SB3526 EngrossedLRB097 20198 HLH 65612 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 304 as follows:
 
6    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 304. Business income of persons other than residents.
9    (a) In general. The business income of a person other than
10a resident shall be allocated to this State if such person's
11business income is derived solely from this State. If a person
12other than a resident derives business income from this State
13and one or more other states, then, for tax years ending on or
14before December 30, 1998, and except as otherwise provided by
15this Section, such person's business income shall be
16apportioned to this State by multiplying the income by a
17fraction, the numerator of which is the sum of the property
18factor (if any), the payroll factor (if any) and 200% of the
19sales factor (if any), and the denominator of which is 4
20reduced by the number of factors other than the sales factor
21which have a denominator of zero and by an additional 2 if the
22sales factor has a denominator of zero. For tax years ending on
23or after December 31, 1998, and except as otherwise provided by

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            materials printed or published in that state
2            divided by the total of such gross receipts for all
3            states in which the copyright is utilized.
4                (III) Trademarks and other items of intangible
5            personal property governed by this paragraph (B-1)
6            are utilized in the state in which the commercial
7            domicile of the licensee or purchaser is located.
8            (iii) If the state of utilization of an item of
9        property governed by this paragraph (B-1) cannot be
10        determined from the taxpayer's books and records or
11        from the books and records of any person related to the
12        taxpayer within the meaning of Section 267(b) of the
13        Internal Revenue Code, 26 U.S.C. 267, the gross
14        receipts attributable to that item shall be excluded
15        from both the numerator and the denominator of the
16        sales factor.
17        (B-2) Gross receipts from the license, sale, or other
18    disposition of patents, copyrights, trademarks, and
19    similar items of intangible personal property, other than
20    gross receipts governed by paragraph (B-7) of this item
21    (3), may be included in the numerator or denominator of the
22    sales factor only if gross receipts from licenses, sales,
23    or other disposition of such items comprise more than 50%
24    of the taxpayer's total gross receipts included in gross
25    income during the tax year and during each of the 2
26    immediately preceding tax years; provided that, when a

 

 

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

 

 

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1        transmitted between or among customer channel
2        termination points.
3            "Conference bridging service" means an "ancillary
4        service" that links two or more participants of an
5        audio or video conference call and may include the
6        provision of a telephone number. "Conference bridging
7        service" does not include the "telecommunications
8        services" used to reach the conference bridge.
9            "Customer Channel Termination Point" means the
10        location where the customer either inputs or receives
11        the communications.
12            "Detailed telecommunications billing service"
13        means an "ancillary service" of separately stating
14        information pertaining to individual calls on a
15        customer's billing statement.
16            "Directory assistance" means an "ancillary
17        service" of providing telephone number information,
18        and/or address information.
19            "Home service provider" means the facilities based
20        carrier or reseller with which the customer contracts
21        for the provision of mobile telecommunications
22        services.
23            "Mobile telecommunications service" means
24        commercial mobile radio service, as defined in Section
25        20.3 of Title 47 of the Code of Federal Regulations as
26        in effect on June 1, 1999.

 

 

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1            "Place of primary use" means the street address
2        representative of where the customer's use of the
3        telecommunications service primarily occurs, which
4        must be the residential street address or the primary
5        business street address of the customer. In the case of
6        mobile telecommunications services, "place of primary
7        use" must be within the licensed service area of the
8        home service provider.
9            "Post-paid telecommunication service" means the
10        telecommunications service obtained by making a
11        payment on a call-by-call basis either through the use
12        of a credit card or payment mechanism such as a bank
13        card, travel card, credit card, or debit card, or by
14        charge made to a telephone number which is not
15        associated with the origination or termination of the
16        telecommunications service. A post-paid calling
17        service includes telecommunications service, except a
18        prepaid wireless calling service, that would be a
19        prepaid calling service except it is not exclusively a
20        telecommunication service.
21            "Prepaid telecommunication service" means the
22        right to access exclusively telecommunications
23        services, which must be paid for in advance and which
24        enables the origination of calls using an access number
25        or authorization code, whether manually or
26        electronically dialed, and that is sold in

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            in this State and in two or more other states, and
2            which segments are not separately billed, are in
3            this State based on a percentage determined by
4            dividing the number of customer channel
5            termination points in this State by the total
6            number of customer channel termination points.
7            (vi) Receipts from charges for ancillary services
8        for telecommunications service sold to customers at
9        retail are in this State if the customer's primary
10        place of use of telecommunications services associated
11        with those ancillary services is in this State. If the
12        seller of those ancillary services cannot determine
13        where the associated telecommunications are located,
14        then the ancillary services shall be based on the
15        location of the purchaser.
16            (vii) Receipts to access a carrier's network or
17        from the sale of telecommunication services or
18        ancillary services for resale are in this State as
19        follows:
20                (a) 100% of the receipts from access fees
21            attributable to intrastate telecommunications
22            service that both originates and terminates in
23            this State.
24                (b) 50% of the receipts from access fees
25            attributable to interstate telecommunications
26            service if the interstate call either originates

