101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3270

 

Introduced , by Rep. Michael T. Marron

 

SYNOPSIS AS INTRODUCED:
 
805 ILCS 5/13.70  from Ch. 32, par. 13.70
805 ILCS 5/14.30  from Ch. 32, par. 14.30
805 ILCS 5/15.35  from Ch. 32, par. 15.35
805 ILCS 5/15.65  from Ch. 32, par. 15.65
805 ILCS 5/15.97  from Ch. 32, par. 15.97
805 ILCS 5/16.05  from Ch. 32, par. 16.05

    Amends the Business Corporation Act of 1983. Increases from $200 to $500 the minimum base penalty for transacting business in this State without authority. Provides that a corporation that effects a change in the number of issued shares or the amount of paid-in capital prior to January 1, 2020, rather than effecting a change at any time, shall file a report regarding the issued shares or paid-in capital. Provides that franchise taxes are not payable on or after January 1, 2020. Provides that on and after January 1, 2020, a corporation that fails to file an annual report shall pay a penalty of $50 plus $10 per month or part of a month that the report is delinquent.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3270LRB101 08246 JLS 53312 b

1    AN ACT concerning business.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Business Corporation Act of 1983 is amended
5by changing Sections 13.70, 14.30, 15.35, 15.65, 15.97, and
616.05 as follows:
 
7    (805 ILCS 5/13.70)  (from Ch. 32, par. 13.70)
8    Sec. 13.70. Transacting business without authority.
9    (a) No foreign corporation transacting business in this
10State without authority to do so is permitted to maintain a
11civil action in any court of this State, until the corporation
12obtains that authority. Nor shall a civil action be maintained
13in any court of this State by any successor or assignee of the
14corporation on any right, claim or demand arising out of the
15transaction of business by the corporation in this State, until
16authority to transact business in this State is obtained by the
17corporation or by a corporation that has acquired all or
18substantially all of its assets.
19    (b) The failure of a foreign corporation to obtain
20authority to transact business in this State does not impair
21the validity of any contract or act of the corporation, and
22does not prevent the corporation from defending any action in
23any court of this State.

 

 

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1    (c) A foreign corporation that transacts business in this
2State without authority is liable to this State, for the years
3or parts thereof during which it transacted business in this
4State without authority, in an amount equal to all fees,
5franchise taxes, penalties and other charges that would have
6been imposed by this Act upon the corporation had it duly
7applied for and received authority to transact business in this
8State as required by this Act, but failed to pay the franchise
9taxes that would have been computed thereon, and thereafter
10filed all reports required by this Act; and, if a corporation
11fails to file an application for authority within 60 days after
12it commences business in this State, in addition thereto it is
13liable for a penalty of either 10% of the filing fee, license
14fee and franchise taxes or $500 $200 plus $25 $5.00 for each
15month or fraction thereof in which it has continued to transact
16business in this State without authority therefor, whichever
17penalty is greater. The Attorney General shall bring
18proceedings to recover all amounts due this State under this
19Section.
20    (d) The Attorney General shall bring an action to restrain
21a foreign corporation from transacting business in this State,
22if the authority of the foreign corporation to transact
23business has been revoked under subsection (m) of Section 13.50
24of this Act.
25(Source: P.A. 95-515, eff. 8-28-07.)
 

 

 

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1    (805 ILCS 5/14.30)  (from Ch. 32, par. 14.30)
2    Sec. 14.30. Cumulative report of changes in issued shares
3or paid-in capital.
4    (a) Each domestic corporation and each foreign corporation
5authorized to transact business in this State that effects any
6change in the number of issued shares or the amount of paid-in
7capital prior to January 1, 2020 that has not theretofore been
8reported in any report other than an annual report, interim
9annual report, or final transition annual report, shall execute
10and file, in accordance with Section 1.10 of this Act, a report
11with respect to the changes in its issued shares or paid-in
12capital:
13        (1) that have occurred subsequent to the last day of
14    the third month preceding its anniversary month in the
15    preceding year and prior to the first day of the second
16    month immediately preceding its anniversary month in the
17    current year; or
18        (2) in the case of a corporation that has established
19    an extended filing month, that have occurred during its
20    fiscal year; or
21        (3) in the case of a statutory merger or consolidation
22    or an amendment to the corporation's articles of
23    incorporation that affects the number of issued shares or
24    the amount of paid-in capital, that have occurred between
25    the last day of the third month immediately preceding its
26    anniversary month and the date of the merger,

 

 

