State of Illinois
91st General Assembly
Legislation

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[ Introduced ][ Enrolled ][ Senate Amendment 002 ]

91_SB1075eng

 
SB1075 Engrossed                               LRB9102740PTdv

 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
 
SB1075 Engrossed            -4-                LRB9102740PTdv
 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:
 
SB1075 Engrossed            -5-                LRB9102740PTdv
 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.
 
SB1075 Engrossed            -6-                LRB9102740PTdv
 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
 
SB1075 Engrossed            -7-                LRB9102740PTdv
 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
 
SB1075 Engrossed            -8-                LRB9102740PTdv
 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,
 
SB1075 Engrossed            -9-                LRB9102740PTdv
 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
 
SB1075 Engrossed            -10-               LRB9102740PTdv
 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
 
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 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
 
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 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
 
SB1075 Engrossed            -13-               LRB9102740PTdv
 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
 
SB1075 Engrossed            -14-               LRB9102740PTdv
 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.
 
SB1075 Engrossed            -15-               LRB9102740PTdv
 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
 
SB1075 Engrossed            -16-               LRB9102740PTdv
 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.   The  credit  allowed
 8    against  the  tax imposed by subsections (a) and (b) shall be
 9    equal to 6 1/2% of the qualifying expenditures for increasing
10    research activities in this State.
11        For   purposes   of    this    subsection,    "qualifying
12    expenditures"  means  the  qualifying expenditures as defined
13    for the federal credit  for  increasing  research  activities
14    which  would  be  allowable  under Section 41 of the Internal
15    Revenue  Code  and  which  are  conducted  in   this   State,
16    "qualifying  expenditures  for increasing research activities
17    in this State" means the excess  of  qualifying  expenditures
18    for  the  taxable  year  in  which  incurred  over qualifying
19    expenditures for the base  period,  "qualifying  expenditures
20    for  the  base  period"  means  the average of the qualifying
21    expenditures for each year in  the  base  period,  and  "base
22    period"  means  the 3 taxable years immediately preceding the
23    taxable year for which the determination is being made.
24        Any credit in excess of the tax liability for the taxable
25    year may be carried forward. A taxpayer may elect to have the
26    unused credit shown on its  final  completed  return  carried
27    over  as a credit against the tax liability for the following
28    5 taxable years or until it has been  fully  used,  whichever
29    occurs first.
30        If  an  unused  credit is carried forward to a given year
31    from 2 or more earlier years,  that  credit  arising  in  the
32    earliest year will be applied first against the tax liability
33    for  the  given  year.  If a tax liability for the given year
34    still remains, the credit from the next  earliest  year  will
 
SB1075 Engrossed            -17-               LRB9102740PTdv
 1    then  be applied, and so on, until all credits have been used
 2    or  no  tax  liability  for  the  given  year  remains.   Any
 3    remaining unused credit  or  credits  then  will  be  carried
 4    forward  to  the next following year in which a tax liability
 5    is incurred, except that no credit can be carried forward  to
 6    a year which is more than 5 years after the year in which the
 7    expense for which the credit is given was incurred.
 8        Unless  extended  by  law,  the  credit shall not include
 9    costs incurred after December  31,  2004,  except  for  costs
10    incurred  pursuant  to  a binding contract entered into on or
11    before December 31, 2004.
12        (l)  Environmental Remediation Tax Credit.
13             (i)  For tax  years ending after December  31,  1997
14        and  on  or before December 31, 2001, a taxpayer shall be
15        allowed a credit against the tax imposed  by  subsections
16        (a)  and (b) of this Section for certain amounts paid for
17        unreimbursed eligible remediation costs, as specified  in
18        this   subsection.    For   purposes   of  this  Section,
19        "unreimbursed eligible  remediation  costs"  means  costs
20        approved  by the Illinois Environmental Protection Agency
21        ("Agency")  under  Section  58.14  of  the  Environmental
22        Protection Act that were paid in performing environmental
23        remediation at a site for which a No Further  Remediation
24        Letter  was  issued  by  the  Agency  and  recorded under
25        Section 58.10 of the Environmental Protection Act.    The
26        credit  must  be  claimed  for  the taxable year in which
27        Agency approval of  the  eligible  remediation  costs  is
28        granted.   The credit is not available to any taxpayer if
29        the taxpayer or any related party caused  or  contributed
30        to,  in  any  material  respect,  a  release of regulated
31        substances on, in, or under the site that was  identified
32        and addressed by the remedial action pursuant to the Site
33        Remediation  Program of the Environmental Protection Act.
34        After the  Pollution  Control  Board  rules  are  adopted
 
