101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB2566

 

Introduced , by Rep. Anne Stava-Murray

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201.1 new
35 ILCS 5/901  from Ch. 120, par. 9-901

    Amends the Illinois Income Tax Act. Provides that in addition to any tax that may be imposed under Section 201, income from passive investments is subject to an annual surcharge of 0.5%, where the total dollar value of passive investments producing the income equals $2,000,000 or more. Provides that all revenue realized from these provisions shall be deposited into the Common School Fund. Defines "passive activity income".


LRB101 10618 HLH 55724 b

 

 

A BILL FOR

 

HB2566LRB101 10618 HLH 55724 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 901 and by adding Section 201.1 as follows:
 
6    (35 ILCS 5/201.1 new)
7    Sec. 201.1. Passive income surcharge.
8    (a) In addition to any tax that may be imposed under
9Section 201, income from passive investments is subject to an
10annual surcharge of 0.5%, where the total dollar value of
11passive investments producing the income equals $2,000,000 or
12more.
13    (b) For purposes of this Section, "income from passive
14investments" means income from investments, dividends,
15interest, and capital gains and includes securities, bonds,
16mutual funds, investment trusts, and other investments not
17involving regular business activity, together with royalties
18received from property held for investment. "Income from
19passive investments" does not include income earned through
20regular business activity.
 
21    (35 ILCS 5/901)  (from Ch. 120, par. 9-901)
22    Sec. 901. Collection authority.

 

 

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1    (a) In general. The Department shall collect the taxes
2imposed by this Act. The Department shall collect certified
3past due child support amounts under Section 2505-650 of the
4Department of Revenue Law of the Civil Administrative Code of
5Illinois. Except as provided in subsections (b), (c), (e), (f),
6(g), and (h) of this Section, money collected pursuant to
7subsections (a) and (b) of Section 201 of this Act shall be
8paid into the General Revenue Fund in the State treasury; money
9collected pursuant to subsections (c) and (d) of Section 201 of
10this Act shall be paid into the Personal Property Tax
11Replacement Fund, a special fund in the State Treasury; and
12money collected under Section 2505-650 of the Department of
13Revenue Law of the Civil Administrative Code of Illinois shall
14be paid into the Child Support Enforcement Trust Fund, a
15special fund outside the State Treasury, or to the State
16Disbursement Unit established under Section 10-26 of the
17Illinois Public Aid Code, as directed by the Department of
18Healthcare and Family Services.
19    (b) Local Government Distributive Fund. Beginning August
201, 1969, and continuing through June 30, 1994, the Treasurer
21shall transfer each month from the General Revenue Fund to a
22special fund in the State treasury, to be known as the "Local
23Government Distributive Fund", an amount equal to 1/12 of the
24net revenue realized from the tax imposed by subsections (a)
25and (b) of Section 201 of this Act during the preceding month.
26Beginning July 1, 1994, and continuing through June 30, 1995,

 

 

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1the Treasurer shall transfer each month from the General
2Revenue Fund to the Local Government Distributive Fund an
3amount equal to 1/11 of the net revenue realized from the tax
4imposed by subsections (a) and (b) of Section 201 of this Act
5during the preceding month. Beginning July 1, 1995 and
6continuing through January 31, 2011, the Treasurer shall
7transfer each month from the General Revenue Fund to the Local
8Government Distributive Fund an amount equal to the net of (i)
91/10 of the net revenue realized from the tax imposed by
10subsections (a) and (b) of Section 201 of the Illinois Income
11Tax Act during the preceding month (ii) minus, beginning July
121, 2003 and ending June 30, 2004, $6,666,666, and beginning
13July 1, 2004, zero. Beginning February 1, 2011, and continuing
14through January 31, 2015, the Treasurer shall transfer each
15month from the General Revenue Fund to the Local Government
16Distributive Fund an amount equal to the sum of (i) 6% (10% of
17the ratio of the 3% individual income tax rate prior to 2011 to
18the 5% individual income tax rate after 2010) of the net
19revenue realized from the tax imposed by subsections (a) and
20(b) of Section 201 of this Act upon individuals, trusts, and
21estates during the preceding month and (ii) 6.86% (10% of the
22ratio of the 4.8% corporate income tax rate prior to 2011 to
23the 7% corporate income tax rate after 2010) of the net revenue
24realized from the tax imposed by subsections (a) and (b) of
25Section 201 of this Act upon corporations during the preceding
26month. Beginning February 1, 2015 and continuing through July

