission and levied pursuant to 47 CFR 69.
13                (d) Gross receipts from sales of
14            telecommunication services or from ancillary
15            services for telecommunications services sold to
16            other telecommunication service providers for
17            resale shall be sourced to this State using the
18            apportionment concepts used for non-resale
19            receipts of telecommunications services if the
20            information is readily available to make that
21            determination. If the information is not readily
22            available, then the taxpayer may use any other
23            reasonable and consistent method.
24        (B-7) For taxable years ending on or after December 31,
25    2008, receipts from the sale of broadcasting services are
26    in this State if the broadcasting services are received in

 

 

09700SB0405sam001- 57 -LRB097 04252 HLH 58953 a

1    this State. For purposes of this paragraph (B-7), the
2    following terms have the following meanings:
3            "Advertising revenue" means consideration received
4        by the taxpayer in exchange for broadcasting services
5        or allowing the broadcasting of commercials or
6        announcements in connection with the broadcasting of
7        film or radio programming, from sponsorships of the
8        programming, or from product placements in the
9        programming.
10            "Audience factor" means the ratio that the
11        audience or subscribers located in this State of a
12        station, a network, or a cable system bears to the
13        total audience or total subscribers for that station,
14        network, or cable system. The audience factor for film
15        or radio programming shall be determined by reference
16        to the books and records of the taxpayer or by
17        reference to published rating statistics provided the
18        method used by the taxpayer is consistently used from
19        year to year for this purpose and fairly represents the
20        taxpayer's activity in this State.
21            "Broadcast" or "broadcasting" or "broadcasting
22        services" means the transmission or provision of film
23        or radio programming, whether through the public
24        airwaves, by cable, by direct or indirect satellite
25        transmission, or by any other means of communication,
26        either through a station, a network, or a cable system.

 

 

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1            "Film" or "film programming" means the broadcast
2        on television of any and all performances, events, or
3        productions, including but not limited to news,
4        sporting events, plays, stories, or other literary,
5        commercial, educational, or artistic works, either
6        live or through the use of video tape, disc, or any
7        other type of format or medium. Each episode of a
8        series of films produced for television shall
9        constitute separate "film" notwithstanding that the
10        series relates to the same principal subject and is
11        produced during one or more tax periods.
12            "Radio" or "radio programming" means the broadcast
13        on radio of any and all performances, events, or
14        productions, including but not limited to news,
15        sporting events, plays, stories, or other literary,
16        commercial, educational, or artistic works, either
17        live or through the use of an audio tape, disc, or any
18        other format or medium. Each episode in a series of
19        radio programming produced for radio broadcast shall
20        constitute a separate "radio programming"
21        notwithstanding that the series relates to the same
22        principal subject and is produced during one or more
23        tax periods.
24                (i) In the case of advertising revenue from
25            broadcasting, the customer is the advertiser and
26            the service is received in this State if the

 

 

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1            commercial domicile of the advertiser is in this
2            State.
3                (ii) In the case where film or radio
4            programming is broadcast by a station, a network,
5            or a cable system for a fee or other remuneration
6            received from the recipient of the broadcast, the
7            portion of the service that is received in this
8            State is measured by the portion of the recipients
9            of the broadcast located in this State.
10            Accordingly, the fee or other remuneration for
11            such service that is included in the Illinois
12            numerator of the sales factor is the total of those
13            fees or other remuneration received from
14            recipients in Illinois. For purposes of this
15            paragraph, a taxpayer may determine the location
16            of the recipients of its broadcast using the
17            address of the recipient shown in its contracts
18            with the recipient or using the billing address of
19            the recipient in the taxpayer's records.
20                (iii) In the case where film or radio
21            programming is broadcast by a station, a network,
22            or a cable system for a fee or other remuneration
23            from the person providing the programming, the
24            portion of the broadcast service that is received
25            by such station, network, or cable system in this
26            State is measured by the portion of recipients of

 

 

