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Full Text of SB2099  97th General Assembly

SB2099 97TH GENERAL ASSEMBLY


 


 
97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB2099

 

Introduced 2/10/2011, by Sen. Kirk W. Dillard

 

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

    Amends the Illinois Income Tax Act. Increases the education expense credit to 50% (instead of 25%) of qualified education expenses and increases the family limit to $1,000 (instead of $500). Effective immediately.


LRB097 10269 HLH 50473 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB2099LRB097 10269 HLH 50473 b

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

 

 

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1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate, for
11    taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate, for
18    taxable years beginning on or after January 1, 2011, and
19    ending prior to January 1, 2015, an amount equal to 5% of
20    the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period

 

 

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1    after December 31, 2014, as calculated under Section 202.5.
2        (5.2) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2015,
4    and ending prior to January 1, 2025, an amount equal to
5    3.75% of the taxpayer's net income for the taxable year.
6        (5.3) In the case of an individual, trust, or estate,
7    for taxable years beginning prior to January 1, 2025, and
8    ending after December 31, 2024, an amount equal to the sum
9    of (i) 3.75% of the taxpayer's net income for the period
10    prior to January 1, 2025, as calculated under Section
11    202.5, and (ii) 3.25% of the taxpayer's net income for the
12    period after December 31, 2024, as calculated under Section
13    202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after January 1, 2025, an
16    amount equal to 3.25% of the taxpayer's net income for the
17    taxable year.
18        (6) In the case of a corporation, for taxable years
19    ending prior to July 1, 1989, an amount equal to 4% of the
20    taxpayer's net income for the taxable year.
21        (7) In the case of a corporation, for taxable years
22    beginning prior to July 1, 1989 and ending after June 30,
23    1989, an amount equal to the sum of (i) 4% of the
24    taxpayer's net income for the period prior to July 1, 1989,
25    as calculated under Section 202.3, and (ii) 4.8% of the
26    taxpayer's net income for the period after June 30, 1989,

 

 

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1    as calculated under Section 202.3.
2        (8) In the case of a corporation, for taxable years
3    beginning after June 30, 1989, and ending prior to January
4    1, 2011, an amount equal to 4.8% of the taxpayer's net
5    income for the taxable year.
6        (9) In the case of a corporation, for taxable years
7    beginning prior to January 1, 2011, and ending after
8    December 31, 2010, an amount equal to the sum of (i) 4.8%
9    of the taxpayer's net income for the period prior to
10    January 1, 2011, as calculated under Section 202.5, and
11    (ii) 7% of the taxpayer's net income for the period after
12    December 31, 2010, as calculated under Section 202.5.
13        (10) In the case of a corporation, for taxable years
14    beginning on or after January 1, 2011, and ending prior to
15    January 1, 2015, an amount equal to 7% of the taxpayer's
16    net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2015, and ending after
19    December 31, 2014, an amount equal to the sum of (i) 7% of
20    the taxpayer's net income for the period prior to January
21    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
22    of the taxpayer's net income for the period after December
23    31, 2014, as calculated under Section 202.5.
24        (12) In the case of a corporation, for taxable years
25    beginning on or after January 1, 2015, and ending prior to
26    January 1, 2025, an amount equal to 5.25% of the taxpayer's

 

 

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

 

 

