Illinois General Assembly

Previous General Assemblies

Full Text of HB0689  99th General Assembly

HB0689ham001 99TH GENERAL ASSEMBLY

Rep. Lou Lang

Filed: 4/15/2016

 

 


 

 


 
09900HB0689ham001LRB099 04511 HLH 47696 a

1
AMENDMENT TO HOUSE BILL 689

2    AMENDMENT NO. ______. Amend House Bill 689 by replacing
3everything after the enacting clause with the following:
 
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

 

 

09900HB0689ham001- 2 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 3 -LRB099 04511 HLH 47696 a

1    the taxpayer's net income for the taxable year.
2        (5.1) In the case of an individual, trust, or estate,
3    for taxable years beginning prior to January 1, 2015, and
4    ending after December 31, 2014, an amount equal to the sum
5    of (i) 5% of the taxpayer's net income for the period prior
6    to January 1, 2015, as calculated under Section 202.5, and
7    (ii) 3.75% of the taxpayer's net income for the period
8    after December 31, 2014, as calculated under Section 202.5.
9        (5.2) Except as provided in paragraph (5.5), in In the
10    case of an individual, trust, or estate, for taxable years
11    beginning on or after January 1, 2015, and ending prior to
12    January 1, 2025, an amount equal to 3.75% of the taxpayer's
13    net income for the taxable year.
14        (5.3) Except as provided in paragraph (5.5), in In the
15    case of an individual, trust, or estate, for taxable years
16    beginning prior to January 1, 2025, and ending after
17    December 31, 2024, an amount equal to the sum of (i) 3.75%
18    of the taxpayer's net income for the period prior to
19    January 1, 2025, as calculated under Section 202.5, and
20    (ii) 3.25% of the taxpayer's net income for the period
21    after December 31, 2024, as calculated under Section 202.5.
22        (5.4) Except as provided in paragraph (5.5), in In the
23    case of an individual, trust, or estate, for taxable years
24    beginning on or after January 1, 2025, an amount equal to
25    3.25% of the taxpayer's net income for the taxable year.
26        (5.5) If and only if an amendment to the Illinois

 

 

09900HB0689ham001- 4 -LRB099 04511 HLH 47696 a

1    Constitution allowing a graduated income tax is approved by
2    the voters at an election occurring in 2016, then, in the
3    case of an individual, trust, or estate, for taxable years
4    beginning on or after January 1, 2017:
5            (A) for taxpayers who are married filing a joint
6        return or head of household:
7                (i) an amount equal to 3.5% of the portion of
8            the taxpayer's net income for the taxable year that
9            is $200,000 or less;
10                (ii) an amount equal to 3.75% of the portion of
11            the taxpayer's net income for the taxable year that
12            is more than $200,000 but not more than $750,000;
13                (iii) an amount equal to 8.75% of the portion
14            of the taxpayer's net income for the taxable year
15            that is more than $750,000 but not more than
16            $1,500,000; and
17                (iv) an amount equal to 9.75% of the portion of
18            the taxpayer's net income for the taxable year that
19            is more than $1,500,000; and
20            (B) for all other taxpayers:
21                (i) an amount equal to 3.5% of the portion of
22            the taxpayer's net income for the taxable year that
23            is $100,000 or less;
24                (ii) an amount equal to 3.75% of the portion of
25            the taxpayer's net income for the taxable year that
26            is more than $100,000 but not more than $500,000;

 

 

09900HB0689ham001- 5 -LRB099 04511 HLH 47696 a

1                (iii) an amount equal to 8.75% of the portion
2            of the taxpayer's net income for the taxable year
3            that is more than $500,000 but not more than
4            $1,000,000; and
5                (iv) an amount equal to 9.75% of the portion of
6            the taxpayer's net income for the taxable year that
7            is more than $1,000,000.
8        If and only if an amendment to the Illinois
9    Constitution allowing a graduated income tax is approved by
10    the voters at an election occurring in 2016, then, for
11    taxable years beginning prior to January 1, 2017 and ending
12    after December 31, 2016, in the case of an individual,
13    trust, or estate, an amount equal to the sum of (i) 3.75%
14    of the taxpayer's net income for the period prior to
15    January 1, 2017, as calculated under Section 202.5, and
16    (ii) the rate set forth for that taxpayer under
17    subparagraph (A) or (B) of this paragraph for the period
18    after December 31, 2016, as calculated under Section 202.5.
19        (6) In the case of a corporation, for taxable years
20    ending prior to July 1, 1989, an amount equal to 4% of the
21    taxpayer's net income for the taxable year.
22        (7) In the case of a corporation, for taxable years
23    beginning prior to July 1, 1989 and ending after June 30,
24    1989, an amount equal to the sum of (i) 4% of the
25    taxpayer's net income for the period prior to July 1, 1989,
26    as calculated under Section 202.3, and (ii) 4.8% of the