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1            the broadcast located in this State. Accordingly,
2            the amount of revenue related to such an
3            arrangement that is included in the Illinois
4            numerator of the sales factor is the total fee or
5            other total remuneration from the person providing
6            the programming related to that broadcast
7            multiplied by the Illinois audience factor for
8            that broadcast.
9                (iv) In the case where film or radio
10            programming is provided by a taxpayer that is a
11            network or station to a customer for broadcast in
12            exchange for a fee or other remuneration from that
13            customer the broadcasting service is received at
14            the location of the office of the customer from
15            which the services were ordered in the regular
16            course of the customer's trade or business.
17            Accordingly, in such a case the revenue derived by
18            the taxpayer that is included in the taxpayer's
19            Illinois numerator of the sales factor is the
20            revenue from such customers who receive the
21            broadcasting service in Illinois.
22                (v) In the case where film or radio programming
23            is provided by a taxpayer that is not a network or
24            station to another person for broadcasting in
25            exchange for a fee or other remuneration from that
26            person, the broadcasting service is received at

 

 

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1            the location of the office of the customer from
2            which the services were ordered in the regular
3            course of the customer's trade or business.
4            Accordingly, in such a case the revenue derived by
5            the taxpayer that is included in the taxpayer's
6            Illinois numerator of the sales factor is the
7            revenue from such customers who receive the
8            broadcasting service in Illinois.
9        (C) For taxable years ending before December 31, 2008,
10    sales, other than sales governed by paragraphs (B), (B-1),
11    and (B-2), are in this State if:
12            (i) The income-producing activity is performed in
13        this State; or
14            (ii) The income-producing activity is performed
15        both within and without this State and a greater
16        proportion of the income-producing activity is
17        performed within this State than without this State,
18        based on performance costs.
19        (C-5) For taxable years ending on or after December 31,
20    2008, sales, other than sales governed by paragraphs (B),
21    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
22    the following criteria are met:
23            (i) Sales from the sale or lease of real property
24        are in this State if the property is located in this
25        State.
26            (ii) Sales from the lease or rental of tangible

 

 

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1        personal property are in this State if the property is
2        located in this State during the rental period. Sales
3        from the lease or rental of tangible personal property
4        that is characteristically moving property, including,
5        but not limited to, motor vehicles, rolling stock,
6        aircraft, vessels, or mobile equipment are in this
7        State to the extent that the property is used in this
8        State.
9            (iii) In the case of interest, net gains (but not
10        less than zero) and other items of income from
11        intangible personal property, the sale is in this State
12        if:
13                (a) in the case of a taxpayer who is a dealer
14            in the item of intangible personal property within
15            the meaning of Section 475 of the Internal Revenue
16            Code, the income or gain is received from a
17            customer in this State. For purposes of this
18            subparagraph, a customer is in this State if the
19            customer is an individual, trust or estate who is a
20            resident of this State and, for all other
21            customers, if the customer's commercial domicile
22            is in this State. Unless the dealer has actual
23            knowledge of the residence or commercial domicile
24            of a customer during a taxable year, the customer
25            shall be deemed to be a customer in this State if
26            the billing address of the customer, as shown in

 

 

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1            the records of the dealer, is in this State; or
2                (b) in all other cases, if the
3            income-producing activity of the taxpayer is
4            performed in this State or, if the
5            income-producing activity of the taxpayer is
6            performed both within and without this State, if a
7            greater proportion of the income-producing
8            activity of the taxpayer is performed within this
9            State than in any other state, based on performance
10            costs.
11            (iv) Sales of services are in this State if the
12        services are received in this State. For the purposes
13        of this section, gross receipts from the performance of
14        services provided to a corporation, partnership, or
15        trust may only be attributed to a state where that
16        corporation, partnership, or trust has a fixed place of
17        business. If the state where the services are received
18        is not readily determinable or is a state where the
19        corporation, partnership, or trust receiving the
20        service does not have a fixed place of business, the
21        services shall be deemed to be received at the location
22        of the office of the customer from which the services
23        were ordered in the regular course of the customer's
24        trade or business. If the ordering office cannot be
25        determined, the services shall be deemed to be received
26        at the office of the customer to which the services are

 

 

