State of Illinois
91st General Assembly
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91_HB1205

 
                                              LRB9102281PTpkA

 1        AN  ACT  to amend the Illinois Income Tax Act by changing
 2    Section 201.

 3        Be it enacted by the People of  the  State  of  Illinois,
 4    represented in the General Assembly:

 5        Section  5.   The  Illinois  Income Tax Act is amended by
 6    changing Section 201 as follows:

 7        (35 ILCS 5/201) (from Ch. 120, par. 2-201)
 8        Sec. 201.  Tax Imposed.
 9        (a)  In general. A tax measured by net income  is  hereby
10    imposed  on  every  individual, corporation, trust and estate
11    for each taxable year ending  after  July  31,  1969  on  the
12    privilege  of earning or receiving income in or as a resident
13    of this State. Such tax shall be in  addition  to  all  other
14    occupation or privilege taxes imposed by this State or by any
15    municipal corporation or political subdivision thereof.
16        (b)  Rates.  The  tax  imposed  by subsection (a) of this
17    Section shall be determined as follows:
18             (1)  In the case of an individual, trust or  estate,
19        for taxable years ending prior to July 1, 1989, an amount
20        equal  to  2  1/2%  of  the taxpayer's net income for the
21        taxable year.
22             (2)  In the case of an individual, trust or  estate,
23        for  taxable  years  beginning  prior to July 1, 1989 and
24        ending after June 30, 1989, an amount equal to the sum of
25        (i) 2 1/2% of the taxpayer's net income  for  the  period
26        prior to July 1, 1989, as calculated under Section 202.3,
27        and  (ii)  3% of the taxpayer's net income for the period
28        after June 30, 1989, as calculated under Section 202.3.
29             (3)  In the case of an individual, trust or  estate,
30        for  taxable  years  beginning  after  June  30, 1989, an
31        amount equal to 3% of the taxpayer's net income  for  the
 
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 1        taxable year.
 2             (4)  (Blank).
 3             (5)  (Blank).
 4             (6)  In the case of a corporation, for taxable years
 5        ending  prior  to  July 1, 1989, an amount equal to 4% of
 6        the taxpayer's net income for the taxable year.
 7             (7)  In the case of a corporation, for taxable years
 8        beginning prior to July 1, 1989 and ending after June 30,
 9        1989, an amount equal  to  the  sum  of  (i)  4%  of  the
10        taxpayer's  net  income  for  the period prior to July 1,
11        1989, as calculated under Section 202.3, and (ii) 4.8% of
12        the taxpayer's net income for the period after  June  30,
13        1989, as calculated under Section 202.3.
14             (8)  In the case of a corporation, for taxable years
15        beginning after June 30, 1989, an amount equal to 4.8% of
16        the taxpayer's net income for the taxable year.
17        (c)  Beginning   on  July  1,  1979  and  thereafter,  in
18    addition to such income tax, there is also hereby imposed the
19    Personal Property Tax Replacement Income Tax measured by  net
20    income   on   every   corporation   (including  Subchapter  S
21    corporations), partnership and trust, for each  taxable  year
22    ending  after  June  30, 1979.  Such taxes are imposed on the
23    privilege of earning or receiving income in or as a  resident
24    of  this State.  The Personal Property Tax Replacement Income
25    Tax shall be  in  addition  to  the  income  tax  imposed  by
26    subsections  (a)  and  (b) of this Section and in addition to
27    all other occupation or privilege taxes imposed by this State
28    or by any  municipal  corporation  or  political  subdivision
29    thereof.
30        (d)  Additional  Personal Property Tax Replacement Income
31    Tax Rates.  The personal property tax replacement income  tax
32    imposed by this subsection and subsection (c) of this Section
33    in  the  case  of  a  corporation,  other than a Subchapter S
34    corporation, shall be an additional amount equal to 2.85%  of
 