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1    consolidation, or amendment or, in the case of a
2    corporation that has established an extended filing month,
3    that have occurred between the first day of its fiscal year
4    and the date of the merger, consolidation, or amendment; or
5        (4) in the case of a statutory merger or consolidation
6    or an amendment to the corporation's articles of
7    incorporation that affects the number of issued shares or
8    the amount of paid-in capital, that have occurred between
9    the date of the merger, consolidation, or amendment (but
10    not including the merger, consolidation, or amendment) and
11    the first day of the second month immediately preceding its
12    anniversary month in the current year, or in the case of a
13    corporation that has established an extended filing month,
14    that have occurred between the date of the merger,
15    consolidation or amendment (but not including the merger,
16    consolidation or amendment) and the last day of its fiscal
17    year.
18    (b) The corporation shall file the report required under
19subsection (a) not later than (i) the time its annual report is
20required to be filed in 1992 and in each subsequent year and
21(ii) not later than the time of filing the articles of merger,
22consolidation, or amendment to the articles of incorporation
23that affects the number of issued shares or the amount of
24paid-in capital of a domestic corporation or the certified copy
25of merger of a foreign corporation.
26    (c) The report shall net decreases against increases that

 

 

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1occur during the same taxable period. The report shall set
2forth:
3        (1) The name of the corporation and the state or
4    country under the laws of which it is organized.
5        (2) A statement of the aggregate number of shares which
6    the corporation has authority to issue, itemized by classes
7    and series, if any, within a class.
8        (3) A statement of the aggregate number of issued
9    shares as last reported to the Secretary of State in any
10    document required or permitted by this Act to be filed,
11    other than an annual report, interim annual report or final
12    transition annual report, itemized by classes and series,
13    if any, within a class.
14        (4) A statement, expressed in dollars, of the amount of
15    paid-in capital of the corporation as last reported to the
16    Secretary of State in any document required or permitted by
17    this Act to be filed, other than an annual report, interim
18    annual report or final transition annual report.
19        (5) A statement, if applicable, of the aggregate number
20    of shares issued by the corporation not theretofore
21    reported to the Secretary of State as having been issued,
22    and a statement, expressed in dollars, of the value of the
23    entire consideration received, less expenses, including
24    commissions, paid or incurred in connection with the
25    issuance, for, or on account of, the issuance of the
26    shares, itemized by classes, and series, if any, within a

 

 

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1    class; and in the case of shares issued as a share
2    dividend, the amount added or transferred to the paid-in
3    capital of the corporation for, or on account of, the
4    issuance of the shares; provided, however, that the report
5    shall also include the date of each issuance made prior to
6    the current reporting period, and the number of issued
7    shares and consideration received in each case.
8        (6) A statement, if applicable, expressed in dollars,
9    of the amount added or transferred to paid-in capital of
10    the corporation without the issuance of shares; provided,
11    however, that the report shall also include the date of
12    each increase made prior to the current reporting period,
13    and the consideration received in each case.
14        (7) In case of an exchange or reclassification of
15    issued shares resulting in an increase in the amount of
16    paid-in capital, a statement of the manner in which it was
17    effected, and a statement, expressed in dollars, of the
18    amount added or transferred to the paid-in capital of the
19    corporation as a result thereof, except any portion thereof
20    reported under any other subsection of this Section as a
21    part of the consideration received by the corporation for,
22    or on account of, its issued shares; provided, however,
23    that the report shall also include the date of each
24    exchange or reclassification made prior to the current
25    reporting period and the consideration received in each
26    case.

 

 

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1        (8) If the consideration received for the issuance of
2    any shares not theretofore reported as having been issued
3    consists of labor or services performed or of property,
4    other than cash, then a statement, expressed in dollars, of
5    the value of that consideration as fixed by the board of
6    directors.
7        (9) In the case of a cancellation of shares or a
8    reduction in paid-in capital made pursuant to Section 9.20,
9    the aggregate reduction in paid-in capital; provided,
10    however, that the report shall also include the date of
11    each reduction made prior to the current reporting period.
12        (10) A statement of the aggregate number of issued
13    shares itemized by classes and series, if any, within a
14    class, after giving effect to the changes reported.
15        (11) A statement, expressed in dollars, of the amount
16    of paid-in capital of the corporation after giving effect
17    to the changes reported.
18    (d) No additional license fees or franchise taxes shall be
19payable upon the filing of the report to the extent that
20license fees or franchise taxes shall have been previously paid
21by the corporation in respect of shares previously issued which
22are being exchanged for the shares the issuance of which is
23being reported, provided those facts are shown in the report.
24    (e) The report shall be made on forms prescribed and
25furnished by the Secretary of State.
26    (f) Until the report under this Section or a report under