 

 

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131, 2017, the Treasurer shall transfer each month from the
2General Revenue Fund to the Local Government Distributive Fund
3an amount equal to the sum of (i) 8% (10% of the ratio of the 3%
4individual income tax rate prior to 2011 to the 3.75%
5individual income tax rate after 2014) of the net revenue
6realized from the tax imposed by subsections (a) and (b) of
7Section 201 of this Act upon individuals, trusts, and estates
8during the preceding month and (ii) 9.14% (10% of the ratio of
9the 4.8% corporate income tax rate prior to 2011 to the 5.25%
10corporate income tax rate after 2014) of the net revenue
11realized from the tax imposed by subsections (a) and (b) of
12Section 201 of this Act upon corporations during the preceding
13month. Beginning August 1, 2017, the Treasurer shall transfer
14each month from the General Revenue Fund to the Local
15Government Distributive Fund an amount equal to the sum of (i)
166.06% (10% of the ratio of the 3% individual income tax rate
17prior to 2011 to the 4.95% individual income tax rate after
18July 1, 2017) of the net revenue realized from the tax imposed
19by subsections (a) and (b) of Section 201 of this Act upon
20individuals, trusts, and estates during the preceding month and
21(ii) 6.85% (10% of the ratio of the 4.8% corporate income tax
22rate prior to 2011 to the 7% corporate income tax rate after
23July 1, 2017) of the net revenue realized from the tax imposed
24by subsections (a) and (b) of Section 201 of this Act upon
25corporations during the preceding month. Net revenue realized
26for a month shall be defined as the revenue from the tax

 

 

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1imposed by subsections (a) and (b) of Section 201 of this Act
2which is deposited in the General Revenue Fund, the Education
3Assistance Fund, the Income Tax Surcharge Local Government
4Distributive Fund, the Fund for the Advancement of Education,
5and the Commitment to Human Services Fund during the month
6minus the amount paid out of the General Revenue Fund in State
7warrants during that same month as refunds to taxpayers for
8overpayment of liability under the tax imposed by subsections
9(a) and (b) of Section 201 of this Act.
10    Notwithstanding any provision of law to the contrary,
11beginning on July 6, 2017 (the effective date of Public Act
12100-23), those amounts required under this subsection (b) to be
13transferred by the Treasurer into the Local Government
14Distributive Fund from the General Revenue Fund shall be
15directly deposited into the Local Government Distributive Fund
16as the revenue is realized from the tax imposed by subsections
17(a) and (b) of Section 201 of this Act.
18    For State fiscal year 2018 only, notwithstanding any
19provision of law to the contrary, the total amount of revenue
20and deposits under this Section attributable to revenues
21realized during State fiscal year 2018 shall be reduced by 10%.
22    For State fiscal year 2019 only, notwithstanding any
23provision of law to the contrary, the total amount of revenue
24and deposits under this Section attributable to revenues
25realized during State fiscal year 2019 shall be reduced by 5%.
26    (c) Deposits Into Income Tax Refund Fund.

 

 

