093_SB1725ham002











                                     LRB093 02872 SJM 17304 a

 1                    AMENDMENT TO SENATE BILL 1725

 2        AMENDMENT NO.     .  Amend Senate Bill 1725 by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.  The Illinois Estate and Generation-Skipping
 5    Transfer Tax Act is amended by changing Sections 2, 3, 5,  6,
 6    7, 8, and 10 as follows:

 7        (35 ILCS 405/2) (from Ch. 120, par. 405A-2)
 8        Sec. 2.  Definitions.
 9        "Federal  estate  tax"  means  the  tax due to the United
10    States with respect to a taxable transfer under Chapter 11 of
11    the Internal Revenue Code.
12        "Federal generation-skipping transfer tax" means the  tax
13    due  to  the United States with respect to a taxable transfer
14    under Chapter 13 of the Internal Revenue Code.
15        "Federal return" means the federal estate tax return with
16    respect to the federal  estate  tax  and  means  the  federal
17    generation-skipping  transfer  tax return with respect to the
18    federal generation-skipping transfer tax.
19        "Federal transfer tax" means the federal  estate  tax  or
20    the federal generation-skipping transfer tax.
21        "Illinois  estate  tax"  means  the tax due to this State
22    with respect to a taxable  transfer  that  gives  rise  to  a
 
                            -2-      LRB093 02872 SJM 17304 a
 1    federal estate tax.
 2        "Illinois generation-skipping transfer tax" means the tax
 3    due  to  this  State  with respect to a taxable transfer that
 4    gives rise to a federal generation-skipping transfer tax.
 5        "Illinois transfer tax" means the Illinois estate tax  or
 6    the Illinois generation-skipping transfer tax.
 7        "Internal Revenue Code" means, unless otherwise provided,
 8    the  Internal  Revenue  Code of 1986, as amended from time to
 9    time.
10        "Non-resident trust" means a trust that is not a resident
11    of this State for purposes of the Illinois Income Tax Act, as
12    amended from time to time.
13        "Person"  means  and  includes  any  individual,   trust,
14    estate, partnership, association, company or corporation.
15        "Qualified  heir"  means  a  qualified heir as defined in
16    Section 2032A(e)(1) of the Internal Revenue Code.
17        "Resident trust" means a trust that is a resident of this
18    State for purposes of the Illinois Income Tax Act, as amended
19    from time to time.
20        "State" means any state, territory or possession  of  the
21    United States and the District of Columbia.
22        "State tax credit" means:
23        (a)  For  persons  dying  on or after January 1, 2003 and
24    through December 31, 2005, an amount equal to the full credit
25    calculable under Section 2011 or Section 2604 of the Internal
26    Revenue Code as the  credit  would  have  been  computed  and
27    allowed  under  the  Internal  Revenue  Code  as in effect on
28    December 31, 2001, without the reduction in the  State  Death
29    Tax   Credit   as  provided  in  Section  2011(b)(2)  or  the
30    termination of the State Death  Tax  Credit  as  provided  in
31    Section  2011(f)  as  enacted  by the Economic Growth and Tax
32    Relief  Reconciliation  Act  of  2001,  but  recognizing  the
33    increased applicable exclusion amount  through  December  31,
34    2005.
 
                            -3-      LRB093 02872 SJM 17304 a
 1        (b)  For  persons dying after December 31, 2005 and on or
 2    before December 31, 2009, an amount equal to the full  credit
 3    calculable under Section 2011 or 2604 of the Internal Revenue
 4    Code as the credit would have been computed and allowed under
 5    the  Internal Revenue Code as in effect on December 31, 2001,
 6    without the reduction  in  the  State  Death  Tax  Credit  as
 7    provided  in  Section  2011(b)(2)  or  the termination of the
 8    State Death Tax Credit as  provided  in  Section  2011(f)  as
 9    enacted  by the Economic Growth and Tax Relief Reconciliation
10    Act of 2001, but recognizing the  exclusion  amount  of  only
11    $2,000,000.
12        (c)  For  persons  dying  after  December  31,  2009, the
13    credit for state tax allowable under Section 2011 or  Section
14    2604 of the Internal Revenue Code.
15        "Taxable  transfer"  means  an event that gives rise to a
16    state tax credit, including any credit allowable as a  result
17    of the imposition of an additional tax under Section 2032A(c)
18    of the Internal Revenue Code.
19        "Transferee"  means  a  transferee  within the meaning of
20    Section  2603(a)(1)  and  Section  6901(h)  of  the  Internal
21    Revenue Code.
22        "Transferred property" means:
23             (1)  With respect to a taxable transfer occurring at
24        the death of an individual that results in the imposition
25        of federal estate tax, the  deceased  individual's  gross
26        estate as defined in Section 2031 of the Internal Revenue
27        Code.
28             (2)  With respect to a taxable transfer occurring as
29        a  result  of a taxable termination as defined in Section
30        2612(a) of the Internal Revenue Code,  the taxable amount
31        determined under Section 2622(a) of the Internal  Revenue
32        Code.
33             (3)  With respect to a taxable transfer occurring as
34        a  result of a taxable distribution as defined in Section
 