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1        billed. If the taxpayer is not taxable in the state in
2        which the services are received, the sale must be
3        excluded from both the numerator and the denominator of
4        the sales factor. The Department shall adopt rules
5        prescribing where specific types of service are
6        received, including, but not limited to, publishing,
7        and utility service.
8        (D) For taxable years ending on or after December 31,
9    1995, the following items of income shall not be included
10    in the numerator or denominator of the sales factor:
11    dividends; amounts included under Section 78 of the
12    Internal Revenue Code; and Subpart F income as defined in
13    Section 952 of the Internal Revenue Code. No inference
14    shall be drawn from the enactment of this paragraph (D) in
15    construing this Section for taxable years ending before
16    December 31, 1995.
17        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
18    ending on or after December 31, 1999, provided that a
19    taxpayer may elect to apply the provisions of these
20    paragraphs to prior tax years. Such election shall be made
21    in the form and manner prescribed by the Department, shall
22    be irrevocable, and shall apply to all tax years; provided
23    that, if a taxpayer's Illinois income tax liability for any
24    tax year, as assessed under Section 903 prior to January 1,
25    1999, was computed in a manner contrary to the provisions
26    of paragraphs (B-1) or (B-2), no refund shall be payable to

 

 

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1    the taxpayer for that tax year to the extent such refund is
2    the result of applying the provisions of paragraph (B-1) or
3    (B-2) retroactively. In the case of a unitary business
4    group, such election shall apply to all members of such
5    group for every tax year such group is in existence, but
6    shall not apply to any taxpayer for any period during which
7    that taxpayer is not a member of such group.
8    (b) Insurance companies.
9        (1) In general. Except as otherwise provided by
10    paragraph (2), business income of an insurance company for
11    a taxable year shall be apportioned to this State by
12    multiplying such income by a fraction, the numerator of
13    which is the direct premiums written for insurance upon
14    property or risk in this State, and the denominator of
15    which is the direct premiums written for insurance upon
16    property or risk everywhere. For purposes of this
17    subsection, the term "direct premiums written" means the
18    total amount of direct premiums written, assessments and
19    annuity considerations as reported for the taxable year on
20    the annual statement filed by the company with the Illinois
21    Director of Insurance in the form approved by the National
22    Convention of Insurance Commissioners or such other form as
23    may be prescribed in lieu thereof.
24        (2) Reinsurance. If the principal source of premiums
25    written by an insurance company consists of premiums for
26    reinsurance accepted by it, the business income of such

 

 

09700SB0405sam001- 66 -LRB097 04252 HLH 58953 a

1    company shall be apportioned to this State by multiplying
2    such income by a fraction, the numerator of which is the
3    sum of (i) direct premiums written for insurance upon
4    property or risk in this State, plus (ii) premiums written
5    for reinsurance accepted in respect of property or risk in
6    this State, and the denominator of which is the sum of
7    (iii) direct premiums written for insurance upon property
8    or risk everywhere, plus (iv) premiums written for
9    reinsurance accepted in respect of property or risk
10    everywhere. For purposes of this paragraph, premiums
11    written for reinsurance accepted in respect of property or
12    risk in this State, whether or not otherwise determinable,
13    may, at the election of the company, be determined on the
14    basis of the proportion which premiums written for
15    reinsurance accepted from companies commercially domiciled
16    in Illinois bears to premiums written for reinsurance
17    accepted from all sources, or, alternatively, in the
18    proportion which the sum of the direct premiums written for
19    insurance upon property or risk in this State by each
20    ceding company from which reinsurance is accepted bears to
21    the sum of the total direct premiums written by each such
22    ceding company for the taxable year. The election made by a
23    company under this paragraph for its first taxable year
24    ending on or after December 31, 2011, shall be binding for
25    that company for that taxable year and for all subsequent
26    taxable years, and may be altered only with the written

 

 