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1        (1) Beginning on January 1, 1989 and thereafter, the
2    Department shall deposit a percentage of the amounts
3    collected pursuant to subsections (a) and (b)(1), (2), and
4    (3) of Section 201 of this Act into a fund in the State
5    treasury known as the Income Tax Refund Fund. The
6    Department shall deposit 6% of such amounts during the
7    period beginning January 1, 1989 and ending on June 30,
8    1989. Beginning with State fiscal year 1990 and for each
9    fiscal year thereafter, the percentage deposited into the
10    Income Tax Refund Fund during a fiscal year shall be the
11    Annual Percentage. For fiscal years 1999 through 2001, the
12    Annual Percentage shall be 7.1%. For fiscal year 2003, the
13    Annual Percentage shall be 8%. For fiscal year 2004, the
14    Annual Percentage shall be 11.7%. Upon the effective date
15    of Public Act 93-839 (July 30, 2004), the Annual Percentage
16    shall be 10% for fiscal year 2005. For fiscal year 2006,
17    the Annual Percentage shall be 9.75%. For fiscal year 2007,
18    the Annual Percentage shall be 9.75%. For fiscal year 2008,
19    the Annual Percentage shall be 7.75%. For fiscal year 2009,
20    the Annual Percentage shall be 9.75%. For fiscal year 2010,
21    the Annual Percentage shall be 9.75%. For fiscal year 2011,
22    the Annual Percentage shall be 8.75%. For fiscal year 2012,
23    the Annual Percentage shall be 8.75%. For fiscal year 2013,
24    the Annual Percentage shall be 9.75%. For fiscal year 2014,
25    the Annual Percentage shall be 9.5%. For fiscal year 2015,
26    the Annual Percentage shall be 10%. For fiscal year 2018,

 

 

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1    the Annual Percentage shall be 9.8%. For fiscal year 2019,
2    the Annual Percentage shall be 9.7%. For all other fiscal
3    years, the Annual Percentage shall be calculated as a
4    fraction, the numerator of which shall be the amount of
5    refunds approved for payment by the Department during the
6    preceding fiscal year as a result of overpayment of tax
7    liability under subsections (a) and (b)(1), (2), and (3) of
8    Section 201 of this Act plus the amount of such refunds
9    remaining approved but unpaid at the end of the preceding
10    fiscal year, minus the amounts transferred into the Income
11    Tax Refund Fund from the Tobacco Settlement Recovery Fund,
12    and the denominator of which shall be the amounts which
13    will be collected pursuant to subsections (a) and (b)(1),
14    (2), and (3) of Section 201 of this Act during the
15    preceding fiscal year; except that in State fiscal year
16    2002, the Annual Percentage shall in no event exceed 7.6%.
17    The Director of Revenue shall certify the Annual Percentage
18    to the Comptroller on the last business day of the fiscal
19    year immediately preceding the fiscal year for which it is
20    to be effective.
21        (2) Beginning on January 1, 1989 and thereafter, the
22    Department shall deposit a percentage of the amounts
23    collected pursuant to subsections (a) and (b)(6), (7), and
24    (8), (c) and (d) of Section 201 of this Act into a fund in
25    the State treasury known as the Income Tax Refund Fund. The
26    Department shall deposit 18% of such amounts during the

 

 

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1    period beginning January 1, 1989 and ending on June 30,
2    1989. Beginning with State fiscal year 1990 and for each
3    fiscal year thereafter, the percentage deposited into the
4    Income Tax Refund Fund during a fiscal year shall be the
5    Annual Percentage. For fiscal years 1999, 2000, and 2001,
6    the Annual Percentage shall be 19%. For fiscal year 2003,
7    the Annual Percentage shall be 27%. For fiscal year 2004,
8    the Annual Percentage shall be 32%. Upon the effective date
9    of Public Act 93-839 (July 30, 2004), the Annual Percentage
10    shall be 24% for fiscal year 2005. For fiscal year 2006,
11    the Annual Percentage shall be 20%. For fiscal year 2007,
12    the Annual Percentage shall be 17.5%. For fiscal year 2008,
13    the Annual Percentage shall be 15.5%. For fiscal year 2009,
14    the Annual Percentage shall be 17.5%. For fiscal year 2010,
15    the Annual Percentage shall be 17.5%. For fiscal year 2011,
16    the Annual Percentage shall be 17.5%. For fiscal year 2012,
17    the Annual Percentage shall be 17.5%. For fiscal year 2013,
18    the Annual Percentage shall be 14%. For fiscal year 2014,
19    the Annual Percentage shall be 13.4%. For fiscal year 2015,
20    the Annual Percentage shall be 14%. For fiscal year 2018,
21    the Annual Percentage shall be 17.5%. For fiscal year 2019,
22    the Annual Percentage shall be 15.5%. For all other fiscal
23    years, the Annual Percentage shall be calculated as a
24    fraction, the numerator of which shall be the amount of
25    refunds approved for payment by the Department during the
26    preceding fiscal year as a result of overpayment of tax