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1    (d) Additional Personal Property Tax Replacement Income
2Tax Rates. The personal property tax replacement income tax
3imposed by this subsection and subsection (c) of this Section
4in the case of a corporation, other than a Subchapter S
5corporation and except as adjusted by subsection (d-1), shall
6be an additional amount equal to 2.85% of such taxpayer's net
7income for the taxable year, except that beginning on January
81, 1981, and thereafter, the rate of 2.85% specified in this
9subsection shall be reduced to 2.5%, and in the case of a
10partnership, trust or a Subchapter S corporation shall be an
11additional amount equal to 1.5% of such taxpayer's net income
12for the taxable year.
13    (d-1) Rate reduction for certain foreign insurers. In the
14case of a foreign insurer, as defined by Section 35A-5 of the
15Illinois Insurance Code, whose state or country of domicile
16imposes on insurers domiciled in Illinois a retaliatory tax
17(excluding any insurer whose premiums from reinsurance assumed
18are 50% or more of its total insurance premiums as determined
19under paragraph (2) of subsection (b) of Section 304, except
20that for purposes of this determination premiums from
21reinsurance do not include premiums from inter-affiliate
22reinsurance arrangements), beginning with taxable years ending
23on or after December 31, 1999, the sum of the rates of tax
24imposed by subsections (b) and (d) shall be reduced (but not
25increased) to the rate at which the total amount of tax imposed
26under this Act, net of all credits allowed under this Act,

 

 

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1shall equal (i) the total amount of tax that would be imposed
2on the foreign insurer's net income allocable to Illinois for
3the taxable year by such foreign insurer's state or country of
4domicile if that net income were subject to all income taxes
5and taxes measured by net income imposed by such foreign
6insurer's state or country of domicile, net of all credits
7allowed or (ii) a rate of zero if no such tax is imposed on such
8income by the foreign insurer's state of domicile. For the
9purposes of this subsection (d-1), an inter-affiliate includes
10a mutual insurer under common management.
11        (1) For the purposes of subsection (d-1), in no event
12    shall the sum of the rates of tax imposed by subsections
13    (b) and (d) be reduced below the rate at which the sum of:
14            (A) the total amount of tax imposed on such foreign
15        insurer under this Act for a taxable year, net of all
16        credits allowed under this Act, plus
17            (B) the privilege tax imposed by Section 409 of the
18        Illinois Insurance Code, the fire insurance company
19        tax imposed by Section 12 of the Fire Investigation
20        Act, and the fire department taxes imposed under
21        Section 11-10-1 of the Illinois Municipal Code,
22    equals 1.25% for taxable years ending prior to December 31,
23    2003, or 1.75% for taxable years ending on or after
24    December 31, 2003, of the net taxable premiums written for
25    the taxable year, as described by subsection (1) of Section
26    409 of the Illinois Insurance Code. This paragraph will in

 

 

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1    no event increase the rates imposed under subsections (b)
2    and (d).
3        (2) Any reduction in the rates of tax imposed by this
4    subsection shall be applied first against the rates imposed
5    by subsection (b) and only after the tax imposed by
6    subsection (a) net of all credits allowed under this
7    Section other than the credit allowed under subsection (i)
8    has been reduced to zero, against the rates imposed by
9    subsection (d).
10    This subsection (d-1) is exempt from the provisions of
11Section 250.
12    (e) Investment credit. A taxpayer shall be allowed a credit
13against the Personal Property Tax Replacement Income Tax for
14investment in qualified property.
15        (1) A taxpayer shall be allowed a credit equal to .5%
16    of the basis of qualified property placed in service during
17    the taxable year, provided such property is placed in
18    service on or after July 1, 1984. There shall be allowed an
19    additional credit equal to .5% of the basis of qualified
20    property placed in service during the taxable year,
21    provided such property is placed in service on or after
22    July 1, 1986, and the taxpayer's base employment within
23    Illinois has increased by 1% or more over the preceding
24    year as determined by the taxpayer's employment records
25    filed with the Illinois Department of Employment Security.
26    Taxpayers who are new to Illinois shall be deemed to have

 

 