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 1    such  taxpayer's net income for the taxable year, except that
 2    beginning on January 1, 1981, and  thereafter,  the  rate  of
 3    2.85%  specified in this subsection shall be reduced to 2.5%,
 4    and in the case of a partnership, trust  or  a  Subchapter  S
 5    corporation  shall  be  an additional amount equal to 1.5% of
 6    such taxpayer's net income for the taxable year.
 7        (e)  Investment credit.  A taxpayer shall  be  allowed  a
 8    credit  against  the Personal Property Tax Replacement Income
 9    Tax for investment in qualified property.
10             (1)  A taxpayer shall be allowed a credit  equal  to
11        .5%  of the basis of qualified property placed in service
12        during the taxable year, provided such property is placed
13        in service on or after July  1,  1984.   There  shall  be
14        allowed an additional credit equal to .5% of the basis of
15        qualified  property  placed in service during the taxable
16        year, provided such property is placed in service  on  or
17        after  July  1,  1986, and the taxpayer's base employment
18        within Illinois has increased by  1%  or  more  over  the
19        preceding year as determined by the taxpayer's employment
20        records  filed with the Illinois Department of Employment
21        Security.  Taxpayers who are new  to  Illinois  shall  be
22        deemed  to  have met the 1% growth in base employment for
23        the first year in which they file employment records with
24        the Illinois  Department  of  Employment  Security.   The
25        provisions  added  to  this Section by Public Act 85-1200
26        (and restored by Public Act 87-895) shall be construed as
27        declaratory of existing law and not as a  new  enactment.
28        If,  in  any year, the increase in base employment within
29        Illinois over the preceding year is  less  than  1%,  the
30        additional  credit  shall  be  limited to that percentage
31        times a fraction, the numerator of which is .5%  and  the
32        denominator  of  which  is  1%, but shall not exceed .5%.
33        The investment credit shall not be allowed to the  extent
34        that  it  would  reduce a taxpayer's liability in any tax
 
                            -4-               LRB9102281PTpkA
 1        year  below  zero,  nor  may  any  credit  for  qualified
 2        property be allowed for any year other than the  year  in
 3        which the property was placed in service in Illinois. For
 4        tax years ending on or after December 31, 1987, and on or
 5        before December 31, 1988, the credit shall be allowed for
 6        the  tax year in which the property is placed in service,
 7        or, if the amount of the credit exceeds the tax liability
 8        for that year, whether it exceeds the original  liability
 9        or  the  liability  as  later amended, such excess may be
10        carried forward and applied to the tax liability of the 5
11        taxable years following the excess credit  years  if  the
12        taxpayer  (i)  makes investments which cause the creation
13        of a  minimum  of  2,000  full-time  equivalent  jobs  in
14        Illinois,   (ii)   is   located  in  an  enterprise  zone
15        established pursuant to the Illinois Enterprise Zone  Act
16        and  (iii) is certified by the Department of Commerce and
17        Community Affairs  as  complying  with  the  requirements
18        specified  in  clause  (i) and (ii) by July 1, 1986.  The
19        Department of Commerce and Community Affairs shall notify
20        the Department of  Revenue  of  all  such  certifications
21        immediately.  For  tax  years  ending  after December 31,
22        1988, the credit shall be allowed for  the  tax  year  in
23        which  the  property  is  placed  in  service, or, if the
24        amount of the credit exceeds the tax liability  for  that
25        year,  whether  it  exceeds the original liability or the
26        liability as later amended, such excess  may  be  carried
27        forward and applied to the tax liability of the 5 taxable
28        years following the excess credit years. The credit shall
29        be  applied  to  the  earliest  year for which there is a
30        liability. If there is credit from more than one tax year
31        that is available to offset a liability,  earlier  credit
32        shall be applied first.
33             (2)  The  term  "qualified  property" means property
34        which:
 
                            -5-               LRB9102281PTpkA
 1                  (A)  is  tangible,   whether   new   or   used,
 2             including  buildings  and  structural  components of
 3             buildings and signs that are real property, but  not
 4             including land or improvements to real property that
 5             are not a structural component of a building such as
 6             landscaping,   sewer   lines,  local  access  roads,
 7             fencing, parking lots, and other appurtenances;
 8                  (B)  is depreciable pursuant to Section 167  of
 9             the  Internal  Revenue  Code,  except  that  "3-year
10             property" as defined in Section 168(c)(2)(A) of that
11             Code is not eligible for the credit provided by this
12             subsection (e);
13                  (C)  is  acquired  by  purchase  as  defined in
14             Section 179(d) of the Internal Revenue Code;
15                  (D)  is used in Illinois by a taxpayer  who  is
16             primarily  engaged  in  manufacturing,  or in mining
17             coal or fluorite, or in retailing; and
18                  (E)  has not previously been used  in  Illinois
19             in  such  a  manner  and  by  such a person as would
20             qualify for the credit provided by  this  subsection
21             (e) or 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
27        shapes, new qualities, or new combinations.  For purposes
28        of  this  subsection (e) the term "mining" shall have the
29        same meaning as the term "mining" in  Section  613(c)  of
30        the   Internal   Revenue  Code.   For  purposes  of  this
31        subsection (e), the term "retailing" means  the  sale  of
32        tangible   personal  property  or  services  rendered  in
33        conjunction with the sale of tangible consumer  goods  or
34        commodities.
 