                            -4-      LRB093 02872 SJM 17304 a
 1        2612(b) of the Internal Revenue Code, the taxable  amount
 2        determined  under Section 2621(a) of the Internal Revenue
 3        Code.
 4             (4)  With respect  to  an  event  which  causes  the
 5        imposition  of  an  additional  estate  tax under Section
 6        2032A(c) of the Internal Revenue Code, the qualified real
 7        property that was disposed of or which ceased to be  used
 8        for  the  qualified  use,  within  the meaning of Section
 9        2032A(c)(1) of the Internal Revenue Code.
10        "Trust" includes a trust as defined in Section 2652(b)(1)
11    of the Internal Revenue Code.
12    (Source: P.A. 86-737.)

13        (35 ILCS 405/3) (from Ch. 120, par. 405A-3)
14        Sec. 3.  Illinois estate tax.
15        (a)  Imposition  of  Tax.   An  Illinois  estate  tax  is
16    imposed  on  every  taxable  transfer  involving  transferred
17    property having a tax situs within the State of Illinois.
18        (b)  Amount of tax.  The amount of  the  Illinois  estate
19    tax  shall  be  the  maximum  state tax credit, as defined in
20    Section 2 of this Act, allowable with respect to the  taxable
21    transfer reduced by the lesser of:
22             (1)  the  amount of the state tax credit paid to any
23        other state or states; and
24             (2)  the  amount  determined  by   multiplying   the
25        maximum  state  tax  credit allowable with respect to the
26        taxable transfer  by the percentage which the gross value
27        of the transferred property not having  a  tax  situs  in
28        Illinois   bears   to   the  gross  value  of  the  total
29        transferred property.
30    (Source: P.A. 86-737.)

31        (35 ILCS 405/5) (from Ch. 120, par. 405A-5)
32        Sec. 5.  Determination of tax situs and valuation.
 
                            -5-      LRB093 02872 SJM 17304 a
 1        (a)  Illinois estate tax.
 2             (1)  For purposes of the Illinois estate tax, in the
 3        case of a decedent who was a resident of  this  State  at
 4        the  time of death, all of the transferred property has a
 5        tax situs in this State, including any such property held
 6        in trust,  except  real  or  tangible  personal  property
 7        physically situated in another state.
 8             (2)  For purposes of the Illinois estate tax, in the
 9        case  of  a decedent who was not a resident of this State
10        at the time of death, the transferred property  having  a
11        tax situs in this State, including any such property held
12        in  trust,  is only the real estate and tangible personal
13        property physically situated in this State.
14        (b)  Illinois generation-skipping transfer tax.
15             (1)  For     purposes      of      the      Illinois
16        generation-skipping   transfer   tax,   all   transferred
17        property  from  or in a resident trust has a tax situs in
18        this State, including any such property  held  in  trust,
19        except  real  or  tangible  personal  property physically
20        situated in another state on the date  that  the  taxable
21        transfer occurs.
22             (2)  For      purposes      of      the     Illinois
23        generation-skipping transfer tax, none of the transferred
24        property from or in a non-resident trust has a tax  situs
25        in  this  State,  except  that portion of the transferred
26        property that  is  real  or  tangible  personal  property
27        physically  situated  in  this  State, including any such
28        property held in trust, on  the  date  that  the  taxable
29        transfer occurs.
30        (c)  Valuation.   Except as otherwise expressly provided,
31    for purposes of this Act,  the  gross  value  of  transferred
32    property  shall  be  its  value  as  finally  determined  for
33    purposes of the related federal transfer tax, undiminished by
34    any   mortgages,   liens  or  other  encumbrances  upon  such
 
                            -6-      LRB093 02872 SJM 17304 a
 1    transferred property for which the  decedent  was  personally
 2    liable.
 3    (Source: P.A. 86-737.)