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1    met the 1% growth in base employment for the first year in
2    which they file employment records with the Illinois
3    Department of Employment Security. The provisions added to
4    this Section by Public Act 85-1200 (and restored by Public
5    Act 87-895) shall be construed as declaratory of existing
6    law and not as a new enactment. If, in any year, the
7    increase in base employment within Illinois over the
8    preceding year is less than 1%, the additional credit shall
9    be limited to that percentage times a fraction, the
10    numerator of which is .5% and the denominator of which is
11    1%, but shall not exceed .5%. The investment credit shall
12    not be allowed to the extent that it would reduce a
13    taxpayer's liability in any tax year below zero, nor may
14    any credit for qualified property be allowed for any year
15    other than the year in which the property was placed in
16    service in Illinois. For tax years ending on or after
17    December 31, 1987, and on or before December 31, 1988, the
18    credit shall be allowed for the tax year in which the
19    property is placed in service, or, if the amount of the
20    credit exceeds the tax liability for that year, whether it
21    exceeds the original liability or the liability as later
22    amended, such excess may be carried forward and applied to
23    the tax liability of the 5 taxable years following the
24    excess credit years if the taxpayer (i) makes investments
25    which cause the creation of a minimum of 2,000 full-time
26    equivalent jobs in Illinois, (ii) is located in an

 

 

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1    enterprise zone established pursuant to the Illinois
2    Enterprise Zone Act and (iii) is certified by the
3    Department of Commerce and Community Affairs (now
4    Department of Commerce and Economic Opportunity) as
5    complying with the requirements specified in clause (i) and
6    (ii) by July 1, 1986. The Department of Commerce and
7    Community Affairs (now Department of Commerce and Economic
8    Opportunity) shall notify the Department of Revenue of all
9    such certifications immediately. For tax years ending
10    after December 31, 1988, the credit shall be allowed for
11    the tax year in which the property is placed in service,
12    or, if the amount of the credit exceeds the tax liability
13    for that year, whether it exceeds the original liability or
14    the liability as later amended, such excess may be carried
15    forward and applied to the tax liability of the 5 taxable
16    years following the excess credit years. The credit shall
17    be applied to the earliest year for which there is a
18    liability. If there is credit from more than one tax year
19    that is available to offset a liability, earlier credit
20    shall be applied first.
21        (2) The term "qualified property" means property
22    which:
23            (A) is tangible, whether new or used, including
24        buildings and structural components of buildings and
25        signs that are real property, but not including land or
26        improvements to real property that are not a structural

 

 

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1        component of a building such as landscaping, sewer
2        lines, local access roads, fencing, parking lots, and
3        other appurtenances;
4            (B) is depreciable pursuant to Section 167 of the
5        Internal Revenue Code, except that "3-year property"
6        as defined in Section 168(c)(2)(A) of that Code is not
7        eligible for the credit provided by this subsection
8        (e);
9            (C) is acquired by purchase as defined in Section
10        179(d) of the Internal Revenue Code;
11            (D) is used in Illinois by a taxpayer who is
12        primarily engaged in manufacturing, or in mining coal
13        or fluorite, or in retailing, or was placed in service
14        on or after July 1, 2006 in a River Edge Redevelopment
15        Zone established pursuant to the River Edge
16        Redevelopment Zone Act; and
17            (E) has not previously been used in Illinois in
18        such a manner and by such a person as would qualify for
19        the credit provided by this subsection (e) or
20        subsection (f).
21        (3) For purposes of this subsection (e),
22    "manufacturing" means the material staging and production
23    of tangible personal property by procedures commonly
24    regarded as manufacturing, processing, fabrication, or
25    assembling which changes some existing material into new
26    shapes, new qualities, or new combinations. For purposes of

 

 

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1    this subsection (e) the term "mining" shall have the same
2    meaning as the term "mining" in Section 613(c) of the
3    Internal Revenue Code. For purposes of this subsection (e),
4    the term "retailing" means the sale of tangible personal
5    property for use or consumption and not for resale, or
6    services rendered in conjunction with the sale of tangible
7    personal property for use or consumption and not for
8    resale. For purposes of this subsection (e), "tangible
9    personal property" has the same meaning as when that term
10    is used in the Retailers' Occupation Tax Act, and, for
11    taxable years ending after December 31, 2008, does not
12    include the generation, transmission, or distribution of
13    electricity.
14        (4) The basis of qualified property shall be the basis
15    used to compute the depreciation deduction for federal
16    income tax purposes.
17        (5) If the basis of the property for federal income tax
18    depreciation purposes is increased after it has been placed
19    in service in Illinois by the taxpayer, the amount of such
20    increase shall be deemed property placed in service on the
21    date of such increase in basis.
22        (6) The term "placed in service" shall have the same
23    meaning as under Section 46 of the Internal Revenue Code.
24        (7) If during any taxable year, any property ceases to
25    be qualified property in the hands of the taxpayer within
26    48 months after being placed in service, or the situs of