09700SB0405sam001- 67 -LRB097 04252 HLH 58953 a

1    permission of the Department, which shall not be
2    unreasonably withheld.
3    (c) Financial organizations.
4        (1) In general. For taxable years ending before
5    December 31, 2008, business income of a financial
6    organization shall be apportioned to this State by
7    multiplying such income by a fraction, the numerator of
8    which is its business income from sources within this
9    State, and the denominator of which is its business income
10    from all sources. For the purposes of this subsection, the
11    business income of a financial organization from sources
12    within this State is the sum of the amounts referred to in
13    subparagraphs (A) through (E) following, but excluding the
14    adjusted income of an international banking facility as
15    determined in paragraph (2):
16            (A) Fees, commissions or other compensation for
17        financial services rendered within this State;
18            (B) Gross profits from trading in stocks, bonds or
19        other securities managed within this State;
20            (C) Dividends, and interest from Illinois
21        customers, which are received within this State;
22            (D) Interest charged to customers at places of
23        business maintained within this State for carrying
24        debit balances of margin accounts, without deduction
25        of any costs incurred in carrying such accounts; and
26            (E) Any other gross income resulting from the

 

 

09700SB0405sam001- 68 -LRB097 04252 HLH 58953 a

1        operation as a financial organization within this
2        State. In computing the amounts referred to in
3        paragraphs (A) through (E) of this subsection, any
4        amount received by a member of an affiliated group
5        (determined under Section 1504(a) of the Internal
6        Revenue Code but without reference to whether any such
7        corporation is an "includible corporation" under
8        Section 1504(b) of the Internal Revenue Code) from
9        another member of such group shall be included only to
10        the extent such amount exceeds expenses of the
11        recipient directly related thereto.
12        (2) International Banking Facility. For taxable years
13    ending before December 31, 2008:
14            (A) Adjusted Income. The adjusted income of an
15        international banking facility is its income reduced
16        by the amount of the floor amount.
17            (B) Floor Amount. The floor amount shall be the
18        amount, if any, determined by multiplying the income of
19        the international banking facility by a fraction, not
20        greater than one, which is determined as follows:
21                (i) The numerator shall be:
22                The average aggregate, determined on a
23            quarterly basis, of the financial organization's
24            loans to banks in foreign countries, to foreign
25            domiciled borrowers (except where secured
26            primarily by real estate) and to foreign

 

 

09700SB0405sam001- 69 -LRB097 04252 HLH 58953 a

1            governments and other foreign official
2            institutions, as reported for its branches,
3            agencies and offices within the state on its
4            "Consolidated Report of Condition", Schedule A,
5            Lines 2.c., 5.b., and 7.a., which was filed with
6            the Federal Deposit Insurance Corporation and
7            other regulatory authorities, for the year 1980,
8            minus
9                The average aggregate, determined on a
10            quarterly basis, of such loans (other than loans of
11            an international banking facility), as reported by
12            the financial institution for its branches,
13            agencies and offices within the state, on the
14            corresponding Schedule and lines of the
15            Consolidated Report of Condition for the current
16            taxable year, provided, however, that in no case
17            shall the amount determined in this clause (the
18            subtrahend) exceed the amount determined in the
19            preceding clause (the minuend); and
20                (ii) the denominator shall be the average
21            aggregate, determined on a quarterly basis, of the
22            international banking facility's loans to banks in
23            foreign countries, to foreign domiciled borrowers
24            (except where secured primarily by real estate)
25            and to foreign governments and other foreign
26            official institutions, which were recorded in its

 

 

09700SB0405sam001- 70 -LRB097 04252 HLH 58953 a

1            financial accounts for the current taxable year.
2            (C) Change to Consolidated Report of Condition and
3        in Qualification. In the event the Consolidated Report
4        of Condition which is filed with the Federal Deposit
5        Insurance Corporation and other regulatory authorities
6        is altered so that the information required for
7        determining the floor amount is not found on Schedule
8        A, lines 2.c., 5.b. and 7.a., the financial institution
9        shall notify the Department and the Department may, by
10        regulations or otherwise, prescribe or authorize the
11        use of an alternative source for such information. The
12        financial institution shall also notify the Department
13        should its international banking facility fail to
14        qualify as such, in whole or in part, or should there
15        be any amendment or change to the Consolidated Report
16        of Condition, as originally filed, to the extent such
17        amendment or change alters the information used in
18        determining the floor amount.
19        (3) For taxable years ending on or after December 31,
20    2008, the business income of a financial organization shall
21    be apportioned to this State by multiplying such income by
22    a fraction, the numerator of which is its gross receipts
23    from sources in this State or otherwise attributable to
24    this State's marketplace and the denominator of which is
25    its gross receipts everywhere during the taxable year.
26    "Gross receipts" for purposes of this subparagraph (3)