                            -6-               LRB9102281PTpkA
 1             (4)  The  basis  of  qualified property shall be the
 2        basis used to  compute  the  depreciation  deduction  for
 3        federal income tax purposes.
 4             (5)  If the basis of the property for federal income
 5        tax  depreciation purposes is increased after it has been
 6        placed in service in Illinois by the taxpayer, the amount
 7        of such increase  shall  be  deemed  property  placed  in
 8        service on the date of such increase in basis.
 9             (6)  The  term  "placed  in  service" shall have the
10        same meaning as under Section 46 of the Internal  Revenue
11        Code.
12             (7)  If during any taxable year, any property ceases
13        to  be  qualified  property  in the hands of the taxpayer
14        within 48 months after being placed in  service,  or  the
15        situs of any qualified property is moved outside Illinois
16        within  48  months  after  being  placed  in service, the
17        Personal Property Tax Replacement  Income  Tax  for  such
18        taxable  year shall be increased.  Such increase shall be
19        determined by (i) recomputing the investment credit which
20        would have been allowed for the year in which credit  for
21        such  property was originally allowed by eliminating such
22        property from such computation and, (ii) subtracting such
23        recomputed credit from the amount  of  credit  previously
24        allowed.  For  the  purposes  of  this  paragraph  (7), a
25        reduction of the basis of  qualified  property  resulting
26        from  a  redetermination  of  the purchase price shall be
27        deemed a disposition of qualified property to the  extent
28        of such reduction.
29             (8)  Unless  the  investment  credit  is extended by
30        law, the basis of qualified property  shall  not  include
31        costs  incurred after December 31, 2003, except for costs
32        incurred pursuant to a binding contract entered  into  on
33        or before December 31, 2003.
34             (9)  Each  taxable  year, a partnership may elect to
 
                            -7-               LRB9102281PTpkA
 1        pass through to its partners the  credits  to  which  the
 2        partnership is entitled under this subsection (e) for the
 3        taxable  year.  A partner may use the credit allocated to
 4        him or her under this  paragraph  only  against  the  tax
 5        imposed  in  subsections (c) and (d) of this Section.  If
 6        the partnership makes that election, those credits  shall
 7        be  allocated  among  the  partners in the partnership in
 8        accordance with the rules set forth in Section 704(b)  of
 9        the  Internal  Revenue  Code,  and  the rules promulgated
10        under that Section,  and  the  allocated  amount  of  the
11        credits shall be allowed to the partners for that taxable
12        year.   The  partnership  shall make this election on its
13        Personal Property Tax Replacement Income Tax  return  for
14        that  taxable  year.  The  election  to  pass through the
15        credits shall be irrevocable.
16        (f)  Investment credit; Enterprise Zone.
17             (1)  A taxpayer shall be allowed  a  credit  against
18        the  tax  imposed  by  subsections  (a)  and  (b) of this
19        Section for investment in  qualified  property  which  is
20        placed  in service in an Enterprise Zone created pursuant
21        to the Illinois Enterprise Zone Act. For partners and for
22        shareholders of Subchapter S corporations, there shall be
23        allowed  a  credit  under  this  subsection  (f)  to   be
24        determined in accordance with the determination of income
25        and  distributive  share of income under Sections 702 and
26        704 and Subchapter S of the Internal  Revenue  Code.  The
27        credit  shall be .5% of the basis for such property.  The
28        credit shall be available only in  the  taxable  year  in
29        which the property is placed in service in the Enterprise
30        Zone and shall not be allowed to the extent that it would
31        reduce  a  taxpayer's  liability  for  the tax imposed by
32        subsections (a) and (b) of this Section  to  below  zero.
33        For  tax  years ending on or after December 31, 1985, the
34        credit shall be allowed for the tax  year  in  which  the
 