 

 

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

 

 

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1        or allowing the broadcasting of commercials or
2        announcements in connection with the broadcasting of
3        film or radio programming, from sponsorships of the
4        programming, or from product placements in the
5        programming.
6            "Audience factor" means the ratio that the
7        audience or subscribers located in this State of a
8        station, a network, or a cable system bears to the
9        total audience or total subscribers for that station,
10        network, or cable system. The audience factor for film
11        or radio programming shall be determined by reference
12        to the books and records of the taxpayer or by
13        reference to published rating statistics provided the
14        method used by the taxpayer is consistently used from
15        year to year for this purpose and fairly represents the
16        taxpayer's activity in this State.
17            "Broadcast" or "broadcasting" or "broadcasting
18        services" means the transmission or provision of film
19        or radio programming, whether through the public
20        airwaves, by cable, by direct or indirect satellite
21        transmission, or by any other means of communication,
22        either through a station, a network, or a cable system.
23            "Film" or "film programming" means the broadcast
24        on television of any and all performances, events, or
25        productions, including but not limited to news,
26        sporting events, plays, stories, or other literary,

 

 

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

 

 

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

 

 

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

 

 

SB3526 Engrossed- 26 -LRB097 20198 HLH 65612 b

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

 

 

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

 

 

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

 

 

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

 

 

SB3526 Engrossed- 30 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 31 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 32 -LRB097 20198 HLH 65612 b

1    December 31, 2008, business income of a financial
2    organization shall be apportioned to this State by
3    multiplying such income by a fraction, the numerator of
4    which is its business income from sources within this
5    State, and the denominator of which is its business income
6    from all sources. For the purposes of this subsection, the
7    business income of a financial organization from sources
8    within this State is the sum of the amounts referred to in
9    subparagraphs (A) through (E) following, but excluding the
10    adjusted income of an international banking facility as
11    determined in paragraph (2):
12            (A) Fees, commissions or other compensation for
13        financial services rendered within this State;
14            (B) Gross profits from trading in stocks, bonds or
15        other securities managed within this State;
16            (C) Dividends, and interest from Illinois
17        customers, which are received within this State;
18            (D) Interest charged to customers at places of
19        business maintained within this State for carrying
20        debit balances of margin accounts, without deduction
21        of any costs incurred in carrying such accounts; and
22            (E) Any other gross income resulting from the
23        operation as a financial organization within this
24        State. In computing the amounts referred to in
25        paragraphs (A) through (E) of this subsection, any
26        amount received by a member of an affiliated group

 

 

SB3526 Engrossed- 33 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 34 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 35 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 36 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 37 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 38 -LRB097 20198 HLH 65612 b

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

 

 

SB3526 Engrossed- 39 -LRB097 20198 HLH 65612 b

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

 

 

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

 

 

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

 

 

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

 

 

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1                which the greatest number of employees are
2                regularly connected with the management of the
3                investment or trading income or out of which
4                they are working, irrespective of where the
5                services of such employees are performed, as of
6                the last day of the taxable year.
7        (4) (Blank).
8        (5) (Blank).
9    (d) Transportation company services. For taxable years
10ending before December 31, 2008, business income of a
11transportation company derived from furnishing transportation
12services shall be apportioned to this State in accordance with
13paragraphs (1) and (2):
14        (1) Business income of a transportation company
15    engaged in the movement of freight or passengers by air,
16    land, or water Such business income (other than that
17    derived from transportation by pipeline) shall be
18    apportioned to this State by multiplying such income by a
19    fraction, the numerator of which is the revenue miles of
20    the person in this State, and the denominator of which is
21    the revenue miles of the person everywhere. For purposes of
22    this paragraph, a revenue mile is the transportation of 1
23    passenger or 1 net ton of freight the distance of 1 mile
24    for a consideration. Where a person is engaged in the
25    transportation of both passengers and freight, the
26    fraction above referred to shall be determined by means of

 

 

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1    an average of the passenger revenue mile fraction and the
2    freight revenue mile fraction, weighted to reflect the
3    person's
4            (A) relative railway operating income from total
5        passenger and total freight service, as reported to the
6        Interstate Commerce Commission, in the case of
7        transportation by railroad, and
8            (B) relative gross receipts from passenger and
9        freight transportation, in case of transportation
10        other than by railroad.
11        (2) Business income of a transportation company
12    engaged in the movement of liquid or gaseous substances by
13    pipeline Such business income derived from transportation
14    by pipeline shall be apportioned to this State by
15    multiplying such income by a fraction, the numerator of
16    which is the revenue miles of the person in this State, and
17    the denominator of which is the revenue miles of the person
18    everywhere. For the purposes of this paragraph, a revenue
19    mile is the transportation by pipeline of 1 barrel of oil,
20    1,000 cubic feet of gas, or of any specified quantity of
21    any other substance, the distance of 1 mile for a
22    consideration.
23        (3) For taxable years ending on or after December 31,
24    2008, business income derived by a transportation company
25    engaged in the movement of freight or passengers by land or
26    water from providing transportation services other than