 

 

09700SB0405sam001- 71 -LRB097 04252 HLH 58953 a

1    means gross income, including net taxable gain on
2    disposition of assets, including securities and money
3    market instruments, when derived from transactions and
4    activities in the regular course of the financial
5    organization's trade or business. The following examples
6    are illustrative:
7            (i) Receipts from the lease or rental of real or
8        tangible personal property are in this State if the
9        property is located in this State during the rental
10        period. Receipts from the lease or rental of tangible
11        personal property that is characteristically moving
12        property, including, but not limited to, motor
13        vehicles, rolling stock, aircraft, vessels, or mobile
14        equipment are from sources in this State to the extent
15        that the property is used in this State.
16            (ii) Interest income, commissions, fees, gains on
17        disposition, and other receipts from assets in the
18        nature of loans that are secured primarily by real
19        estate or tangible personal property are from sources
20        in this State if the security is located in this State.
21            (iii) Interest income, commissions, fees, gains on
22        disposition, and other receipts from consumer loans
23        that are not secured by real or tangible personal
24        property are from sources in this State if the debtor
25        is a resident of this State.
26            (iv) Interest income, commissions, fees, gains on

 

 

09700SB0405sam001- 72 -LRB097 04252 HLH 58953 a

1        disposition, and other receipts from commercial loans
2        and installment obligations that are not secured by
3        real or tangible personal property are from sources in
4        this State if the proceeds of the loan are to be
5        applied in this State. If it cannot be determined where
6        the funds are to be applied, the income and receipts
7        are from sources in this State if the office of the
8        borrower from which the loan was negotiated in the
9        regular course of business is located in this State. If
10        the location of this office cannot be determined, the
11        income and receipts shall be excluded from the
12        numerator and denominator of the sales factor.
13            (v) Interest income, fees, gains on disposition,
14        service charges, merchant discount income, and other
15        receipts from credit card receivables are from sources
16        in this State if the card charges are regularly billed
17        to a customer in this State.
18            (vi) Receipts from the performance of services,
19        including, but not limited to, fiduciary, advisory,
20        and brokerage services, are in this State if the
21        services are received in this State within the meaning
22        of subparagraph (a)(3)(C-5)(iv) of this Section.
23            (vii) Receipts from the issuance of travelers
24        checks and money orders are from sources in this State
25        if the checks and money orders are issued from a
26        location within this State.

 

 

09700SB0405sam001- 73 -LRB097 04252 HLH 58953 a

1            (viii) Receipts from investment assets and
2        activities and trading assets and activities are
3        included in the receipts factor as follows:
4                (1) Interest, dividends, net gains (but not
5            less than zero) and other income from investment
6            assets and activities from trading assets and
7            activities shall be included in the receipts
8            factor. Investment assets and activities and
9            trading assets and activities include but are not
10            limited to: investment securities; trading account
11            assets; federal funds; securities purchased and
12            sold under agreements to resell or repurchase;
13            options; futures contracts; forward contracts;
14            notional principal contracts such as swaps;
15            equities; and foreign currency transactions. With
16            respect to the investment and trading assets and
17            activities described in subparagraphs (A) and (B)
18            of this paragraph, the receipts factor shall
19            include the amounts described in such
20            subparagraphs.
21                    (A) The receipts factor shall include the
22                amount by which interest from federal funds
23                sold and securities purchased under resale
24                agreements exceeds interest expense on federal
25                funds purchased and securities sold under
26                repurchase agreements.