 

 

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1    liability under subsections (a) and (b)(6), (7), and (8),
2    (c) and (d) of Section 201 of this Act plus the amount of
3    such refunds remaining approved but unpaid at the end of
4    the preceding fiscal year, and the denominator of which
5    shall be the amounts which will be collected pursuant to
6    subsections (a) and (b)(6), (7), and (8), (c) and (d) of
7    Section 201 of this Act during the preceding fiscal year;
8    except that in State fiscal year 2002, the Annual
9    Percentage shall in no event exceed 23%. The Director of
10    Revenue shall certify the Annual Percentage to the
11    Comptroller on the last business day of the fiscal year
12    immediately preceding the fiscal year for which it is to be
13    effective.
14        (3) The Comptroller shall order transferred and the
15    Treasurer shall transfer from the Tobacco Settlement
16    Recovery Fund to the Income Tax Refund Fund (i) $35,000,000
17    in January, 2001, (ii) $35,000,000 in January, 2002, and
18    (iii) $35,000,000 in January, 2003.
19    (d) Expenditures from Income Tax Refund Fund.
20        (1) Beginning January 1, 1989, money in the Income Tax
21    Refund Fund shall be expended exclusively for the purpose
22    of paying refunds resulting from overpayment of tax
23    liability under Section 201 of this Act and for making
24    transfers pursuant to this subsection (d).
25        (2) The Director shall order payment of refunds
26    resulting from overpayment of tax liability under Section

 

 

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1    201 of this Act from the Income Tax Refund Fund only to the
2    extent that amounts collected pursuant to Section 201 of
3    this Act and transfers pursuant to this subsection (d) and
4    item (3) of subsection (c) have been deposited and retained
5    in the Fund.
6        (3) As soon as possible after the end of each fiscal
7    year, the Director shall order transferred and the State
8    Treasurer and State Comptroller shall transfer from the
9    Income Tax Refund Fund to the Personal Property Tax
10    Replacement Fund an amount, certified by the Director to
11    the Comptroller, equal to the excess of the amount
12    collected pursuant to subsections (c) and (d) of Section
13    201 of this Act deposited into the Income Tax Refund Fund
14    during the fiscal year over the amount of refunds resulting
15    from overpayment of tax liability under subsections (c) and
16    (d) of Section 201 of this Act paid from the Income Tax
17    Refund Fund during the fiscal year.
18        (4) As soon as possible after the end of each fiscal
19    year, the Director shall order transferred and the State
20    Treasurer and State Comptroller shall transfer from the
21    Personal Property Tax Replacement Fund to the Income Tax
22    Refund Fund an amount, certified by the Director to the
23    Comptroller, equal to the excess of the amount of refunds
24    resulting from overpayment of tax liability under
25    subsections (c) and (d) of Section 201 of this Act paid
26    from the Income Tax Refund Fund during the fiscal year over

 

 

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1    the amount collected pursuant to subsections (c) and (d) of
2    Section 201 of this Act deposited into the Income Tax
3    Refund Fund during the fiscal year.
4        (4.5) As soon as possible after the end of fiscal year
5    1999 and of each fiscal year thereafter, the Director shall
6    order transferred and the State Treasurer and State
7    Comptroller shall transfer from the Income Tax Refund Fund
8    to the General Revenue Fund any surplus remaining in the
9    Income Tax Refund Fund as of the end of such fiscal year;
10    excluding for fiscal years 2000, 2001, and 2002 amounts
11    attributable to transfers under item (3) of subsection (c)
12    less refunds resulting from the earned income tax credit.
13        (5) This Act shall constitute an irrevocable and
14    continuing appropriation from the Income Tax Refund Fund
15    for the purpose of paying refunds upon the order of the
16    Director in accordance with the provisions of this Section.
17    (e) Deposits into the Education Assistance Fund and the
18Income Tax Surcharge Local Government Distributive Fund. On
19July 1, 1991, and thereafter, of the amounts collected pursuant
20to subsections (a) and (b) of Section 201 of this Act, minus
21deposits into the Income Tax Refund Fund, the Department shall
22deposit 7.3% into the Education Assistance Fund in the State
23Treasury. Beginning July 1, 1991, and continuing through
24January 31, 1993, of the amounts collected pursuant to
25subsections (a) and (b) of Section 201 of the Illinois Income
26Tax Act, minus deposits into the Income Tax Refund Fund, the