 

 

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

 

 

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1        freight transportation, in case of transportation
2        other than by railroad.
3        (4) For taxable years ending on or after December 31,
4    2008, business income derived by a transportation company
5    engaged in the movement of freight or passengers by air
6    from furnishing airline transportation services shall be
7    apportioned to this State by multiplying such income by a
8    fraction, the numerator of which is the revenue miles of
9    the person in this State, and the denominator of which is
10    the revenue miles of the person everywhere. For purposes of
11    this paragraph, a revenue mile is the transportation of one
12    passenger or one net ton of freight the distance of one
13    mile for a consideration. If a person is engaged in the
14    transportation of both passengers and freight, the
15    fraction above referred to shall be determined by means of
16    an average of the passenger revenue mile fraction and the
17    freight revenue mile fraction, weighted to reflect the
18    person's relative gross receipts from passenger and
19    freight airline transportation.
20    For purposes of this subsection (d), the term
21"transportation company" means any person primarily engaged in
22(i) the movement of freight or passengers by air, land, or
23water or (ii) the movement of liquid or gaseous substances by
24pipeline and the provision of services incidental thereto
25including, but not limited to, (i) with regard to railroads,
26the in-transit sale of food or beverages, switching, demurrage,

 

 

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1and packing and warehousing; (ii) with regard to airlines, the
2in-flight rental of pillows, blankets, movies, or headsets, the
3in-flight sale of food or beverages, baggage services, and
4making, changing, or cancelling reservations; (iii) with
5regard to trucking companies, packing and warehousing,
6furnishing vehicles with drivers to another transportation
7company under lease or similar arrangements, and (iv)
8transportation brokerage and freight forwarding services. For
9purposes of this subsection, a person who is a member of a
10unitary business group which includes a transportation company
11or companies and who primarily provides services incidental to
12the movement of freight or passengers by air, land, or water or
13the movement of liquid or gaseous substances by pipeline as
14defined in this subsection shall be considered a transportation
15company.
16    (e) Combined apportionment. Where 2 or more persons are
17engaged in a unitary business as described in subsection
18(a)(27) of Section 1501, a part of which is conducted in this
19State by one or more members of the group, the business income
20attributable to this State by any such member or members shall
21be apportioned by means of the combined apportionment method.
22    (f) Alternative allocation. If the allocation and
23apportionment provisions of subsections (a) through (e) and of
24subsection (h) do not fairly represent the extent of a person's
25business activity in this State, the person may petition for,
26or the Director may, without a petition, permit or require, in

 

 

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1respect of all or any part of the person's business activity,
2if reasonable:
3        (1) Separate accounting;
4        (2) The exclusion of any one or more factors;
5        (3) The inclusion of one or more additional factors
6    which will fairly represent the person's business
7    activities in this State; or
8        (4) The employment of any other method to effectuate an
9    equitable allocation and apportionment of the person's
10    business income.
11    (g) Cross reference. For allocation of business income by
12residents, see Section 301(a).
13    (h) For tax years ending on or after December 31, 1998, the
14apportionment factor of persons who apportion their business
15income to this State under subsection (a) shall be equal to:
16        (1) for tax years ending on or after December 31, 1998
17    and before December 31, 1999, 16 2/3% of the property
18    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
19    the sales factor;
20        (2) for tax years ending on or after December 31, 1999
21    and before December 31, 2000, 8 1/3% of the property factor
22    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
23    factor;
24        (3) for tax years ending on or after December 31, 2000,
25    the sales factor.
26If, in any tax year ending on or after December 31, 1998 and

 

 

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1before December 31, 2000, the denominator of the payroll,
2property, or sales factor is zero, the apportionment factor
3computed in paragraph (1) or (2) of this subsection for that
4year shall be divided by an amount equal to 100% minus the
5percentage weight given to each factor whose denominator is
6equal to zero.
7(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11.)
 
8    (Text of Section after amendment by P.A. 97-636)
9    Sec. 304. Business income of persons other than residents.
10    (a) In general. The business income of a person other than
11a resident shall be allocated to this State if such person's
12business income is derived solely from this State. If a person
13other than a resident derives business income from this State
14and one or more other states, then, for tax years ending on or
15before December 30, 1998, and except as otherwise provided by
16this Section, such person's business income shall be
17apportioned to this State by multiplying the income by a
18fraction, the numerator of which is the sum of the property
19factor (if any), the payroll factor (if any) and 200% of the
20sales factor (if any), and the denominator of which is 4
21reduced by the number of factors other than the sales factor
22which have a denominator of zero and by an additional 2 if the
23sales factor has a denominator of zero. For tax years ending on
24or after December 31, 1998, and except as otherwise provided by
25this Section, persons other than residents who derive business