 4        (35 ILCS 405/6) (from Ch. 120, par. 405A-6)
 5        Sec. 6.  Returns and payments.
 6        (a)  Due  Dates.  The Illinois transfer tax shall be paid
 7    and the Illinois transfer tax return shall be  filed  on  the
 8    due  date  or  dates, respectively, including extensions, for
 9    paying the  related  federal  transfer  tax  and  filing  the
10    related federal return.
11        (b)  Installment  payments  and  deferral.   In the event
12    that any portion of the federal transfer tax is  deferred  or
13    to  be  paid  in  installments  under  the  provisions of the
14    Internal Revenue Code, the portion of the  Illinois  transfer
15    tax  which  is subject to deferral or payable in installments
16    shall be determined by multiplying the Illinois transfer  tax
17    by  a  fraction, the numerator of which is the gross value of
18    the assets included in the transferred property having a  tax
19    situs  in  this  State and which give rise to the deferred or
20    installment payment under  the Internal Revenue Code, and the
21    denominator of  which  is  the  gross  value  of  all  assets
22    included  in  the  transferred property having a tax situs in
23    this State.  Deferred payments and installment payments, with
24    interest, shall be paid at the same  time  and  in  the  same
25    manner  as  payments of the federal transfer tax are required
26    to be made under the  applicable  Sections  of  the  Internal
27    Revenue  Code,  provided  that the rate of interest on unpaid
28    amounts of Illinois transfer tax shall  be  determined  under
29    this  Act.   Acceleration of payment under this Section shall
30    occur under the same circumstances and in the same manner  as
31    provided in the Internal Revenue Code.
32        (c)  Who  shall  file and pay.  The Illinois transfer tax
33    return (including any supplemental or amended  return)  shall
 
                            -7-      LRB093 02872 SJM 17304 a
 1    be  filed,  and  the  Illinois  transfer  tax  (including any
 2    additional tax that may become due) shall be paid by the same
 3    person or persons, respectively, who are required to pay  the
 4    related  federal  transfer  tax  and file the related federal
 5    return, or who would have been  required  to  pay  a  federal
 6    transfer  tax and file a federal return if a federal transfer
 7    tax were due.
 8        (d)  Where  to  file  return.   The   executed   Illinois
 9    transfer tax return shall be filed with the Attorney General.
10    In addition, a copy of the Illinois transfer tax return shall
11    be  filed  with  the  county  treasurer  to whom the Illinois
12    transfer tax is paid, determined under subsection (e) of this
13    Section.
14        (e)  Where to pay tax.  The Illinois transfer  tax  shall
15    be  paid  to the treasurer of the county determined under the
16    following rules:
17             (1)  Illinois Estate Tax.  The Illinois  estate  tax
18        shall be paid to the treasurer of the county in which the
19        decedent  was  a  resident  on the date of the decedent's
20        death or, if the decedent was  not  a  resident  of  this
21        State  on  the  date  of  death,  the county in which the
22        greater part, by gross value, of the transferred property
23        with a tax situs in this State is located.
24             (2)  Illinois Generation-Skipping Transfer Tax.  The
25        Illinois  generation-skipping  transfer   tax   involving
26        transferred property from or in a resident trust shall be
27        paid  to the county treasurer for the county in which the
28        grantor resided at the time the trust became  irrevocable
29        (in  the  case  of an inter vivos trust) or the county in
30        which the decedent resided at death (in  the  case  of  a
31        trust  created by the will of a decedent). In the case of
32        an Illinois generation-skipping  transfer  tax  involving
33        transferred property from or in a non-resident trust, the
34        Illinois  generation-skipping  transfer tax shall be paid
 