 

 

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1    any qualified property is moved outside Illinois within 48
2    months after being placed in service, the Personal Property
3    Tax Replacement Income Tax for such taxable year shall be
4    increased. Such increase shall be determined by (i)
5    recomputing the investment credit which would have been
6    allowed for the year in which credit for such property was
7    originally allowed by eliminating such property from such
8    computation and, (ii) subtracting such recomputed credit
9    from the amount of credit previously allowed. For the
10    purposes of this paragraph (7), a reduction of the basis of
11    qualified property resulting from a redetermination of the
12    purchase price shall be deemed a disposition of qualified
13    property to the extent of such reduction.
14        (8) Unless the investment credit is extended by law,
15    the basis of qualified property shall not include costs
16    incurred after December 31, 2013, except for costs incurred
17    pursuant to a binding contract entered into on or before
18    December 31, 2013.
19        (9) Each taxable year ending before December 31, 2000,
20    a partnership may elect to pass through to its partners the
21    credits to which the partnership is entitled under this
22    subsection (e) for the taxable year. A partner may use the
23    credit allocated to him or her under this paragraph only
24    against the tax imposed in subsections (c) and (d) of this
25    Section. If the partnership makes that election, those
26    credits shall be allocated among the partners in the

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1(d) of this Section. This credit shall be computed by
2multiplying the tax imposed by subsections (c) and (d) of this
3Section by a fraction, the numerator of which is base income
4allocable to Illinois and the denominator of which is Illinois
5base income, and further multiplying the product by the tax
6rate imposed by subsections (a) and (b) of this Section.
7    Any credit earned on or after December 31, 1986 under this
8subsection which is unused in the year the credit is computed
9because it exceeds the tax liability imposed by subsections (a)
10and (b) for that year (whether it exceeds the original
11liability or the liability as later amended) may be carried
12forward and applied to the tax liability imposed by subsections
13(a) and (b) of the 5 taxable years following the excess credit
14year, provided that no credit may be carried forward to any
15year ending on or after December 31, 2003. This credit shall be
16applied first to the earliest year for which there is a
17liability. If there is a credit under this subsection from more
18than one tax year that is available to offset a liability the
19earliest credit arising under this subsection shall be applied
20first.
21    If, during any taxable year ending on or after December 31,
221986, the tax imposed by subsections (c) and (d) of this
23Section for which a taxpayer has claimed a credit under this
24subsection (i) is reduced, the amount of credit for such tax
25shall also be reduced. Such reduction shall be determined by
26recomputing the credit to take into account the reduced tax

 

 

SB2099- 26 -LRB097 10269 HLH 50473 b

1imposed by subsections (c) and (d). If any portion of the
2reduced amount of credit has been carried to a different
3taxable year, an amended return shall be filed for such taxable
4year to reduce the amount of credit claimed.
5    (j) Training expense credit. Beginning with tax years
6ending on or after December 31, 1986 and prior to December 31,
72003, a taxpayer shall be allowed a credit against the tax
8imposed by subsections (a) and (b) under this Section for all
9amounts paid or accrued, on behalf of all persons employed by
10the taxpayer in Illinois or Illinois residents employed outside
11of Illinois by a taxpayer, for educational or vocational
12training in semi-technical or technical fields or semi-skilled
13or skilled fields, which were deducted from gross income in the
14computation of taxable income. The credit against the tax
15imposed by subsections (a) and (b) shall be 1.6% of such
16training expenses. For partners, shareholders of subchapter S
17corporations, and owners of limited liability companies, if the
18liability company is treated as a partnership for purposes of
19federal and State income taxation, there shall be allowed a
20credit under this subsection (j) to be determined in accordance
21with the determination of income and distributive share of
22income under Sections 702 and 704 and subchapter S of the
23Internal Revenue Code.
24    Any credit allowed under this subsection which is unused in
25the year the credit is earned may be carried forward to each of
26the 5 taxable years following the year for which the credit is