 

 

09700SB0405sam001- 74 -LRB097 04252 HLH 58953 a

1                    (B) The receipts factor shall include the
2                amount by which interest, dividends, gains and
3                other income from trading assets and
4                activities, including but not limited to
5                assets and activities in the matched book, in
6                the arbitrage book, and foreign currency
7                transactions, exceed amounts paid in lieu of
8                interest, amounts paid in lieu of dividends,
9                and losses from such assets and activities.
10                (2) The numerator of the receipts factor
11            includes interest, dividends, net gains (but not
12            less than zero), and other income from investment
13            assets and activities and from trading assets and
14            activities described in paragraph (1) of this
15            subsection that are attributable to this State.
16                    (A) The amount of interest, dividends, net
17                gains (but not less than zero), and other
18                income from investment assets and activities
19                in the investment account to be attributed to
20                this State and included in the numerator is
21                determined by multiplying all such income from
22                such assets and activities by a fraction, the
23                numerator of which is the gross income from
24                such assets and activities which are properly
25                assigned to a fixed place of business of the
26                taxpayer within this State and the denominator

 

 

09700SB0405sam001- 75 -LRB097 04252 HLH 58953 a

1                of which is the gross income from all such
2                assets and activities.
3                    (B) The amount of interest from federal
4                funds sold and purchased and from securities
5                purchased under resale agreements and
6                securities sold under repurchase agreements
7                attributable to this State and included in the
8                numerator is determined by multiplying the
9                amount described in subparagraph (A) of
10                paragraph (1) of this subsection from such
11                funds and such securities by a fraction, the
12                numerator of which is the gross income from
13                such funds and such securities which are
14                properly assigned to a fixed place of business
15                of the taxpayer within this State and the
16                denominator of which is the gross income from
17                all such funds and such securities.
18                    (C) The amount of interest, dividends,
19                gains, and other income from trading assets and
20                activities, including but not limited to
21                assets and activities in the matched book, in
22                the arbitrage book and foreign currency
23                transactions (but excluding amounts described
24                in subparagraphs (A) or (B) of this paragraph),
25                attributable to this State and included in the
26                numerator is determined by multiplying the

 

 

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1                amount described in subparagraph (B) of
2                paragraph (1) of this subsection by a fraction,
3                the numerator of which is the gross income from
4                such trading assets and activities which are
5                properly assigned to a fixed place of business
6                of the taxpayer within this State and the
7                denominator of which is the gross income from
8                all such assets and activities.
9                    (D) Properly assigned, for purposes of
10                this paragraph (2) of this subsection, means
11                the investment or trading asset or activity is
12                assigned to the fixed place of business with
13                which it has a preponderance of substantive
14                contacts. An investment or trading asset or
15                activity assigned by the taxpayer to a fixed
16                place of business without the State shall be
17                presumed to have been properly assigned if:
18                        (i) the taxpayer has assigned, in the
19                    regular course of its business, such asset
20                    or activity on its records to a fixed place
21                    of business consistent with federal or
22                    state regulatory requirements;
23                        (ii) such assignment on its records is
24                    based upon substantive contacts of the
25                    asset or activity to such fixed place of
26                    business; and

 

 

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

 

 

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1                subparagraph (E), it shall be presumed,
2                subject to rebuttal, that taxpayer's
3                commercial domicile is in the state of the
4                United States or the District of Columbia to
5                which the greatest number of employees are
6                regularly connected with the management of the
7                investment or trading income or out of which
8                they are working, irrespective of where the
9                services of such employees are performed, as of
10                the last day of the taxable year.
11        (4) (Blank).
12        (5) (Blank).
13    (c-1) Federally-regulated exchanges, execution platforms,
14and clearinghouses. For taxable years ending on or after
15December 31, 2011, business income of federally-regulated
16exchanges, execution platforms, and clearinghouses (as defined
17in this subsection) shall, at the option of the
18federally-regulated exchange, execution platform, or
19clearinghouse, be apportioned to this State by multiplying such
20income by a fraction, the numerator of which is its business
21income from sources within this State, and the denominator of
22which is its business income from all sources. For purposes of
23this subsection, the business income of a federally-regulated
24exchange, execution platform, and clearinghouse from sources
25within this State is the sum of the amounts referred to in
26subparagraphs (1) through (8) following:

 

 