                            -8-               LRB9102281PTpkA
 1        property  is  placed in service, or, if the amount of the
 2        credit exceeds the tax liability for that  year,  whether
 3        it  exceeds  the  original  liability or the liability as
 4        later amended, such excess may  be  carried  forward  and
 5        applied  to  the  tax  liability  of  the 5 taxable years
 6        following the excess credit year.  The  credit  shall  be
 7        applied  to  the  earliest  year  for  which  there  is a
 8        liability. If there is credit from more than one tax year
 9        that is available  to  offset  a  liability,  the  credit
10        accruing first in time shall be applied first.
11             (2)  The  term  qualified  property  means  property
12        which:
13                  (A)  is   tangible,   whether   new   or  used,
14             including buildings  and  structural  components  of
15             buildings;
16                  (B)  is  depreciable pursuant to Section 167 of
17             the  Internal  Revenue  Code,  except  that  "3-year
18             property" as defined in Section 168(c)(2)(A) of that
19             Code is not eligible for the credit provided by this
20             subsection (f);
21                  (C)  is acquired  by  purchase  as  defined  in
22             Section 179(d) of the Internal Revenue Code;
23                  (D)  is  used  in  the  Enterprise  Zone by the
24             taxpayer; and
25                  (E)  has not been previously used  in  Illinois
26             in  such  a  manner  and  by  such a person as would
27             qualify for the credit provided by  this  subsection
28             (f) or subsection (e).
29             (3)  The  basis  of  qualified property shall be the
30        basis used to  compute  the  depreciation  deduction  for
31        federal income tax purposes.
32             (4)  If the basis of the property for federal income
33        tax  depreciation purposes is increased after it has been
34        placed in service in the Enterprise Zone by the taxpayer,
 
                            -9-               LRB9102281PTpkA
 1        the amount of such  increase  shall  be  deemed  property
 2        placed in service on the date of such increase in basis.
 3             (5)  The  term  "placed  in  service" shall have the
 4        same meaning as under Section 46 of the Internal  Revenue
 5        Code.
 6             (6)  If during any taxable year, any property ceases
 7        to  be  qualified  property  in the hands of the taxpayer
 8        within 48 months after being placed in  service,  or  the
 9        situs  of  any  qualified  property  is moved outside the
10        Enterprise Zone within 48 months after  being  placed  in
11        service, the tax imposed under subsections (a) and (b) of
12        this  Section  for  such taxable year shall be increased.
13        Such increase shall be determined by (i) recomputing  the
14        investment  credit  which would have been allowed for the
15        year in which credit for  such  property  was  originally
16        allowed   by   eliminating   such   property   from  such
17        computation, and (ii) subtracting such recomputed  credit
18        from  the  amount  of credit previously allowed.  For the
19        purposes of this paragraph (6), a reduction of the  basis
20        of qualified property resulting from a redetermination of
21        the  purchase  price  shall  be  deemed  a disposition of
22        qualified property to the extent of such reduction.
23             (g)  Jobs Tax Credit; Enterprise  Zone  and  Foreign
24    Trade Zone or Sub-Zone.
25             (1)  A taxpayer conducting a trade or business in an
26        enterprise  zone  or a High Impact Business designated by
27        the  Department  of  Commerce   and   Community   Affairs
28        conducting  a trade or business in a federally designated
29        Foreign Trade Zone or Sub-Zone shall be allowed a  credit
30        against  the  tax  imposed  by subsections (a) and (b) of
31        this Section in the amount of $500 per eligible  employee
32        hired to work in the zone during the taxable year.
33             (2)  To qualify for the credit:
34                  (A)  the  taxpayer must hire 5 or more eligible
 
                            -10-              LRB9102281PTpkA
 1             employees to work in an enterprise zone or federally
 2             designated Foreign Trade Zone or Sub-Zone during the
 3             taxable year;
 4                  (B)  the taxpayer's total employment within the
 5             enterprise  zone  or  federally  designated  Foreign
 6             Trade Zone or Sub-Zone must increase by  5  or  more
 7             full-time  employees  beyond  the  total employed in
 8             that zone at the end of the previous  tax  year  for
 9             which  a  jobs  tax  credit  under  this Section was
10             taken, or beyond the total employed by the  taxpayer
11             as of December 31, 1985, whichever is later; and
12                  (C)  the  eligible  employees  must be employed
13             180 consecutive days in order to be deemed hired for
14             purposes of this subsection.
15             (3)  An "eligible employee" means  an  employee  who
16        is:
17                  (A)  Certified  by  the  Department of Commerce
18             and Community Affairs  as  "eligible  for  services"
19             pursuant  to  regulations  promulgated in accordance
20             with Title II of the Job Training  Partnership  Act,
21             Training Services for the Disadvantaged or Title III
22             of  the Job Training Partnership Act, Employment and
23             Training Assistance for Dislocated Workers Program.
24                  (B)  Hired  after  the   enterprise   zone   or
25             federally  designated Foreign Trade Zone or Sub-Zone
26             was designated or the trade or business was  located
27             in that zone, whichever is later.
28                  (C)  Employed in the enterprise zone or Foreign
29             Trade  Zone  or Sub-Zone. An employee is employed in
30             an enterprise zone or federally  designated  Foreign
31             Trade  Zone or Sub-Zone if his services are rendered
32             there or it  is  the  base  of  operations  for  the
33             services performed.
34                  (D)  A  full-time  employee  working 30 or more
 