 

 

SB2099- 27 -LRB097 10269 HLH 50473 b

1first computed until it is used. This credit shall be applied
2first to the earliest year for which there is a liability. If
3there is a credit under this subsection from more than one tax
4year that is available to offset a liability the earliest
5credit arising under this subsection shall be applied first. No
6carryforward credit may be claimed in any tax year ending on or
7after December 31, 2003.
8    (k) Research and development credit.
9    For tax years ending after July 1, 1990 and prior to
10December 31, 2003, and beginning again for tax years ending on
11or after December 31, 2004, and ending prior to January 1,
122011, a taxpayer shall be allowed a credit against the tax
13imposed by subsections (a) and (b) of this Section for
14increasing research activities in this State. The credit
15allowed against the tax imposed by subsections (a) and (b)
16shall be equal to 6 1/2% of the qualifying expenditures for
17increasing research activities in this State. For partners,
18shareholders of subchapter S corporations, and owners of
19limited liability companies, if the liability company is
20treated as a partnership for purposes of federal and State
21income taxation, there shall be allowed a credit under this
22subsection to be determined in accordance with the
23determination of income and distributive share of income under
24Sections 702 and 704 and subchapter S of the Internal Revenue
25Code.
26    For purposes of this subsection, "qualifying expenditures"

 

 

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1means the qualifying expenditures as defined for the federal
2credit for increasing research activities which would be
3allowable under Section 41 of the Internal Revenue Code and
4which are conducted in this State, "qualifying expenditures for
5increasing research activities in this State" means the excess
6of qualifying expenditures for the taxable year in which
7incurred over qualifying expenditures for the base period,
8"qualifying expenditures for the base period" means the average
9of the qualifying expenditures for each year in the base
10period, and "base period" means the 3 taxable years immediately
11preceding the taxable year for which the determination is being
12made.
13    Any credit in excess of the tax liability for the taxable
14year may be carried forward. A taxpayer may elect to have the
15unused credit shown on its final completed return carried over
16as a credit against the tax liability for the following 5
17taxable years or until it has been fully used, whichever occurs
18first; provided that no credit earned in a tax year ending
19prior to December 31, 2003 may be carried forward to any year
20ending on or after December 31, 2003, and no credit may be
21carried forward to any taxable year ending on or after January
221, 2011.
23    If an unused credit is carried forward to a given year from
242 or more earlier years, that credit arising in the earliest
25year will be applied first against the tax liability for the
26given year. If a tax liability for the given year still

 

 

SB2099- 29 -LRB097 10269 HLH 50473 b

1remains, the credit from the next earliest year will then be
2applied, and so on, until all credits have been used or no tax
3liability for the given year remains. Any remaining unused
4credit or credits then will be carried forward to the next
5following year in which a tax liability is incurred, except
6that no credit can be carried forward to a year which is more
7than 5 years after the year in which the expense for which the
8credit is given was incurred.
9    No inference shall be drawn from this amendatory Act of the
1091st General Assembly in construing this Section for taxable
11years beginning before January 1, 1999.
12    (l) Environmental Remediation Tax Credit.
13        (i) For tax years ending after December 31, 1997 and on
14    or before December 31, 2001, a taxpayer shall be allowed a
15    credit against the tax imposed by subsections (a) and (b)
16    of this Section for certain amounts paid for unreimbursed
17    eligible remediation costs, as specified in this
18    subsection. For purposes of this Section, "unreimbursed
19    eligible remediation costs" means costs approved by the
20    Illinois Environmental Protection Agency ("Agency") under
21    Section 58.14 of the Environmental Protection Act that were
22    paid in performing environmental remediation at a site for
23    which a No Further Remediation Letter was issued by the
24    Agency and recorded under Section 58.10 of the
25    Environmental Protection Act. The credit must be claimed
26    for the taxable year in which Agency approval of the