                            -8-      LRB093 02872 SJM 17304 a
 1        to the county treasurer  for  the  county  in  which  the
 2        greater part, by gross value, of the transferred property
 3        with a tax situs in this State is located.
 4        (f)  Forms;  confidentiality.   The Illinois transfer tax
 5    return shall be in  all  respects  in  the  manner  and  form
 6    prescribed  by  the  regulations of the Attorney General.  At
 7    the same time the Illinois transfer tax return is filed,  the
 8    person  required  to  file  shall also file with the Attorney
 9    General a copy of the related federal return. For individuals
10    dying after December 31, 2005,  in  cases  where  no  federal
11    return  is  required to be filed, the person required to file
12    an Illinois return shall also file with the Attorney  General
13    schedules  of assets in the manner and form prescribed by the
14    Attorney General. The Illinois transfer tax  return  and  the
15    copy of the federal return filed with the Attorney General or
16    any  county treasurer shall be confidential, and the Attorney
17    General, each county treasurer and all of their assistants or
18    employees are prohibited from divulging in any manner any  of
19    the  contents  of  those returns, except only in a proceeding
20    instituted under the provisions of this Act.
21        (g)  County Treasurer shall accept  payment.   No  county
22    treasurer  shall  refuse  to accept payment of any amount due
23    under this Act on the grounds that the county  treasurer  has
24    not  yet received a copy of the appropriate Illinois transfer
25    tax return.
26    (Source: P.A. 86-737.)

27        (35 ILCS 405/7) (from Ch. 120, par. 405A-7)
28        Sec. 7.  Supplemental returns; refunds.
29        (a)  Supplemental returns.  If the State  tax  credit  is
30    increased  after  the  filing  of  the  Illinois transfer tax
31    return, the person or persons required to file  the  Illinois
32    transfer  tax  return and pay the Illinois transfer tax shall
33    file  a  supplemental  Illinois  transfer  tax  return.   The
 
                            -9-      LRB093 02872 SJM 17304 a
 1    supplemental return shall be filed  and  the  additional  tax
 2    shall  be  paid  in  the same place and manner as provided in
 3    Section 6 of this Act.  The due  date  for  the  supplemental
 4    return  and for the payment of the additional tax reported in
 5    the supplemental return shall be no later than 3 months after
 6    the earliest of:
 7             (1)  the date an amended, related federal return  is
 8        filed;
 9             (2)  the  date  an  increase in the federal transfer
10        tax is paid or accepted in writing; or
11             (3)  the date the Internal Revenue Service issues  a
12        request  for evidence of payment of the State tax credit;
13        or
14             (4)  the date  that  any  increase  to  the  taxable
15        estate is discovered;
16    provided  that  if  the  related  federal transfer tax may be
17    deferred or paid in installments, then part  or  all  of  the
18    additional  Illinois  transfer tax may be deferred or paid in
19    installments under rules consistent with  subsection  (b)  of
20    Section 6 of this Act.
21        (b)  Refunds.   If  the state tax credit is reduced after
22    the filing of the Illinois transfer tax  return,  the  person
23    who  paid  the Illinois transfer tax (or the person upon whom
24    the burden of payment fell) shall file  an  amended  Illinois
25    transfer  tax return and shall be entitled to a refund of tax
26    or interest paid on the Illinois transfer tax.   No  interest
27    shall be paid on any amount refunded.
28    (Source: P.A. 86-737.)

29        (35 ILCS 405/8) (from Ch. 120, par. 405A-8)
30        Sec.  8.   Penalties for failure to file tax return or to
31    pay tax.
32        (a)  Failure to file return.  In case of failure to  file
33    any  return required under this Act with the Attorney General
 