 

 

09900HB0689ham001- 6 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 7 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 8 -LRB099 04511 HLH 47696 a

1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

09900HB0689ham001- 9 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 10 -LRB099 04511 HLH 47696 a

1    409 of the Illinois Insurance Code. This paragraph will in
2    no event increase the rates imposed under subsections (b)
3    and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates imposed
6    by subsection (b) and only after the tax imposed by
7    subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (e) Investment credit. A taxpayer shall be allowed a credit
14against the Personal Property Tax Replacement Income Tax for
15investment in qualified property.
16        (1) A taxpayer shall be allowed a credit equal to .5%
17    of the basis of qualified property placed in service during
18    the taxable year, provided such property is placed in
19    service on or after July 1, 1984. There shall be allowed an
20    additional credit equal to .5% of the basis of qualified
21    property placed in service during the taxable year,
22    provided such property is placed in service on or after
23    July 1, 1986, and the taxpayer's base employment within
24    Illinois has increased by 1% or more over the preceding
25    year as determined by the taxpayer's employment records
26    filed with the Illinois Department of Employment Security.

 

 

09900HB0689ham001- 11 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 12 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 13 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 14 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 15 -LRB099 04511 HLH 47696 a

1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal Property
4    Tax Replacement Income Tax for such taxable year shall be
5    increased. Such increase shall be determined by (i)
6    recomputing the investment credit which would have been
7    allowed for the year in which credit for such property was
8    originally allowed by eliminating such property from such
9    computation and, (ii) subtracting such recomputed credit
10    from the amount of credit previously allowed. For the
11    purposes of this paragraph (7), a reduction of the basis of
12    qualified property resulting from a redetermination of the
13    purchase price shall be deemed a disposition of qualified
14    property to the extent of such reduction.
15        (8) Unless the investment credit is extended by law,
16    the basis of qualified property shall not include costs
17    incurred after December 31, 2018, except for costs incurred
18    pursuant to a binding contract entered into on or before
19    December 31, 2018.
20        (9) Each taxable year ending before December 31, 2000,
21    a partnership may elect to pass through to its partners the
22    credits to which the partnership is entitled under this
23    subsection (e) for the taxable year. A partner may use the
24    credit allocated to him or her under this paragraph only
25    against the tax imposed in subsections (c) and (d) of this
26    Section. If the partnership makes that election, those

 

 

09900HB0689ham001- 16 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 17 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 18 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 19 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 20 -LRB099 04511 HLH 47696 a

1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more over
5    the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file employment
10    records with the Illinois Department of Employment
11    Security. If, in any year, the increase in base employment
12    within Illinois over the preceding year is less than 1%,
13    the additional credit shall be limited to that percentage
14    times a fraction, the numerator of which is 0.5% and the
15    denominator of which is 1%, but shall not exceed 0.5%.
16    (g) (Blank).
17    (h) Investment credit; High Impact Business.
18        (1) Subject to subsections (b) and (b-5) of Section 5.5
19    of the Illinois Enterprise Zone Act, a taxpayer shall be
20    allowed a credit against the tax imposed by subsections (a)
21    and (b) of this Section for investment in qualified
22    property which is placed in service by a Department of
23    Commerce and Economic Opportunity designated High Impact
24    Business. The credit shall be .5% of the basis for such
25    property. The credit shall not be available (i) until the
26    minimum investments in qualified property set forth in

 

 

09900HB0689ham001- 21 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 22 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 23 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 24 -LRB099 04511 HLH 47696 a