 

 

SB2099- 30 -LRB097 10269 HLH 50473 b

1    eligible remediation costs is granted. The credit is not
2    available to any taxpayer if the taxpayer or any related
3    party caused or contributed to, in any material respect, a
4    release of regulated substances on, in, or under the site
5    that was identified and addressed by the remedial action
6    pursuant to the Site Remediation Program of the
7    Environmental Protection Act. After the Pollution Control
8    Board rules are adopted pursuant to the Illinois
9    Administrative Procedure Act for the administration and
10    enforcement of Section 58.9 of the Environmental
11    Protection Act, determinations as to credit availability
12    for purposes of this Section shall be made consistent with
13    those rules. For purposes of this Section, "taxpayer"
14    includes a person whose tax attributes the taxpayer has
15    succeeded to under Section 381 of the Internal Revenue Code
16    and "related party" includes the persons disallowed a
17    deduction for losses by paragraphs (b), (c), and (f)(1) of
18    Section 267 of the Internal Revenue Code by virtue of being
19    a related taxpayer, as well as any of its partners. The
20    credit allowed against the tax imposed by subsections (a)
21    and (b) shall be equal to 25% of the unreimbursed eligible
22    remediation costs in excess of $100,000 per site, except
23    that the $100,000 threshold shall not apply to any site
24    contained in an enterprise zone as determined by the
25    Department of Commerce and Community Affairs (now
26    Department of Commerce and Economic Opportunity). The

 

 

SB2099- 31 -LRB097 10269 HLH 50473 b

1    total credit allowed shall not exceed $40,000 per year with
2    a maximum total of $150,000 per site. For partners and
3    shareholders of subchapter S corporations, there shall be
4    allowed a credit under this subsection to be determined in
5    accordance with the determination of income and
6    distributive share of income under Sections 702 and 704 and
7    subchapter S of the Internal Revenue Code.
8        (ii) A credit allowed under this subsection that is
9    unused in the year the credit is earned may be carried
10    forward to each of the 5 taxable years following the year
11    for which the credit is first earned until it is used. The
12    term "unused credit" does not include any amounts of
13    unreimbursed eligible remediation costs in excess of the
14    maximum credit per site authorized under paragraph (i).
15    This credit shall be applied first to the earliest year for
16    which there is a liability. If there is a credit under this
17    subsection from more than one tax year that is available to
18    offset a liability, the earliest credit arising under this
19    subsection shall be applied first. A credit allowed under
20    this subsection may be sold to a buyer as part of a sale of
21    all or part of the remediation site for which the credit
22    was granted. The purchaser of a remediation site and the
23    tax credit shall succeed to the unused credit and remaining
24    carry-forward period of the seller. To perfect the
25    transfer, the assignor shall record the transfer in the
26    chain of title for the site and provide written notice to

 

 

SB2099- 32 -LRB097 10269 HLH 50473 b

1    the Director of the Illinois Department of Revenue of the
2    assignor's intent to sell the remediation site and the
3    amount of the tax credit to be transferred as a portion of
4    the sale. In no event may a credit be transferred to any
5    taxpayer if the taxpayer or a related party would not be
6    eligible under the provisions of subsection (i).
7        (iii) For purposes of this Section, the term "site"
8    shall have the same meaning as under Section 58.2 of the
9    Environmental Protection Act.
10    (m) Education expense credit. Beginning with tax years
11ending after December 31, 1999, a taxpayer who is the custodian
12of one or more qualifying pupils shall be allowed a credit
13against the tax imposed by subsections (a) and (b) of this
14Section for qualified education expenses incurred on behalf of
15the qualifying pupils. For taxable years ending on or before
16December 30, 2011, the The credit shall be equal to 25% of
17qualified education expenses, but in no event may the total
18credit under this subsection claimed by a family that is the
19custodian of qualifying pupils exceed $500. For taxable years
20ending on or after December 31, 2011, the credit shall be equal
21to 50% of qualified education expenses, but in no event may the
22total credit under this subsection claimed by a family that is
23the custodian of qualifying pupils exceed $1,000. In no event
24shall a credit under this subsection reduce the taxpayer's
25liability under this Act to less than zero. This subsection is
26exempt from the provisions of Section 250 of this Act.