                            -10-     LRB093 02872 SJM 17304 a
 1    by the due date, unless it is shown that the failure to  file
 2    is  due  to  a  reasonable cause, there shall be added to the
 3    amount required to be shown as tax on the return  5%  of  the
 4    amount  of  that  tax (or 5% of the additional tax due in the
 5    case of a supplemental return) if the failure is for not more
 6    than one month from the due date, with an additional  5%  for
 7    each  additional  month  or  fraction  of  a month thereafter
 8    during which the failure to file continues, not exceeding  in
 9    the   aggregate  25%  of  the  tax  or,  in  the  case  of  a
10    supplemental return, 25% of the additional tax.
11        (b)  Failure to pay tax.  In the case of failure  to  pay
12    the amount of tax shown due on any return required under this
13    Act on or before the due date for payment of that tax, unless
14    it  is  shown  that  the  failure to pay is due to reasonable
15    cause, there shall be added to the unpaid amount of  the  tax
16    0.5%  of  that  unpaid  amount if the failure is for not more
17    than one month from the due date, with an additional 0.5% for
18    each additional month  or  fraction  of  a  month  thereafter
19    during  which  the failure to pay continues, not exceeding in
20    the aggregate 25% of the unpaid amount.
21        (c)  Extensions of Time.
22             (1)  Internal Revenue Service  Extensions.   If  the
23        date  for  filing  the related federal return or the date
24        for payment  of  the  related  federal  transfer  tax  is
25        extended  by  the Internal Revenue Service, the filing of
26        the return and payment of the tax  imposed  by  this  Act
27        shall  be  due  on  the  respective date specified by the
28        Internal  Revenue  Service  in  granting  a  request  for
29        extension.  If the request for extension  is  granted  by
30        the Internal Revenue Service, the person required to file
31        the  Illinois  transfer  tax  return  shall  furnish  the
32        Attorney General with a copy of the request for extension
33        showing approval of the extension by the Internal Revenue
34        Service.   If a request for extension of time to file the
 
                            -11-     LRB093 02872 SJM 17304 a
 1        federal return is denied by the Internal Revenue Service,
 2        no penalty shall be due under  this  Act  if  the  return
 3        required  by  this Act is filed within the time specified
 4        by the Internal Revenue Service for  filing  the  federal
 5        return.   If  a  request for extension of time to pay the
 6        federal transfer tax is denied by  the  Internal  Revenue
 7        Service,  no  penalty  shall be due under this Act if the
 8        tax is paid within the time  specified  by  the  Internal
 9        Revenue Service for paying the federal transfer tax.
10             (2)  Attorney  General  Extensions.   The  person or
11        persons required to file the Illinois transfer tax return
12        and to pay the Illinois transfer tax  may  apply  to  the
13        Attorney  General  for  an  extension of time to file the
14        Illinois transfer tax  return  or  to  pay  the  Illinois
15        transfer  tax.  The application must establish reasonable
16        cause why it is  impossible  or  impractical  to  file  a
17        reasonably  complete  return or to pay the full amount of
18        tax due by the due date.  The Attorney  General  may  for
19        reasonable cause extend the time for filing the return or
20        paying  the  tax  for  a  reasonable period from the date
21        fixed for filing the return or paying the tax.
22        (d)  Waiver of Penalties.
23             (1)  Internal  Revenue  Service  Waiver.    If   the
24        Internal  Revenue  Service waives the penalty provided in
25        the Internal Revenue Code for failure to timely file  the
26        related  federal  return  or  the  penalty for failure to
27        timely pay the related federal  transfer  tax  liability,
28        such  waiver  or  waivers  shall  be deemed to constitute
29        reasonable cause for purposes of this Section.
30             (2)  Attorney General Waiver.  The Attorney  General
31        may waive the penalty or penalties for failure to file or
32        pay  for reasonable cause, notwithstanding the failure of
33        the Internal Revenue Service  to  waive  the  penalty  or
34        penalties for failure to timely file the federal transfer
 
                            -12-     LRB093 02872 SJM 17304 a
 1        tax return or to pay the federal transfer tax.
 2    (Source: P.A. 86-737.)