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1        (1) 100% of receipts attributable to transactions
2    executed via open outcry on a physical trading floor
3    located in this State.
4        (2) 27.54% of receipts attributable to transactions
5    matched or executed by means of an electronic transaction
6    system, including where a taxpayer provides electronic
7    matching or execution services for another exchange or
8    execution platform.
9        (3) 27.54% of receipts attributable to the clearing of
10    transactions not matched or executed on the taxpayer's
11    physical trading floor or electronic transaction systems,
12    including "ex-pit" transaction fees and post-trade
13    transaction fees, and including where a taxpayer provides
14    clearing services for another clearinghouse.
15        (4) Receipts attributable to licensing, sale, or other
16    disposition of a patent, copyright, trademark, or similar
17    item of intangible personal property are sourced in
18    accordance with the rules contained in paragraph (B-1) of
19    item (3) of subsection (a) of this Section.
20        (5) Sales from the sale or lease of real property are
21    in this State if the property is located in this State.
22        (6) Sales from the lease or rental of tangible personal
23    property are in this State if the property is located in
24    this State during the rental period.
25        (7) In the case of interest, net gains (but not less
26    than zero), and other items of income from intangible

 

 

09700SB0405sam001- 80 -LRB097 04252 HLH 58953 a

1    personal property, the sale is in this State if:
2            (A) in the case of a taxpayer who is a dealer in
3        the item of intangible personal property within the
4        meaning of Section 475 of the Internal Revenue Code, or
5        who regularly engages in the sale, licensing, leasing,
6        assignment, or other disposition of any type of
7        intangible personal property and would be a dealer with
8        respect to such property under Section 475 if the
9        property were a "security" as defined under Section
10        475(c)(2) of the Internal Revenue Code, the income or
11        gain is received from a customer in this State; for
12        example, Taxpayer regularly grants limited,
13        non-exclusive licenses to use and distribute its
14        proprietary data and data it gathers from other
15        sources; taxpayer is not a dealer "in securities" under
16        Section 475; however, Taxpayer is a "dealer in the item
17        of intangible personal property" (the data) for
18        purposes of this Section; for purposes of this
19        subparagraph, a customer is in this State if the
20        customer is an individual, trust, or estate who is a
21        resident of this State and, for all other customers, if
22        the customer's commercial domicile is in this State;
23        unless the dealer has actual knowledge of the residence
24        or commercial domicile of a customer during a taxable
25        year, the customer shall be deemed to be a customer in
26        this State if the billing address of the customer, as

 

 

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1        shown in the records of the dealer, is in this State;
2        or
3            (B) in all other cases, the income-producing
4        activity of the taxpayer is performed in this State or,
5        if the income-producing activity of the taxpayer is
6        performed both within and without this State, a greater
7        proportion of the income-producing activity of the
8        taxpayer is performed within this State than in any
9        other state, based on performance costs.
10        (8) All other sales of services not covered by (1)
11    through (7) of this subsection are in this State if the
12    services are received in this State. For the purposes of
13    this subsection, gross receipts from the performance of
14    services provided to a corporation, partnership, or trust
15    may only be attributed to a state where that corporation,
16    partnership, or trust has a fixed place of business. If the
17    state where the services are received is not readily
18    determinable or is a state where the corporation,
19    partnership, or trust receiving the service does not have a
20    fixed place of business, the services shall be deemed to be
21    received at the location of the office of the customer from
22    which the services were ordered in the regular course of
23    the customer's trade or business. If the ordering office
24    cannot be determined, the services shall be deemed to be
25    received at the office of the customer to which the
26    services are billed.

 

 

09700SB0405sam001- 82 -LRB097 04252 HLH 58953 a

1    "Federally-regulated exchanges, execution platforms, and
2clearinghouses", as used in this subsection, means a designated
3contract market, swap execution facility, or derivatives
4clearing organization regulated by the U.S. Commodity Futures
5Trading Commission, or a securities exchange, security-based
6swap execution facility, or securities clearinghouse regulated
7by the U. S. Securities and Exchange Commission, including any
8institution engaged in comparable trading or clearing
9activities that is regulated by any successor designated
10federal regulatory agency to one or both of the foregoing
11agencies.
12    The special industry rules for federally-regulated
13exchanges, execution platforms, and clearinghouses shall apply
14to all entities satisfying the statutory definition of this
15subsection and all unitary affiliates, including holding
16companies.
17    If the federally-regulated exchange, execution platform,
18or clearinghouse chooses not to apportion its income according
19to this subsection (c-1), its business income shall be
20apportioned to this State in accordance with subsection (a) of
21this Section.
22    In no event shall the Illinois apportionment percentage
23computed in accordance with this subsection (c-1) for any
24taxpayer for any tax year be less than the Illinois
25apportionment percentage computed under this subsection (c-1)
26for that taxpayer for the first full tax year for which this