1    the taxpayer relocates its entire facility in violation of
2    the explicit terms and length of the contract under Section
3    18-183 of the Property Tax Code, the tax imposed under
4    subsections (a) and (b) of this Section shall be increased
5    for the taxable year in which the taxpayer relocated its
6    facility by an amount equal to the amount of credit
7    received by the taxpayer under this subsection (h).
8    (i) Credit for Personal Property Tax Replacement Income
9Tax. For tax years ending prior to December 31, 2003, a credit
10shall be allowed against the tax imposed by subsections (a) and
11(b) of this Section for the tax imposed by subsections (c) and
12(d) of this Section. This credit shall be computed by
13multiplying the tax imposed by subsections (c) and (d) of this
14Section by a fraction, the numerator of which is base income
15allocable to Illinois and the denominator of which is Illinois
16base income, and further multiplying the product by the tax
17rate imposed by subsections (a) and (b) of this Section.
18    Any credit earned on or after December 31, 1986 under this
19subsection which is unused in the year the credit is computed
20because it exceeds the tax liability imposed by subsections (a)
21and (b) for that year (whether it exceeds the original
22liability or the liability as later amended) may be carried
23forward and applied to the tax liability imposed by subsections
24(a) and (b) of the 5 taxable years following the excess credit
25year, provided that no credit may be carried forward to any
26year ending on or after December 31, 2003. This credit shall be

 

 

09900HB0689ham001- 25 -LRB099 04511 HLH 47696 a

1applied first to the earliest year for which there is a
2liability. If there is a credit under this subsection from more
3than one tax year that is available to offset a liability the
4earliest credit arising under this subsection shall be applied
5first.
6    If, during any taxable year ending on or after December 31,
71986, the tax imposed by subsections (c) and (d) of this
8Section for which a taxpayer has claimed a credit under this
9subsection (i) is reduced, the amount of credit for such tax
10shall also be reduced. Such reduction shall be determined by
11recomputing the credit to take into account the reduced tax
12imposed by subsections (c) and (d). If any portion of the
13reduced amount of credit has been carried to a different
14taxable year, an amended return shall be filed for such taxable
15year to reduce the amount of credit claimed.
16    (j) Training expense credit. Beginning with tax years
17ending on or after December 31, 1986 and prior to December 31,
182003, a taxpayer shall be allowed a credit against the tax
19imposed by subsections (a) and (b) under this Section for all
20amounts paid or accrued, on behalf of all persons employed by
21the taxpayer in Illinois or Illinois residents employed outside
22of Illinois by a taxpayer, for educational or vocational
23training in semi-technical or technical fields or semi-skilled
24or skilled fields, which were deducted from gross income in the
25computation of taxable income. The credit against the tax
26imposed by subsections (a) and (b) shall be 1.6% of such

 

 

09900HB0689ham001- 26 -LRB099 04511 HLH 47696 a

1training expenses. For partners, shareholders of subchapter S
2corporations, and owners of limited liability companies, if the
3liability company is treated as a partnership for purposes of
4federal and State income taxation, there shall be allowed a
5credit under this subsection (j) to be determined in accordance
6with the determination of income and distributive share of
7income under Sections 702 and 704 and subchapter S of the
8Internal Revenue Code.
9    Any credit allowed under this subsection which is unused in
10the year the credit is earned may be carried forward to each of
11the 5 taxable years following the year for which the credit is
12first computed until it is used. This credit shall be applied
13first to the earliest year for which there is a liability. If
14there is a credit under this subsection from more than one tax
15year that is available to offset a liability the earliest
16credit arising under this subsection shall be applied first. No
17carryforward credit may be claimed in any tax year ending on or
18after December 31, 2003.
19    (k) Research and development credit. For tax years ending
20after July 1, 1990 and prior to December 31, 2003, and
21beginning again for tax years ending on or after December 31,
222004, and ending prior to January 1, 2016, a taxpayer shall be
23allowed a credit against the tax imposed by subsections (a) and
24(b) of this Section for increasing research activities in this
25State. The credit allowed against the tax imposed by
26subsections (a) and (b) shall be equal to 6 1/2% of the

 

 

09900HB0689ham001- 27 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 28 -LRB099 04511 HLH 47696 a