 3        (35 ILCS 405/10) (from Ch. 120, par. 405A-10)
 4        Sec. 10.  Liens and Personal Liability.
 5        (a)  Lien for Illinois transfer tax.  Unless the Illinois
 6    transfer  tax  is  sooner paid in full, the Illinois transfer
 7    tax shall  be  a  lien  in  favor  of  this  State  upon  the
 8    transferred property having a tax situs within this State for
 9    10  years  from  the date of the taxable transfer, or, in the
10    case of Illinois transfer tax subject to deferral or  payable
11    in  installments,  the later of 10 years from the date of the
12    taxable transfer or one  year  after  the  last  deferred  or
13    installment payment may become due.  The lien imposed by this
14    Section  on  the  transferred  property shall not be valid as
15    against any purchaser, mortgagee, pledgee, or other holder of
16    a security interest for a full and adequate consideration  in
17    money or money's worth; provided, however, that any property,
18    consideration  or  proceeds received as a result of any sale,
19    mortgage, pledge or granting of  a  security  interest  shall
20    remain  subject  to  the  lien  imposed  by this Section.  In
21    addition, the lien imposed by this Section on the transferred
22    property shall be subject to  the  exceptions  set  forth  in
23    Section  6324(c)(i)  of  the  Internal Revenue Code as if the
24    lien were a lien imposed by that Section.  In no event  shall
25    the issuance by the Attorney General of a release of the lien
26    imposed  by  this  subsection be required with respect to the
27    sale, mortgage, pledge, granting of a security  interest  in,
28    transfer or distribution of transferred property.
29        (b)  Special lien for property valued under Section 2032A
30    of  the  Internal  Revenue  Code.   In the event the Illinois
31    estate tax is reduced  as  a  result  of  an  election  under
32    Section  2032A  of  the Internal Revenue Code, then an amount
33    equal to the additional Illinois estate tax that would be due
 
                            -13-     LRB093 02872 SJM 17304 a
 1    in the absence of such an election shall be a lien  in  favor
 2    of  this  State  on  the  transferred property that has a tax
 3    situs in this State and is subject  to  such  election.   The
 4    lien  imposed  by  this subsection shall arise at the time an
 5    election is filed under Section 2032A of the Internal Revenue
 6    Code and shall continue  with  respect  to  such  transferred
 7    property:
 8             (1)  until the liability for the Illinois estate tax
 9        with  respect  to  such  transferred  property  has  been
10        satisfied  or has become unenforceable by reason of lapse
11        of time or otherwise; or
12             (2)  until it is established to the satisfaction  of
13        the  Attorney  General  that no further tax liability may
14        arise under this Act with  respect  to  such  transferred
15        property.
16        The lien imposed by this subsection shall not be valid as
17    against  any purchaser, mortgagee, pledgee, other holder of a
18    security interest, mechanic's lien, or judgment lien creditor
19    until notice of such lien has been filed as provided  by  the
20    laws  of this State.  In regulations prescribed in accordance
21    with Section 16 of this Act, the Attorney General may require
22    that the qualified heir  file  such  notice  of  lien.   Even
23    though  notice of said lien has been filed as provided in the
24    preceding sentence, such lien shall be subject to  the  rules
25    set  forth  in  paragraph  (3)  of  Section  6324A(d)  of the
26    Internal Revenue Code as if the lien were a lien  imposed  by
27    that Section.
28        (c)  Personal liability.  If the Illinois transfer tax is
29    not  paid  when  due,  then  the  person required to file the
30    related federal return and the transferee of any  transferred
31    property  having  a  tax  situs  within  this  State shall be
32    personally liable for  the  Illinois  transfer  tax,  to  the
33    extent  of  such  transferred  property  originally received,
34    controlled or transferred to that person or transferee,  less
 
                            -14-     LRB093 02872 SJM 17304 a
 1    the amount of any expenses or charges against the transferred
 2    property,  related  to  the  taxable  transfer,  which have a
 3    higher priority of payment  under  applicable  law  than  the
 4    Illinois transfer tax.
 5        (d)  Collection.   The  Attorney  General  shall have the
 6    right to sue for collection of the Illinois transfer tax  for
 7    3  years  after  the date of the actual filing of the related
 8    Illinois transfer tax return with the Attorney  General,  or,
 9    if  later, the last date upon which application for refund of
10    the Illinois transfer tax  could  be  filed  with  the  State
11    Treasurer.
12        (e)  Waiver  of  lien  and  personal  liability.   If the
13    Attorney General is satisfied that no liability for  Illinois
14    transfer  tax  exists  or  that the Illinois transfer tax has
15    been fully discharged or provided for, the  Attorney  General
16    shall  issue  a  certificate releasing all of the transferred
17    property having a tax situs within the State of Illinois from
18    the  lien  imposed  by  this  Section.   Issuance   of   such
19    certificate  shall  discharge the person required to file the
20    Illinois related  federal  return  and  any  transferee  from
21    personal liability for the Illinois transfer tax.
22    (Source: P.A. 86-737.)

23        Section  99.  Effective date.  This Act takes effect upon
24    becoming law.".