 

 

SB2099- 33 -LRB097 10269 HLH 50473 b

1    For purposes of this subsection:
2    "Qualifying pupils" means individuals who (i) are
3residents of the State of Illinois, (ii) are under the age of
421 at the close of the school year for which a credit is
5sought, and (iii) during the school year for which a credit is
6sought were full-time pupils enrolled in a kindergarten through
7twelfth grade education program at any school, as defined in
8this subsection.
9    "Qualified education expense" means the amount incurred on
10behalf of a qualifying pupil in excess of $250 for tuition,
11book fees, and lab fees at the school in which the pupil is
12enrolled during the regular school year.
13    "School" means any public or nonpublic elementary or
14secondary school in Illinois that is in compliance with Title
15VI of the Civil Rights Act of 1964 and attendance at which
16satisfies the requirements of Section 26-1 of the School Code,
17except that nothing shall be construed to require a child to
18attend any particular public or nonpublic school to qualify for
19the credit under this Section.
20    "Custodian" means, with respect to qualifying pupils, an
21Illinois resident who is a parent, the parents, a legal
22guardian, or the legal guardians of the qualifying pupils.
23    (n) River Edge Redevelopment Zone site remediation tax
24credit.
25        (i) For tax years ending on or after December 31, 2006,
26    a taxpayer shall be allowed a credit against the tax

 

 

SB2099- 34 -LRB097 10269 HLH 50473 b

1    imposed by subsections (a) and (b) of this Section for
2    certain amounts paid for unreimbursed eligible remediation
3    costs, as specified in this subsection. For purposes of
4    this Section, "unreimbursed eligible remediation costs"
5    means costs approved by the Illinois Environmental
6    Protection Agency ("Agency") under Section 58.14a of the
7    Environmental Protection Act that were paid in performing
8    environmental remediation at a site within a River Edge
9    Redevelopment Zone for which a No Further Remediation
10    Letter was issued by the Agency and recorded under Section
11    58.10 of the Environmental Protection Act. The credit must
12    be claimed for the taxable year in which Agency approval of
13    the eligible remediation costs is granted. The credit is
14    not available to any taxpayer if the taxpayer or any
15    related party caused or contributed to, in any material
16    respect, a release of regulated substances on, in, or under
17    the site that was identified and addressed by the remedial
18    action pursuant to the Site Remediation Program of the
19    Environmental Protection Act. Determinations as to credit
20    availability for purposes of this Section shall be made
21    consistent with rules adopted by the Pollution Control
22    Board pursuant to the Illinois Administrative Procedure
23    Act for the administration and enforcement of Section 58.9
24    of the Environmental Protection Act. For purposes of this
25    Section, "taxpayer" includes a person whose tax attributes
26    the taxpayer has succeeded to under Section 381 of the

 

 

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

 

 

SB2099- 36 -LRB097 10269 HLH 50473 b

1    amount of the tax credit to be transferred as a portion of
2    the sale. In no event may a credit be transferred to any
3    taxpayer if the taxpayer or a related party would not be
4    eligible under the provisions of subsection (i).
5        (iii) For purposes of this Section, the term "site"
6    shall have the same meaning as under Section 58.2 of the
7    Environmental Protection Act.
8        (iv) This subsection is exempt from the provisions of
9    Section 250.
10(Source: P.A. 95-454, eff. 8-27-07; 96-115, eff. 7-31-09;
1196-116, eff. 7-31-09; 96-937, eff. 6-23-10; 96-1000, eff.
127-2-10; 96-1496, eff. 1-13-11.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.