 

 

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

 

 

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1    which is the total amount paid in this State during the
2    taxable year by the person for compensation, and the
3    denominator of which is the total compensation paid
4    everywhere during the taxable year.
5        (B) Compensation is paid in this State if:
6            (i) The individual's service is performed entirely
7        within this State;
8            (ii) The individual's service is performed both
9        within and without this State, but the service
10        performed without this State is incidental to the
11        individual's service performed within this State; or
12            (iii) Some of the service is performed within this
13        State and either the base of operations, or if there is
14        no base of operations, the place from which the service
15        is directed or controlled is within this State, or the
16        base of operations or the place from which the service
17        is directed or controlled is not in any state in which
18        some part of the service is performed, but the
19        individual's residence is in this State.
20            (iv) Compensation paid to nonresident professional
21        athletes.
22            (a) General. The Illinois source income of a
23        nonresident individual who is a member of a
24        professional athletic team includes the portion of the
25        individual's total compensation for services performed
26        as a member of a professional athletic team during the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1            divided by the total of such gross receipts for all
2            states in which the copyright is utilized.
3                (III) Trademarks and other items of intangible
4            personal property governed by this paragraph (B-1)
5            are utilized in the state in which the commercial
6            domicile of the licensee or purchaser is located.
7            (iii) If the state of utilization of an item of
8        property governed by this paragraph (B-1) cannot be
9        determined from the taxpayer's books and records or
10        from the books and records of any person related to the
11        taxpayer within the meaning of Section 267(b) of the
12        Internal Revenue Code, 26 U.S.C. 267, the gross
13        receipts attributable to that item shall be excluded
14        from both the numerator and the denominator of the
15        sales factor.
16        (B-2) Gross receipts from the license, sale, or other
17    disposition of patents, copyrights, trademarks, and
18    similar items of intangible personal property, other than
19    gross receipts governed by paragraph (B-7) of this item
20    (3), may be included in the numerator or denominator of the
21    sales factor only if gross receipts from licenses, sales,
22    or other disposition of such items comprise more than 50%
23    of the taxpayer's total gross receipts included in gross
24    income during the tax year and during each of the 2
25    immediately preceding tax years; provided that, when a
26    taxpayer is a member of a unitary business group, such

 

 

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1    determination shall be made on the basis of the gross
2    receipts of the entire unitary business group.
3        (B-5) For taxable years ending on or after December 31,
4    2008, except as provided in subsections (ii) through (vii),
5    receipts from the sale of telecommunications service or
6    mobile telecommunications service are in this State if the
7    customer's service address is in this State.
8            (i) For purposes of this subparagraph (B-5), the
9        following terms have the following meanings:
10            "Ancillary services" means services that are
11        associated with or incidental to the provision of
12        "telecommunications services", including but not
13        limited to "detailed telecommunications billing",
14        "directory assistance", "vertical service", and "voice
15        mail services".
16            "Air-to-Ground Radiotelephone service" means a
17        radio service, as that term is defined in 47 CFR 22.99,
18        in which common carriers are authorized to offer and
19        provide radio telecommunications service for hire to
20        subscribers in aircraft.
21            "Call-by-call Basis" means any method of charging
22        for telecommunications services where the price is
23        measured by individual calls.
24            "Communications Channel" means a physical or
25        virtual path of communications over which signals are
26        transmitted between or among customer channel

 

 

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1        termination points.
2            "Conference bridging service" means an "ancillary
3        service" that links two or more participants of an
4        audio or video conference call and may include the
5        provision of a telephone number. "Conference bridging
6        service" does not include the "telecommunications
7        services" used to reach the conference bridge.
8            "Customer Channel Termination Point" means the
9        location where the customer either inputs or receives
10        the communications.
11            "Detailed telecommunications billing service"
12        means an "ancillary service" of separately stating
13        information pertaining to individual calls on a
14        customer's billing statement.
15            "Directory assistance" means an "ancillary
16        service" of providing telephone number information,
17        and/or address information.
18            "Home service provider" means the facilities based
19        carrier or reseller with which the customer contracts
20        for the provision of mobile telecommunications
21        services.
22            "Mobile telecommunications service" means
23        commercial mobile radio service, as defined in Section
24        20.3 of Title 47 of the Code of Federal Regulations as
25        in effect on June 1, 1999.
26            "Place of primary use" means the street address

 

 