                            -11-              LRB9102281PTpkA
 1             hours per week.
 2             (4)  For tax years ending on or after  December  31,
 3        1985  and prior to December 31, 1988, the credit shall be
 4        allowed for the tax year in which the eligible  employees
 5        are hired.  For tax years ending on or after December 31,
 6        1988,  the  credit  shall  be  allowed  for  the tax year
 7        immediately following the tax year in which the  eligible
 8        employees are hired.  If the amount of the credit exceeds
 9        the  tax  liability for that year, whether it exceeds the
10        original liability or the  liability  as  later  amended,
11        such excess may be carried forward and applied to the tax
12        liability  of  the  5  taxable years following the excess
13        credit year.  The credit shall be applied to the earliest
14        year for which there is a liability. If there  is  credit
15        from more than one tax year that is available to offset a
16        liability, earlier credit shall be applied first.
17             (5)  The Department of Revenue shall promulgate such
18        rules and regulations as may be deemed necessary to carry
19        out the purposes of this subsection (g).
20             (6)  The  credit  shall  be  available  for eligible
21        employees hired on or after January 1, 1986.
22             (h)  Investment credit; High Impact Business.
23             (1)  Subject to subsection (b) of Section 5.5 of the
24        Illinois Enterprise Zone Act, a taxpayer shall be allowed
25        a credit against the tax imposed by subsections  (a)  and
26        (b)  of this Section for investment in qualified property
27        which is placed in service by a  Department  of  Commerce
28        and  Community  Affairs  designated High Impact Business.
29        The credit shall be .5% of the basis for  such  property.
30        The  credit  shall  not  be  available  until the minimum
31        investments in qualified property set  forth  in  Section
32        5.5  of  the  Illinois  Enterprise  Zone  Act  have  been
33        satisfied  and shall not be allowed to the extent that it
34        would reduce a taxpayer's liability for the  tax  imposed
 
                            -12-              LRB9102281PTpkA
 1        by subsections (a) and (b) of this Section to below zero.
 2        The  credit  applicable to such minimum investments shall
 3        be taken in  the  taxable  year  in  which  such  minimum
 4        investments   have   been   completed.   The  credit  for
 5        additional investments beyond the minimum investment by a
 6        designated high impact business shall be  available  only
 7        in  the  taxable  year in which the property is placed in
 8        service and shall not be allowed to the  extent  that  it
 9        would  reduce  a taxpayer's liability for the tax imposed
10        by subsections (a) and (b) of this Section to below zero.
11        For tax years ending on or after December 31,  1987,  the
12        credit  shall  be  allowed  for the tax year in which the
13        property is placed in service, or, if the amount  of  the
14        credit  exceeds  the tax liability for that year, whether
15        it exceeds the original liability  or  the  liability  as
16        later  amended,  such  excess  may be carried forward and
17        applied to the tax  liability  of  the  5  taxable  years
18        following  the  excess  credit year.  The credit shall be
19        applied to  the  earliest  year  for  which  there  is  a
20        liability.   If  there  is  credit from more than one tax
21        year that is available to offset a liability, the  credit
22        accruing first in time shall be applied first.
23             Changes  made  in  this subdivision (h)(1) by Public
24        Act 88-670 restore changes made by Public Act 85-1182 and
25        reflect existing law.
26             (2)  The  term  qualified  property  means  property
27        which:
28                  (A)  is  tangible,   whether   new   or   used,
29             including  buildings  and  structural  components of
30             buildings;
31                  (B)  is depreciable pursuant to Section 167  of
32             the  Internal  Revenue  Code,  except  that  "3-year
33             property" as defined in Section 168(c)(2)(A) of that
34             Code is not eligible for the credit provided by this
 