 

 

09700SB0405sam001- 83 -LRB097 04252 HLH 58953 a

1subsection (c-1) applied to the taxpayer.
2    (d) Transportation services. For taxable years ending
3before December 31, 2008, business income derived from
4furnishing transportation services shall be apportioned to
5this State in accordance with paragraphs (1) and (2):
6        (1) Such business income (other than that derived from
7    transportation by pipeline) shall be apportioned to this
8    State by multiplying such income by a fraction, the
9    numerator of which is the revenue miles of the person in
10    this State, and the denominator of which is the revenue
11    miles of the person everywhere. For purposes of this
12    paragraph, a revenue mile is the transportation of 1
13    passenger or 1 net ton of freight the distance of 1 mile
14    for a consideration. Where a person is engaged in the
15    transportation of both passengers and freight, the
16    fraction above referred to shall be determined by means of
17    an average of the passenger revenue mile fraction and the
18    freight revenue mile fraction, weighted to reflect the
19    person's
20            (A) relative railway operating income from total
21        passenger and total freight service, as reported to the
22        Interstate Commerce Commission, in the case of
23        transportation by railroad, and
24            (B) relative gross receipts from passenger and
25        freight transportation, in case of transportation
26        other than by railroad.

 

 

09700SB0405sam001- 84 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 85 -LRB097 04252 HLH 58953 a

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

 

 

09700SB0405sam001- 86 -LRB097 04252 HLH 58953 a

1    mile fraction and the freight revenue mile fraction,
2    weighted to reflect the person's relative gross receipts
3    from passenger and freight airline transportation.
4    (e) Combined apportionment. Where 2 or more persons are
5engaged in a unitary business as described in subsection
6(a)(27) of Section 1501, a part of which is conducted in this
7State by one or more members of the group, the business income
8attributable to this State by any such member or members shall
9be apportioned by means of the combined apportionment method.
10    (f) Alternative allocation. If the allocation and
11apportionment provisions of subsections (a) through (e) and of
12subsection (h) do not fairly represent the extent of a person's
13business activity in this State, the person may petition for,
14or the Director may, without a petition, permit or require, in
15respect of all or any part of the person's business activity,
16if reasonable:
17        (1) Separate accounting;
18        (2) The exclusion of any one or more factors;
19        (3) The inclusion of one or more additional factors
20    which will fairly represent the person's business
21    activities in this State; or
22        (4) The employment of any other method to effectuate an
23    equitable allocation and apportionment of the person's
24    business income.
25    (g) Cross reference. For allocation of business income by
26residents, see Section 301(a).

 

 

09700SB0405sam001- 87 -LRB097 04252 HLH 58953 a

1    (h) For tax years ending on or after December 31, 1998, the
2apportionment factor of persons who apportion their business
3income to this State under subsection (a) shall be equal to:
4        (1) for tax years ending on or after December 31, 1998
5    and before December 31, 1999, 16 2/3% of the property
6    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
7    the sales factor;
8        (2) for tax years ending on or after December 31, 1999
9    and before December 31, 2000, 8 1/3% of the property factor
10    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
11    factor;
12        (3) for tax years ending on or after December 31, 2000,
13    the sales factor.
14If, in any tax year ending on or after December 31, 1998 and
15before December 31, 2000, the denominator of the payroll,
16property, or sales factor is zero, the apportionment factor
17computed in paragraph (1) or (2) of this subsection for that
18year shall be divided by an amount equal to 100% minus the
19percentage weight given to each factor whose denominator is
20equal to zero.
21(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.".