1taxable years or until it has been fully used, whichever occurs
2first; provided that no credit earned in a tax year ending
3prior to December 31, 2003 may be carried forward to any year
4ending on or after December 31, 2003.
5    If an unused credit is carried forward to a given year from
62 or more earlier years, that credit arising in the earliest
7year will be applied first against the tax liability for the
8given year. If a tax liability for the given year still
9remains, the credit from the next earliest year will then be
10applied, and so on, until all credits have been used or no tax
11liability for the given year remains. Any remaining unused
12credit or credits then will be carried forward to the next
13following year in which a tax liability is incurred, except
14that no credit can be carried forward to a year which is more
15than 5 years after the year in which the expense for which the
16credit is given was incurred.
17    No inference shall be drawn from this amendatory Act of the
1891st General Assembly in construing this Section for taxable
19years beginning before January 1, 1999.
20    (l) Environmental Remediation Tax Credit.
21        (i) For tax years ending after December 31, 1997 and on
22    or before December 31, 2001, a taxpayer shall be allowed a
23    credit against the tax imposed by subsections (a) and (b)
24    of this Section for certain amounts paid for unreimbursed
25    eligible remediation costs, as specified in this
26    subsection. For purposes of this Section, "unreimbursed

 

 

09900HB0689ham001- 29 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 30 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 31 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 32 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 33 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 34 -LRB099 04511 HLH 47696 a

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

 

 

09900HB0689ham001- 35 -LRB099 04511 HLH 47696 a

1    chain of title for the site and provide written notice to
2    the Director of the Illinois Department of Revenue of the
3    assignor's intent to sell the remediation site and the
4    amount of the tax credit to be transferred as a portion of
5    the sale. In no event may a credit be transferred to any
6    taxpayer if the taxpayer or a related party would not be
7    eligible under the provisions of subsection (i).
8        (iii) For purposes of this Section, the term "site"
9    shall have the same meaning as under Section 58.2 of the
10    Environmental Protection Act.
11    (o) For each of taxable years during the Compassionate Use
12of Medical Cannabis Pilot Program, a surcharge is imposed on
13all taxpayers on income arising from the sale or exchange of
14capital assets, depreciable business property, real property
15used in the trade or business, and Section 197 intangibles of
16an organization registrant under the Compassionate Use of
17Medical Cannabis Pilot Program Act. The amount of the surcharge
18is equal to the amount of federal income tax liability for the
19taxable year attributable to those sales and exchanges. The
20surcharge imposed does not apply if:
21        (1) the medical cannabis cultivation center
22    registration, medical cannabis dispensary registration, or
23    the property of a registration is transferred as a result
24    of any of the following:
25            (A) bankruptcy, a receivership, or a debt
26        adjustment initiated by or against the initial

 

 

09900HB0689ham001- 36 -LRB099 04511 HLH 47696 a

1        registration or the substantial owners of the initial
2        registration;
3            (B) cancellation, revocation, or termination of
4        any registration by the Illinois Department of Public
5        Health;
6            (C) a determination by the Illinois Department of
7        Public Health that transfer of the registration is in
8        the best interests of Illinois qualifying patients as
9        defined by the Compassionate Use of Medical Cannabis
10        Pilot Program Act;
11            (D) the death of an owner of the equity interest in
12        a registrant;
13            (E) the acquisition of a controlling interest in
14        the stock or substantially all of the assets of a
15        publicly traded company;
16            (F) a transfer by a parent company to a wholly
17        owned subsidiary; or
18            (G) the transfer or sale to or by one person to
19        another person where both persons were initial owners
20        of the registration when the registration was issued;
21        or
22        (2) the cannabis cultivation center registration,
23    medical cannabis dispensary registration, or the
24    controlling interest in a registrant's property is
25    transferred in a transaction to lineal descendants in which
26    no gain or loss is recognized or as a result of a

 

 

09900HB0689ham001- 37 -LRB099 04511 HLH 47696 a

1    transaction in accordance with Section 351 of the Internal
2    Revenue Code in which no gain or loss is recognized.
3(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
4eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; 98-756,
5eff. 7-16-14.)
 
6    Section 99. Effective date. This Act takes effect upon
7becoming law.".