                            -13-              LRB9102281PTpkA
 1             subsection (h);
 2                  (C)  is  acquired  by  purchase  as  defined in
 3             Section 179(d) of the Internal Revenue Code; and
 4                  (D)  is not eligible for  the  Enterprise  Zone
 5             Investment Credit provided by subsection (f) of this
 6             Section.
 7             (3)  The  basis  of  qualified property shall be the
 8        basis used to  compute  the  depreciation  deduction  for
 9        federal income tax purposes.
10             (4)  If the basis of the property for federal income
11        tax  depreciation purposes is increased after it has been
12        placed in service in a federally designated Foreign Trade
13        Zone or Sub-Zone located in Illinois by the taxpayer, the
14        amount of such increase shall be deemed  property  placed
15        in service on the date of such increase in basis.
16             (5)  The  term  "placed  in  service" shall have the
17        same meaning as under Section 46 of the Internal  Revenue
18        Code.
19             (6)  If  during any taxable year ending on or before
20        December 31, 1996, any property ceases  to  be  qualified
21        property  in  the  hands of the taxpayer within 48 months
22        after being placed  in  service,  or  the  situs  of  any
23        qualified  property  is  moved outside Illinois within 48
24        months after being placed in  service,  the  tax  imposed
25        under  subsections  (a)  and (b) of this Section for such
26        taxable year shall be increased.  Such increase shall  be
27        determined by (i) recomputing the investment credit which
28        would  have been allowed for the year in which credit for
29        such property was originally allowed by eliminating  such
30        property from such computation, and (ii) subtracting such
31        recomputed  credit  from  the amount of credit previously
32        allowed.  For the  purposes  of  this  paragraph  (6),  a
33        reduction  of  the  basis of qualified property resulting
34        from a redetermination of the  purchase  price  shall  be
 
                            -14-              LRB9102281PTpkA
 1        deemed  a disposition of qualified property to the extent
 2        of such reduction.
 3             (7)  Beginning with tax years ending after  December
 4        31,  1996,  if  a taxpayer qualifies for the credit under
 5        this  subsection  (h)  and  thereby  is  granted  a   tax
 6        abatement  and the taxpayer relocates its entire facility
 7        in violation of the explicit  terms  and  length  of  the
 8        contract  under  Section 18-183 of the Property Tax Code,
 9        the tax imposed under subsections (a)  and  (b)  of  this
10        Section  shall be increased for the taxable year in which
11        the taxpayer relocated its facility by an amount equal to
12        the amount of credit received by the taxpayer under  this
13        subsection (h).
14        (i)  A credit shall be allowed against the tax imposed by
15    subsections  (a)  and (b) of this Section for the tax imposed
16    by subsections (c) and (d)  of  this  Section.   This  credit
17    shall   be   computed  by  multiplying  the  tax  imposed  by
18    subsections (c) and (d) of this Section by  a  fraction,  the
19    numerator  of  which is base income allocable to Illinois and
20    the denominator of which is Illinois base income, and further
21    multiplying  the  product  by  the  tax   rate   imposed   by
22    subsections (a) and (b) of this Section.
23        Any  credit  earned  on  or after December 31, 1986 under
24    this subsection which is unused in the  year  the  credit  is
25    computed  because  it  exceeds  the  tax liability imposed by
26    subsections (a) and (b) for that year (whether it exceeds the
27    original liability or the liability as later amended) may  be
28    carried  forward  and applied to the tax liability imposed by
29    subsections (a) and (b) of the 5 taxable years following  the
30    excess  credit  year.   This credit shall be applied first to
31    the earliest year for which there is a liability.   If  there
32    is a credit under this subsection from more than one tax year
33    that  is  available to offset a liability the earliest credit
34    arising under this subsection shall be applied first.
 
                            -15-              LRB9102281PTpkA
 1        If, during any taxable year ending on or  after  December
 2    31,  1986, the tax imposed by subsections (c) and (d) of this
 3    Section for which a taxpayer has claimed a credit under  this
 4    subsection  (i) is reduced, the amount of credit for such tax
 5    shall also be reduced.  Such reduction shall be determined by
 6    recomputing the credit to take into account the  reduced  tax
 7    imposed  by  subsection  (c)  and (d).  If any portion of the
 8    reduced amount of credit has  been  carried  to  a  different
 9    taxable  year,  an  amended  return  shall  be filed for such
10    taxable year to reduce the amount of credit claimed.
11        (j)  Training expense credit.  Beginning with  tax  years
12    ending  on  or  after  December 31, 1986, a taxpayer shall be
13    allowed a credit against the tax imposed  by  subsection  (a)
14    and  (b)  under this Section for all amounts paid or accrued,
15    on behalf of all persons employed by the taxpayer in Illinois
16    or Illinois residents  employed  outside  of  Illinois  by  a
17    taxpayer,   for   educational   or   vocational  training  in
18    semi-technical or technical fields or semi-skilled or skilled
19    fields,  which  were  deducted  from  gross  income  in   the
20    computation  of  taxable  income.  The credit against the tax
21    imposed by subsections (a) and (b)  shall  be  1.6%  of  such
22    training  expenses.   For  partners  and  for shareholders of
23    subchapter S corporations, there shall be  allowed  a  credit
24    under this subsection (j) to be determined in accordance with
25    the  determination of income and distributive share of income
26    under Sections 702 and 704 and subchapter S of  the  Internal
27    Revenue Code.
28        Any  credit allowed under this subsection which is unused
29    in the year the credit is earned may be  carried  forward  to
30    each  of the 5 taxable years following the year for which the
31    credit is first computed until it is used.  This credit shall
32    be applied first to the earliest year for which  there  is  a
33    liability.   If  there is a credit under this subsection from
34    more than  one  tax  year  that  is  available  to  offset  a
 