 

 

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1Section 14.25 shall have been filed in the Office of the
2Secretary of State showing a reduction in paid-in capital, the
3basis of the annual franchise tax payable by the corporation
4shall not be reduced, provided, however, in no event shall the
5annual franchise tax for any taxable year be reduced if the
6report is not filed prior to the first day of the anniversary
7month or, in the case of a corporation which has established an
8extended filing month, the extended filing month of the
9corporation of that taxable year and before payment of its
10annual franchise tax.
11(Source: P.A. 90-421, eff. 1-1-98.)
 
12    (805 ILCS 5/15.35)  (from Ch. 32, par. 15.35)
13    Sec. 15.35. Franchise taxes payable by domestic
14corporations. For the privilege of exercising its franchises in
15this State, each domestic corporation shall pay to the
16Secretary of State the following franchise taxes, computed on
17the basis, at the rates and for the periods prescribed in this
18Act:
19        (a) An initial franchise tax at the time of filing its
20    first report of issuance of shares.
21        (b) An additional franchise tax at the time of filing
22    (1) a report of the issuance of additional shares, or (2) a
23    report of an increase in paid-in capital without the
24    issuance of shares, or (3) an amendment to the articles of
25    incorporation or a report of cumulative changes in paid-in

 

 

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1    capital, whenever any amendment or such report discloses an
2    increase in its paid-in capital over the amount thereof
3    last reported in any document, other than an annual report,
4    interim annual report or final transition annual report
5    required by this Act to be filed in the office of the
6    Secretary of State.
7        (c) An additional franchise tax at the time of filing a
8    report of paid-in capital following a statutory merger or
9    consolidation, which discloses that the paid-in capital of
10    the surviving or new corporation immediately after the
11    merger or consolidation is greater than the sum of the
12    paid-in capital of all of the merged or consolidated
13    corporations as last reported by them in any documents,
14    other than annual reports, required by this Act to be filed
15    in the office of the Secretary of State; and in addition,
16    the surviving or new corporation shall be liable for a
17    further additional franchise tax on the paid-in capital of
18    each of the merged or consolidated corporations as last
19    reported by them in any document, other than an annual
20    report, required by this Act to be filed with the Secretary
21    of State from their taxable year end to the next succeeding
22    anniversary month or, in the case of a corporation which
23    has established an extended filing month, the extended
24    filing month of the surviving or new corporation; however
25    if the taxable year ends within the 2 month period
26    immediately preceding the anniversary month or, in the case

 

 

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1    of a corporation which has established an extended filing
2    month, the extended filing month of the surviving or new
3    corporation the tax will be computed to the anniversary
4    month or, in the case of a corporation which has
5    established an extended filing month, the extended filing
6    month of the surviving or new corporation in the next
7    succeeding calendar year.
8        (d) An annual franchise tax payable each year with the
9    annual report which the corporation is required by this Act
10    to file.
11    The provisions of this Section shall not apply to require
12the payment of any franchise tax that would otherwise have been
13due and payable on or after January 1, 2020. There shall be no
14refunds or proration of franchise tax for any taxes due and
15payable prior to January 1, 2020 on the basis that a portion of
16the corporation's taxable year extends beyond January 1, 2020.
17This amendatory Act of the 101st General Assembly shall not
18affect any right accrued or established, or any liability or
19penalty incurred prior to January 1, 2020.
20(Source: P.A. 86-985.)
 
21    (805 ILCS 5/15.65)  (from Ch. 32, par. 15.65)
22    Sec. 15.65. Franchise taxes payable by foreign
23corporations. For the privilege of exercising its authority to
24transact such business in this State as set out in its
25application therefor or any amendment thereto, each foreign

 

 

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1corporation shall pay to the Secretary of State the following
2franchise taxes, computed on the basis, at the rates and for
3the periods prescribed in this Act:
4        (a) An initial franchise tax at the time of filing its
5    application for authority to transact business in this
6    State.
7        (b) An additional franchise tax at the time of filing
8    (1) a report of the issuance of additional shares, or (2) a
9    report of an increase in paid-in capital without the
10    issuance of shares, or (3) a report of cumulative changes
11    in paid-in capital or a report of an exchange or
12    reclassification of shares, whenever any such report
13    discloses an increase in its paid-in capital over the
14    amount thereof last reported in any document, other than an
15    annual report, interim annual report or final transition
16    annual report, required by this Act to be filed in the
17    office of the Secretary of State.
18        (c) Whenever the corporation shall be a party to a
19    statutory merger and shall be the surviving corporation, an
20    additional franchise tax at the time of filing its report
21    following merger, if such report discloses that the amount
22    represented in this State of its paid-in capital
23    immediately after the merger is greater than the aggregate
24    of the amounts represented in this State of the paid-in
25    capital of such of the merged corporations as were
26    authorized to transact business in this State at the time