SB1075 Engrossed            -18-               LRB9102740PTdv
 1        pursuant to the Illinois Administrative Procedure Act for
 2        the administration and enforcement of Section 58.9 of the
 3        Environmental Protection Act, determinations as to credit
 4        availability  for  purposes of this Section shall be made
 5        consistent  with  those  rules.   For  purposes  of  this
 6        Section,  "taxpayer"  includes   a   person   whose   tax
 7        attributes  the  taxpayer  has succeeded to under Section
 8        381 of the Internal  Revenue  Code  and  "related  party"
 9        includes the persons disallowed a deduction for losses by
10        paragraphs  (b),  (c),  and  (f)(1) of Section 267 of the
11        Internal Revenue  Code  by  virtue  of  being  a  related
12        taxpayer,  as  well  as  any of its partners.  The credit
13        allowed against the tax imposed by  subsections  (a)  and
14        (b)  shall  be  equal to 25% of the unreimbursed eligible
15        remediation costs in excess of $100,000 per site,  except
16        that  the  $100,000 threshold shall not apply to any site
17        contained in an enterprise  zone  as  determined  by  the
18        Department  of Commerce and Community Affairs.  The total
19        credit allowed shall not exceed $40,000 per year  with  a
20        maximum  total  of  $150,000  per site.  For partners and
21        shareholders of subchapter S corporations, there shall be
22        allowed a credit under this subsection to  be  determined
23        in  accordance  with  the  determination  of  income  and
24        distributive  share  of income under Sections 702 and 704
25        of subchapter S of the Internal Revenue Code.
26             (ii)  A credit allowed under this subsection that is
27        unused in the year the credit is earned  may  be  carried
28        forward to each of the 5 taxable years following the year
29        for  which  the  credit is first earned until it is used.
30        The term "unused credit" does not include any amounts  of
31        unreimbursed  eligible remediation costs in excess of the
32        maximum credit per site authorized under  paragraph  (i).
33        This  credit  shall be applied first to the earliest year
34        for which there is a liability.  If  there  is  a  credit
 
SB1075 Engrossed            -19-               LRB9102740PTdv
 1        under this subsection from more than one tax year that is
 2        available  to  offset  a  liability,  the earliest credit
 3        arising under this subsection shall be applied first.   A
 4        credit  allowed  under  this  subsection may be sold to a
 5        buyer as part of a sale of all or part of the remediation
 6        site for which the credit was granted.  The purchaser  of
 7        a  remediation  site  and the tax credit shall succeed to
 8        the unused credit and remaining carry-forward  period  of
 9        the  seller.  To perfect the transfer, the assignor shall
10        record the transfer in the chain of title  for  the  site
11        and  provide  written  notice  to  the  Director  of  the
12        Illinois  Department  of Revenue of the assignor's intent
13        to sell the remediation site and the amount  of  the  tax
14        credit to be transferred as a portion of the sale.  In no
15        event  may a credit be transferred to any taxpayer if the
16        taxpayer or a related party would not be  eligible  under
17        the provisions of subsection (i).
18             (iii)  For purposes of this Section, the term "site"
19        shall  have the same meaning as under Section 58.2 of the
20        Environmental Protection Act.
21        (m)  Education expense credit.
22        Beginning with tax years ending after December 31,  1999,
23    a  taxpayer  who  is  the custodian of one or more qualifying
24    pupils shall be allowed a credit against the tax  imposed  by
25    subsections  (a)  and  (b)  of  this  Section  for  qualified
26    education  expenses  incurred  on  behalf  of  the qualifying
27    pupils.  The credit  shall  be  equal  to  25%  of  qualified
28    education  expenses,  but  in  no  event may the total credit
29    under this Section claimed by a family that is the  custodian
30    of  qualifying pupils exceed $500. In no event shall a credit
31    under this subsection reduce the taxpayer's  liability  under
32    this  Act  to  less than zero. This subsection is exempt from
33    the provisions of Section 250 of this Act.
34        For purposes of this subsection;
 
SB1075 Engrossed            -20-               LRB9102740PTdv
 1        "Qualifying  pupils"  means  individuals  who   (i)   are
 2    residents of the State of Illinois, (ii) are under the age of
 3    21  at  the  close  of  the school year for which a credit is
 4    sought, and (iii) during the school year for which  a  credit
 5    is  sought  were  full-time pupils enrolled in a kindergarten
 6    through twelfth grade education program  at  any  school,  as
 7    defined in this subsection.
 8        "Qualified  education  expense" means the amount incurred
 9    on behalf of  a  qualifying  pupil  in  excess  of  $250  for
10    tuition,  book  fees, and lab fees at the school in which the
11    pupil is enrolled during the regular school year.
12        "School" means any  public  or  nonpublic  elementary  or
13    secondary school in Illinois that is in compliance with Title
14    VI  of  the  Civil Rights Act of 1964 and attendance at which
15    satisfies the requirements of  Section  26-1  of  the  School
16    Code,  except  that  nothing  shall be construed to require a
17    child to attend any particular public or nonpublic school  to
18    qualify for the credit under this Section.
19        "Custodian"  means, with respect to qualifying pupils, an
20    Illinois resident who is  a  parent,  the  parents,  a  legal
21    guardian, or the legal guardians of the qualifying pupils.
22    (Source:  P.A.  89-235,  eff.  8-4-95;  89-519, eff. 7-18-96;
23    89-591, eff.  8-1-96;  90-123,  eff.  7-21-97;  90-458,  eff.
24    8-17-97;  90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717,
25    eff. 8-7-98; 90-792, eff. 1-1-99; revised 9-16-98.)

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