                            -16-              LRB9102281PTpkA
 1    liability  the  earliest credit arising under this subsection
 2    shall be applied first.
 3        (k)  Research and development credit.
 4        Beginning with tax years ending after  July  1,  1990,  a
 5    taxpayer shall be allowed a credit against the tax imposed by
 6    subsections  (a)  and  (b)  of  this  Section  for increasing
 7    research activities in this State.  For tax  years  beginning
 8    on  or  after  January 1, 1999, for partners, shareholders of
 9    Subchapter S corporations, and owners  of  limited  liability
10    companies  if  the  limited liability company is treated as a
11    partnership for purposes of Illinois income  taxation,  there
12    shall  be  allowed  a  credit under this subsection (k) to be
13    determined in accordance with the determination of income and
14    distributive share of items of income under Sections 702  and
15    704  and  Subchapter  S  of  the  Internal Revenue Code.  The
16    credit may be  applied  against  the  tax  liability  of  the
17    partner,  shareholder, or owner under subsections (a) and (b)
18    of this Section. The credit allowed against the  tax  imposed
19    by  subsections  (a)  and (b) shall be equal to 6 1/2% of the
20    qualifying expenditures for increasing research activities in
21    this State.
22        For   purposes   of    this    subsection,    "qualifying
23    expenditures"  means  the  qualifying expenditures as defined
24    for the federal credit  for  increasing  research  activities
25    which  would  be  allowable  under Section 41 of the Internal
26    Revenue  Code  and  which  are  conducted  in   this   State,
27    "qualifying  expenditures  for increasing research activities
28    in this State" means the excess  of  qualifying  expenditures
29    for  the  taxable  year  in  which  incurred  over qualifying
30    expenditures for the base  period,  "qualifying  expenditures
31    for  the  base  period"  means  the average of the qualifying
32    expenditures for each year in  the  base  period,  and  "base
33    period"  means  the 3 taxable years immediately preceding the
34    taxable year for which the determination is being made.
 
                            -17-              LRB9102281PTpkA
 1        Any credit in excess of the tax liability for the taxable
 2    year may be carried forward. A taxpayer may elect to have the
 3    unused credit shown on its  final  completed  return  carried
 4    over  as a credit against the tax liability for the following
 5    5 taxable years or until it has been  fully  used,  whichever
 6    occurs first.
 7        If  an  unused  credit is carried forward to a given year
 8    from 2 or more earlier years,  that  credit  arising  in  the
 9    earliest year will be applied first against the tax liability
10    for  the  given  year.  If a tax liability for the given year
11    still remains, the credit from the next  earliest  year  will
12    then  be applied, and so on, until all credits have been used
13    or  no  tax  liability  for  the  given  year  remains.   Any
14    remaining unused credit  or  credits  then  will  be  carried
15    forward  to  the next following year in which a tax liability
16    is incurred, except that no credit can be carried forward  to
17    a year which is more than 5 years after the year in which the
18    expense for which the credit is given was incurred.
19        Unless  extended  by  law,  the  credit shall not include
20    costs incurred after December  31,  2004,  except  for  costs
21    incurred  pursuant  to  a binding contract entered into on or
22    before December 31, 2004.
23        No inference shall be drawn from this Amendatory  Act  of
24    the  91st  General  Assembly  in  construing this Section for
25    taxable years beginning before January 1, 1999.
26        (l)  Environmental Remediation Tax Credit.
27             (i)  For tax  years ending after December  31,  1997
28        and  on  or before December 31, 2001, a taxpayer shall be
29        allowed a credit against the tax imposed  by  subsections
30        (a)  and (b) of this Section for certain amounts paid for
31        unreimbursed eligible remediation costs, as specified  in
32        this   subsection.    For   purposes   of  this  Section,
33        "unreimbursed eligible  remediation  costs"  means  costs
34        approved  by the Illinois Environmental Protection Agency
 