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1        representative of where the customer's use of the
2        telecommunications service primarily occurs, which
3        must be the residential street address or the primary
4        business street address of the customer. In the case of
5        mobile telecommunications services, "place of primary
6        use" must be within the licensed service area of the
7        home service provider.
8            "Post-paid telecommunication service" means the
9        telecommunications service obtained by making a
10        payment on a call-by-call basis either through the use
11        of a credit card or payment mechanism such as a bank
12        card, travel card, credit card, or debit card, or by
13        charge made to a telephone number which is not
14        associated with the origination or termination of the
15        telecommunications service. A post-paid calling
16        service includes telecommunications service, except a
17        prepaid wireless calling service, that would be a
18        prepaid calling service except it is not exclusively a
19        telecommunication service.
20            "Prepaid telecommunication service" means the
21        right to access exclusively telecommunications
22        services, which must be paid for in advance and which
23        enables the origination of calls using an access number
24        or authorization code, whether manually or
25        electronically dialed, and that is sold in
26        predetermined units or dollars of which the number

 

 

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

 

 

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

 

 

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1            transaction is the processed data or information;
2                (b) Installation or maintenance of wiring or
3            equipment on a customer's premises;
4                (c) Tangible personal property;
5                (d) Advertising, including but not limited to
6            directory advertising.
7                (e) Billing and collection services provided
8            to third parties;
9                (f) Internet access service;
10                (g) Radio and television audio and video
11            programming services, regardless of the medium,
12            including the furnishing of transmission,
13            conveyance and routing of such services by the
14            programming service provider. Radio and television
15            audio and video programming services shall include
16            but not be limited to cable service as defined in
17            47 USC 522(6) and audio and video programming
18            services delivered by commercial mobile radio
19            service providers, as defined in 47 CFR 20.3;
20                (h) "Ancillary services"; or
21                (i) Digital products "delivered
22            electronically", including but not limited to
23            software, music, video, reading materials or ring
24            tones.
25            "Vertical service" means an "ancillary service"
26        that is offered in connection with one or more

 

 

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1        "telecommunications services", which offers advanced
2        calling features that allow customers to identify
3        callers and to manage multiple calls and call
4        connections, including "conference bridging services".
5            "Voice mail service" means an "ancillary service"
6        that enables the customer to store, send or receive
7        recorded messages. "Voice mail service" does not
8        include any "vertical services" that the customer may
9        be required to have in order to utilize the "voice mail
10        service".
11            (ii) Receipts from the sale of telecommunications
12        service sold on an individual call-by-call basis are in
13        this State if either of the following applies:
14                (a) The call both originates and terminates in
15            this State.
16                (b) The call either originates or terminates
17            in this State and the service address is located in
18            this State.
19            (iii) Receipts from the sale of postpaid
20        telecommunications service at retail are in this State
21        if the origination point of the telecommunication
22        signal, as first identified by the service provider's
23        telecommunication system or as identified by
24        information received by the seller from its service
25        provider if the system used to transport
26        telecommunication signals is not the seller's, is

 

 

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1        located in this State.
2            (iv) Receipts from the sale of prepaid
3        telecommunications service or prepaid mobile
4        telecommunications service at retail are in this State
5        if the purchaser obtains the prepaid card or similar
6        means of conveyance at a location in this State.
7        Receipts from recharging a prepaid telecommunications
8        service or mobile telecommunications service is in
9        this State if the purchaser's billing information
10        indicates a location in this State.
11            (v) Receipts from the sale of private
12        communication services are in this State as follows:
13                (a) 100% of receipts from charges imposed at
14            each channel termination point in this State.
15                (b) 100% of receipts from charges for the total
16            channel mileage between each channel termination
17            point in this State.
18                (c) 50% of the total receipts from charges for
19            service segments when those segments are between 2
20            customer channel termination points, 1 of which is
21            located in this State and the other is located
22            outside of this State, which segments are
23            separately charged.
24                (d) The receipts from charges for service
25            segments with a channel termination point located
26            in this State and in two or more other states, and

 

 

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1            which segments are not separately billed, are in
2            this State based on a percentage determined by
3            dividing the number of customer channel
4            termination points in this State by the total
5            number of customer channel termination points.
6            (vi) Receipts from charges for ancillary services
7        for telecommunications service sold to customers at
8        retail are in this State if the customer's primary
9        place of use of telecommunications services associated
10        with those ancillary services is in this State. If the
11        seller of those ancillary services cannot determine
12        where the associated telecommunications are located,
13        then the ancillary services shall be based on the
14        location of the purchaser.
15            (vii) Receipts to access a carrier's network or
16        from the sale of telecommunication services or
17        ancillary services for resale are in this State as
18        follows:
19                (a) 100% of the receipts from access fees
20            attributable to intrastate telecommunications
21            service that both originates and terminates in
22            this State.
23                (b) 50% of the receipts from access fees
24            attributable to interstate telecommunications
25            service if the interstate call either originates
26            or terminates in this State.