 

 

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1Department shall deposit 3.0% into the Income Tax Surcharge
2Local Government Distributive Fund in the State Treasury.
3Beginning February 1, 1993 and continuing through June 30,
41993, of the amounts collected pursuant to subsections (a) and
5(b) of Section 201 of the Illinois Income Tax Act, minus
6deposits into the Income Tax Refund Fund, the Department shall
7deposit 4.4% into the Income Tax Surcharge Local Government
8Distributive Fund in the State Treasury. Beginning July 1,
91993, and continuing through June 30, 1994, of the amounts
10collected under subsections (a) and (b) of Section 201 of this
11Act, minus deposits into the Income Tax Refund Fund, the
12Department shall deposit 1.475% into the Income Tax Surcharge
13Local Government Distributive Fund in the State Treasury.
14    (f) Deposits into the Fund for the Advancement of
15Education. Beginning February 1, 2015, the Department shall
16deposit the following portions of the revenue realized from the
17tax imposed upon individuals, trusts, and estates by
18subsections (a) and (b) of Section 201 of this Act, minus
19deposits into the Income Tax Refund Fund, into the Fund for the
20Advancement of Education:
21        (1) beginning February 1, 2015, and prior to February
22    1, 2025, 1/30; and
23        (2) beginning February 1, 2025, 1/26.
24    If the rate of tax imposed by subsection (a) and (b) of
25Section 201 is reduced pursuant to Section 201.5 of this Act,
26the Department shall not make the deposits required by this

 

 

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1subsection (f) on or after the effective date of the reduction.
2    (g) Deposits into the Commitment to Human Services Fund.
3Beginning February 1, 2015, the Department shall deposit the
4following portions of the revenue realized from the tax imposed
5upon individuals, trusts, and estates by subsections (a) and
6(b) of Section 201 of this Act, minus deposits into the Income
7Tax Refund Fund, into the Commitment to Human Services Fund:
8        (1) beginning February 1, 2015, and prior to February
9    1, 2025, 1/30; and
10        (2) beginning February 1, 2025, 1/26.
11    If the rate of tax imposed by subsection (a) and (b) of
12Section 201 is reduced pursuant to Section 201.5 of this Act,
13the Department shall not make the deposits required by this
14subsection (g) on or after the effective date of the reduction.
15    (h) Deposits into the Tax Compliance and Administration
16Fund. Beginning on the first day of the first calendar month to
17occur on or after August 26, 2014 (the effective date of Public
18Act 98-1098), each month the Department shall pay into the Tax
19Compliance and Administration Fund, to be used, subject to
20appropriation, to fund additional auditors and compliance
21personnel at the Department, an amount equal to 1/12 of 5% of
22the cash receipts collected during the preceding fiscal year by
23the Audit Bureau of the Department from the tax imposed by
24subsections (a), (b), (c), and (d) of Section 201 of this Act,
25net of deposits into the Income Tax Refund Fund made from those
26cash receipts.

 

 

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1    (i) All revenue realized under Section 201.1 shall be
2deposited into the Common School Fund.
3(Source: P.A. 99-78, eff. 7-20-15; 100-22, eff. 7-6-17; 100-23,
4eff. 7-6-17; 100-587, eff. 6-4-18; 100-621, eff. 7-20-18;
5100-863, eff. 8-14-18; 100-1171, eff. 1-4-19; revised 1-8-19.)