                            -18-              LRB9102281PTpkA
 1        ("Agency")  under  Section  58.14  of  the  Environmental
 2        Protection Act that were paid in performing environmental
 3        remediation at a site for which a No Further  Remediation
 4        Letter  was  issued  by  the  Agency  and  recorded under
 5        Section 58.10 of the Environmental Protection Act.    The
 6        credit  must  be  claimed  for  the taxable year in which
 7        Agency approval of  the  eligible  remediation  costs  is
 8        granted.   The credit is not available to any taxpayer if
 9        the taxpayer or any related party caused  or  contributed
10        to,  in  any  material  respect,  a  release of regulated
11        substances on, in, or under the site that was  identified
12        and addressed by the remedial action pursuant to the Site
13        Remediation  Program of the Environmental Protection Act.
14        After the  Pollution  Control  Board  rules  are  adopted
15        pursuant to the Illinois Administrative Procedure Act for
16        the administration and enforcement of Section 58.9 of the
17        Environmental Protection Act, determinations as to credit
18        availability  for  purposes of this Section shall be made
19        consistent  with  those  rules.   For  purposes  of  this
20        Section,  "taxpayer"  includes   a   person   whose   tax
21        attributes  the  taxpayer  has succeeded to under Section
22        381 of the Internal  Revenue  Code  and  "related  party"
23        includes the persons disallowed a deduction for losses by
24        paragraphs  (b),  (c),  and  (f)(1) of Section 267 of the
25        Internal Revenue  Code  by  virtue  of  being  a  related
26        taxpayer,  as  well  as  any of its partners.  The credit
27        allowed against the tax imposed by  subsections  (a)  and
28        (b)  shall  be  equal to 25% of the unreimbursed eligible
29        remediation costs in excess of $100,000 per site,  except
30        that  the  $100,000 threshold shall not apply to any site
31        contained in an enterprise  zone  as  determined  by  the
32        Department  of Commerce and Community Affairs.  The total
33        credit allowed shall not exceed $40,000 per year  with  a
34        maximum  total  of  $150,000  per site.  For partners and
 
                            -19-              LRB9102281PTpkA
 1        shareholders of subchapter S corporations, there shall be
 2        allowed a credit under this subsection to  be  determined
 3        in  accordance  with  the  determination  of  income  and
 4        distributive  share  of income under Sections 702 and 704
 5        of subchapter S of the Internal Revenue Code.
 6             (ii)  A credit allowed under this subsection that is
 7        unused in the year the credit is earned  may  be  carried
 8        forward to each of the 5 taxable years following the year
 9        for  which  the  credit is first earned until it is used.
10        The term "unused credit" does not include any amounts  of
11        unreimbursed  eligible remediation costs in excess of the
12        maximum credit per site authorized under  paragraph  (i).
13        This  credit  shall be applied first to the earliest year
14        for which there is a liability.  If  there  is  a  credit
15        under this subsection from more than one tax year that is
16        available  to  offset  a  liability,  the earliest credit
17        arising under this subsection shall be applied first.   A
18        credit  allowed  under  this  subsection may be sold to a
19        buyer as part of a sale of all or part of the remediation
20        site for which the credit was granted.  The purchaser  of
21        a  remediation  site  and the tax credit shall succeed to
22        the unused credit and remaining carry-forward  period  of
23        the  seller.  To perfect the transfer, the assignor shall
24        record the transfer in the chain of title  for  the  site
25        and  provide  written  notice  to  the  Director  of  the
26        Illinois  Department  of Revenue of the assignor's intent
27        to sell the remediation site and the amount  of  the  tax
28        credit to be transferred as a portion of the sale.  In no
29        event  may a credit be transferred to any taxpayer if the
30        taxpayer or a related party would not be  eligible  under
31        the provisions of subsection (i).
32             (iii)  For purposes of this Section, the term "site"
33        shall  have the same meaning as under Section 58.2 of the
34        Environmental Protection Act.
 
                            -20-              LRB9102281PTpkA
 1    (Source: P.A. 89-235,  eff.  8-4-95;  89-519,  eff.  7-18-96;
 2    89-591,  eff.  8-1-96;  90-123,  eff.  7-21-97;  90-458, eff.
 3    8-17-97; 90-605, eff. 6-30-98; 90-655, eff. 7-30-98;  90-717,
 4    eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)

 5        Section  99.  Effective date.  This Act takes effect upon
 6    becoming law.

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