 

 

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

 

 

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1        announcements in connection with the broadcasting of
2        film or radio programming, from sponsorships of the
3        programming, or from product placements in the
4        programming.
5            "Audience factor" means the ratio that the
6        audience or subscribers located in this State of a
7        station, a network, or a cable system bears to the
8        total audience or total subscribers for that station,
9        network, or cable system. The audience factor for film
10        or radio programming shall be determined by reference
11        to the books and records of the taxpayer or by
12        reference to published rating statistics provided the
13        method used by the taxpayer is consistently used from
14        year to year for this purpose and fairly represents the
15        taxpayer's activity in this State.
16            "Broadcast" or "broadcasting" or "broadcasting
17        services" means the transmission or provision of film
18        or radio programming, whether through the public
19        airwaves, by cable, by direct or indirect satellite
20        transmission, or by any other means of communication,
21        either through a station, a network, or a cable system.
22            "Film" or "film programming" means the broadcast
23        on television of any and all performances, events, or
24        productions, including but not limited to news,
25        sporting events, plays, stories, or other literary,
26        commercial, educational, or artistic works, either

 

 

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

 

 

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

 

 

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

 

 

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1            Illinois numerator of the sales factor is the
2            revenue from such customers who receive the
3            broadcasting service in Illinois.
4        (C) For taxable years ending before December 31, 2008,
5    sales, other than sales governed by paragraphs (B), (B-1),
6    and (B-2), are in this State if:
7            (i) The income-producing activity is performed in
8        this State; or
9            (ii) The income-producing activity is performed
10        both within and without this State and a greater
11        proportion of the income-producing activity is
12        performed within this State than without this State,
13        based on performance costs.
14        (C-5) For taxable years ending on or after December 31,
15    2008, sales, other than sales governed by paragraphs (B),
16    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
17    the following criteria are met:
18            (i) Sales from the sale or lease of real property
19        are in this State if the property is located in this
20        State.
21            (ii) Sales from the lease or rental of tangible
22        personal property are in this State if the property is
23        located in this State during the rental period. Sales
24        from the lease or rental of tangible personal property
25        that is characteristically moving property, including,
26        but not limited to, motor vehicles, rolling stock,

 

 

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

 

 

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

 

 

SB3526 Engrossed- 77 -LRB097 20198 HLH 65612 b

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

 

 

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

 

 

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1    this State, and the denominator of which is the sum of
2    (iii) direct premiums written for insurance upon property
3    or risk everywhere, plus (iv) premiums written for
4    reinsurance accepted in respect of property or risk
5    everywhere. For purposes of this paragraph, premiums
6    written for reinsurance accepted in respect of property or
7    risk in this State, whether or not otherwise determinable,
8    may, at the election of the company, be determined on the
9    basis of the proportion which premiums written for
10    reinsurance accepted from companies commercially domiciled
11    in Illinois bears to premiums written for reinsurance
12    accepted from all sources, or, alternatively, in the
13    proportion which the sum of the direct premiums written for
14    insurance upon property or risk in this State by each
15    ceding company from which reinsurance is accepted bears to
16    the sum of the total direct premiums written by each such
17    ceding company for the taxable year. The election made by a
18    company under this paragraph for its first taxable year
19    ending on or after December 31, 2011, shall be binding for
20    that company for that taxable year and for all subsequent
21    taxable years, and may be altered only with the written
22    permission of the Department, which shall not be
23    unreasonably withheld.
24    (c) Financial organizations.
25        (1) In general. For taxable years ending before
26    December 31, 2008, business income of a financial

 

 

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1    organization shall be apportioned to this State by
2    multiplying such income by a fraction, the numerator of
3    which is its business income from sources within this
4    State, and the denominator of which is its business income
5    from all sources. For the purposes of this subsection, the
6    business income of a financial organization from sources
7    within this State is the sum of the amounts referred to in
8    subparagraphs (A) through (E) following, but excluding the
9    adjusted income of an international banking facility as
10    determined in paragraph (2):
11            (A) Fees, commissions or other compensation for
12        financial services rendered within this State;
13            (B) Gross profits from trading in stocks, bonds or
14        other securities managed within this State;
15            (C) Dividends, and interest from Illinois
16        customers, which are received within this State;
17            (D) Interest charged to customers at places of
18        business maintained within this State for carrying
19        debit balances of margin accounts, without deduction
20        of any costs incurred in carrying such accounts; and
21            (E) Any other gross income resulting from the
22        operation as a financial organization within this
23        State. In computing the amounts referred to in
24        paragraphs (A) through (E) of this subsection, any
25        amount received by a member of an affiliated group
26        (determined under Section 1504(a) of the Internal

 

 

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

 

 

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

 

 

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1        is altered so that the information required for
2        determining the floor amount is not found on Schedule
3        A, lines 2.c., 5.b. and 7.a., the financial institution
4        shall notify the Department and the Department may, by
5        regulations or otherwise, prescribe or authorize the
6        use of an alternative source for such information. The
7        financial institution shall also notify the Department
8        should its international banking facility fail to
9        qualify as such, in whole or in part, or should there
10        be any amendment or change to the Consolidated Report
11        of Condition, as originally filed, to the extent such
12        amendment or change alters the information used in
13        determining the floor amount.
14        (3) For taxable years ending on or after December 31,
15    2008, the business income of a financial organization shall
16    be apportioned to this State by multiplying such income by
17    a fraction, the numerator of which is its gross receipts
18    from sources in this State or otherwise attributable to
19    this State's marketplace and the denominator of which is
20    its gross receipts everywhere during the taxable year.
21    "Gross receipts" for purposes of this subparagraph (3)
22    means gross income, including net taxable gain on
23    disposition of assets, including securities and money
24    market instruments, when derived from transactions and
25    activities in the regular course of the financial
26    organization's trade or business. The following examples

 

 

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1    are illustrative:
2            (i) Receipts from the lease or rental of real or
3        tangible personal property are in this State if the
4        property is located in this State during the rental
5        period. Receipts from the lease or rental of tangible
6        personal property that is characteristically moving
7        property, including, but not limited to, motor
8        vehicles, rolling stock, aircraft, vessels, or mobile
9        equipment are from sources in this State to the extent
10        that the property is used in this State.
11            (ii) Interest income, commissions, fees, gains on
12        disposition, and other receipts from assets in the
13        nature of loans that are secured primarily by real
14        estate or tangible personal property are from sources
15        in this State if the security is located in this State.
16            (iii) Interest income, commissions, fees, gains on
17        disposition, and other receipts from consumer loans
18        that are not secured by real or tangible personal
19        property are from sources in this State if the debtor
20        is a resident of this State.
21            (iv) Interest income, commissions, fees, gains on
22        disposition, and other receipts from commercial loans
23        and installment obligations that are not secured by
24        real or tangible personal property are from sources in
25        this State if the proceeds of the loan are to be
26        applied in this State. If it cannot be determined where

 

 

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1        the funds are to be applied, the income and receipts
2        are from sources in this State if the office of the
3        borrower from which the loan was negotiated in the
4        regular course of business is located in this State. If
5        the location of this office cannot be determined, the
6        income and receipts shall be excluded from the
7        numerator and denominator of the sales factor.
8            (v) Interest income, fees, gains on disposition,
9        service charges, merchant discount income, and other
10        receipts from credit card receivables are from sources
11        in this State if the card charges are regularly billed
12        to a customer in this State.
13            (vi) Receipts from the performance of services,
14        including, but not limited to, fiduciary, advisory,
15        and brokerage services, are in this State if the
16        services are received in this State within the meaning
17        of subparagraph (a)(3)(C-5)(iv) of this Section.
18            (vii) Receipts from the issuance of travelers
19        checks and money orders are from sources in this State
20        if the checks and money orders are issued from a
21        location within this State.
22            (viii) Receipts from investment assets and
23        activities and trading assets and activities are
24        included in the receipts factor as follows:
25                (1) Interest, dividends, net gains (but not
26            less than zero) and other income from investment

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB3526 Engrossed- 90 -LRB097 20198 HLH 65612 b

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

 

 

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1                regularly connected with the management of the
2                investment or trading income or out of which
3                they are working, irrespective of where the
4                services of such employees are performed, as of
5                the last day of the taxable year.
6        (4) (Blank).
7        (5) (Blank).
8    (c-1) Federally regulated exchanges. For taxable years
9ending on or after December 31, 2012, business income of a
10federally regulated exchange shall, at the option of the
11federally regulated exchange, be apportioned to this State by
12multiplying such income by a fraction, the numerator of which
13is its business income from sources within this State, and the
14denominator of which is its business income from all sources.
15For purposes of this subsection, the business income within
16this State of a federally regulated exchange is the sum of the
17following:
18        (1) Receipts attributable to transactions executed on
19    a physical trading floor if that physical trading floor is
20    located in this State.
21        (2) Receipts attributable to all other matching,
22    execution, or clearing transactions, including without
23    limitation receipts from the provision of matching,
24    execution, or clearing services to another entity,
25    multiplied by (i) for taxable years ending on or after
26    December 31, 2012 but before December 31, 2013, 63.77%; and

 

 

SB3526 Engrossed- 92 -LRB097 20198 HLH 65612 b

1    (ii) for taxable years ending on or after December 31,
2    2013, 27.54%.
3        (3) All other receipts not governed by subparagraphs
4    (1) or (2) of this subsection (c-1), to the extent the
5    receipts would be characterized as "sales in this State"
6    under item (3) of subsection (a) of this Section.
7    "Federally regulated exchange" means (i) a "registered
8entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
9or (C), (ii) an "exchange" or "clearing agency" within the
10meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
11entities regulated under any successor regulatory structure to
12the foregoing, and (iv) all taxpayers who are members of the
13same unitary business group as a federally regulated exchange,
14determined without regard to the prohibition in Section
151501(a)(27) of this Act against including in a unitary business
16group taxpayers who are ordinarily required to apportion
17business income under different subsections of this Section;
18provided that this subparagraph (iv) shall apply only if 50% or
19more of the business receipts of the unitary business group
20determined by application of this subparagraph (iv) for the
21taxable year are attributable to the matching, execution, or
22clearing of transactions conducted by an entity described in
23subparagraph (i), (ii), or (iii) of this paragraph.
24    In no event shall the Illinois apportionment percentage
25computed in accordance with this subsection (c-1) for any
26taxpayer for any tax year be less than the Illinois

 

 

SB3526 Engrossed- 93 -LRB097 20198 HLH 65612 b

1apportionment percentage computed under this subsection (c-1)
2for that taxpayer for the first full tax year ending on or
3after December 31, 2013 for which this subsection (c-1) applied
4to the taxpayer.
5    (d) Transportation company services. For taxable years
6ending before December 31, 2008, business income of a
7transportation company derived from furnishing transportation
8services shall be apportioned to this State in accordance with
9paragraphs (1) and (2):
10        (1) Business income of a transportation company
11    engaged in the movement of freight or passengers by air,
12    land, or water Such business income (other than that
13    derived from transportation by pipeline) shall be
14    apportioned to this State by multiplying such income by a
15    fraction, the numerator of which is the revenue miles of
16    the person in this State, and the denominator of which is
17    the revenue miles of the person everywhere. For purposes of
18    this paragraph, a revenue mile is the transportation of 1
19    passenger or 1 net ton of freight the distance of 1 mile
20    for a consideration. Where a person is engaged in the
21    transportation of both passengers and freight, the
22    fraction above referred to shall be determined by means of
23    an average of the passenger revenue mile fraction and the
24    freight revenue mile fraction, weighted to reflect the
25    person's
26            (A) relative railway operating income from total

 

 

SB3526 Engrossed- 94 -LRB097 20198 HLH 65612 b

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

 

 

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

 

 

SB3526 Engrossed- 96 -LRB097 20198 HLH 65612 b

1    engaged in the movement of freight or passengers by air
2    from furnishing airline transportation services shall be
3    apportioned to this State by multiplying such income by a
4    fraction, the numerator of which is the revenue miles of
5    the person in this State, and the denominator of which is
6    the revenue miles of the person everywhere. For purposes of
7    this paragraph, a revenue mile is the transportation of one
8    passenger or one net ton of freight the distance of one
9    mile for a consideration. If a person is engaged in the
10    transportation of both passengers and freight, the
11    fraction above referred to shall be determined by means of
12    an average of the passenger revenue mile fraction and the
13    freight revenue mile fraction, weighted to reflect the
14    person's relative gross receipts from passenger and
15    freight airline transportation.
16    For purposes of this subsection (d), the term
17"transportation company" means any person primarily engaged in
18(i) the movement of freight or passengers by air, land, or
19water or (ii) the movement of liquid or gaseous substances by
20pipeline and the provision of services incidental thereto
21including, but not limited to, (i) with regard to railroads,
22the in-transit sale of food or beverages, switching, demurrage,
23and packing and warehousing; (ii) with regard to airlines, the
24in-flight rental of pillows, blankets, movies, or headsets, the
25in-flight sale of food or beverages, baggage services, and
26making, changing, or cancelling reservations; (iii) with

 

 

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1regard to trucking companies, packing and warehousing,
2furnishing vehicles with drivers to another transportation
3company under lease or similar arrangements, and (iv)
4transportation brokerage and freight forwarding services. For
5purposes of this subsection, a person who is a member of a
6unitary business group which includes a transportation company
7or companies and who primarily provides services incidental to
8the movement of freight or passengers by air, land, or water or
9the movement of liquid or gaseous substances by pipeline as
10defined in this subsection shall be considered a transportation
11company.
12    (e) Combined apportionment. Where 2 or more persons are
13engaged in a unitary business as described in subsection
14(a)(27) of Section 1501, a part of which is conducted in this
15State by one or more members of the group, the business income
16attributable to this State by any such member or members shall
17be apportioned by means of the combined apportionment method.
18    (f) Alternative allocation. If the allocation and
19apportionment provisions of subsections (a) through (e) and of
20subsection (h) do not fairly represent the extent of a person's
21business activity in this State, the person may petition for,
22or the Director may, without a petition, permit or require, in
23respect of all or any part of the person's business activity,
24if reasonable:
25        (1) Separate accounting;
26        (2) The exclusion of any one or more factors;

 

 

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

 

 

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1percentage weight given to each factor whose denominator is
2equal to zero.
3(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11;
497-636, eff. 6-1-12.)
 
5    Section 95. No acceleration or delay. Where this Act makes
6changes in a statute that is represented in this Act by text
7that is not yet or no longer in effect (for example, a Section
8represented by multiple versions), the use of that text does
9not accelerate or delay the taking effect of (i) the changes
10made by this Act or (ii) provisions derived from any other
11Public Act.
 
12    Section 99. Effective date. This Act takes effect upon
13becoming law.