 

 

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1    of the merger, as last reported by them in any documents,
2    other than annual reports, required by this Act to be filed
3    in the office of the Secretary of State; and in addition,
4    the surviving corporation shall be liable for a further
5    additional franchise tax on the paid-in capital of each of
6    the merged corporations as last reported by them in any
7    document, other than an annual report, required by this Act
8    to be filed with the Secretary of State, from their taxable
9    year end to the next succeeding anniversary month or, in
10    the case of a corporation which has established an extended
11    filing month, the extended filing month of the surviving
12    corporation; however if the taxable year ends within the 2
13    month period immediately preceding the anniversary month
14    or the extended filing month of the surviving corporation,
15    the tax will be computed to the anniversary or, extended
16    filing month of the surviving corporation in the next
17    succeeding calendar year.
18        (d) An annual franchise tax payable each year with any
19    annual report which the corporation is required by this Act
20    to file.
21    The provisions of this Section shall not apply to require
22the payment of any franchise tax that would otherwise have been
23due and payable on or after January 1, 2020. There shall be no
24refunds or proration of franchise tax for any taxes due and
25payable prior to January 1, 2020 on the basis that a portion of
26the corporation's taxable year extends beyond January 1, 2020.

 

 

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1This amendatory Act of the 101st General Assembly shall not
2affect any right accrued or established, or any liability or
3penalty incurred prior to January 1, 2020.
4(Source: P.A. 92-33, eff. 7-1-01.)
 
5    (805 ILCS 5/15.97)  (from Ch. 32, par. 15.97)
6    Sec. 15.97. Corporate Franchise Tax Refund Fund.
7    (a) Beginning July 1, 1993, a percentage of the amounts
8collected under Sections 15.35, 15.45, 15.65, and 15.75 of this
9Act shall be deposited into the Corporate Franchise Tax Refund
10Fund, a special Fund hereby created in the State treasury. From
11July 1, 1993, until December 31, 1994, there shall be deposited
12into the Fund 3% of the amounts received under those Sections.
13Beginning January 1, 1995, and for each fiscal year beginning
14thereafter, 2% of the amounts collected under those Sections
15during the preceding fiscal year shall be deposited into the
16Fund.
17    (b) Beginning July 1, 1993, moneys in the Fund shall be
18expended exclusively for the purpose of paying refunds payable
19because of overpayment of franchise taxes, penalties, or
20interest under Sections 13.70, 15.35, 15.45, 15.65, 15.75, and
2116.05 of this Act and making transfers authorized under this
22Section. Refunds in accordance with the provisions of
23subsections (f) and (g) of Section 1.15 and Section 1.17 of
24this Act may be made from the Fund only to the extent that
25amounts collected under Sections 15.35, 15.45, 15.65, and 15.75

 

 

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1of this Act have been deposited in the Fund and remain
2available. On or before August 31 of each year, the balance in
3the Fund in excess of $100,000 shall be transferred to the
4General Revenue Fund. Notwithstanding the above, for the period
5commencing on the effective date of this amendatory Act of the
6101st General Assembly and continuing through December 31,
72021, amounts in the Fund shall not be transferred to the
8General Revenue Fund and shall be used to pay refunds in
9accordance with the provisions of this Act. Within a reasonable
10time after January 1, 2022, the Secretary of State shall direct
11and the Comptroller shall order transferred to the General
12Revenue Fund all amounts remaining in the Fund.
13    (c) This Act shall constitute an irrevocable and continuing
14appropriation from the Corporate Franchise Tax Refund Fund for
15the purpose of paying refunds upon the order of the Secretary
16of State in accordance with the provisions of this Section.
17(Source: P.A. 99-620, eff. 1-1-17.)
 
18    (805 ILCS 5/16.05)  (from Ch. 32, par. 16.05)
19    Sec. 16.05. Penalties and interest imposed upon
20corporations.
21    (a) Each corporation, domestic or foreign, that fails or
22refuses to file any annual report or report of cumulative
23changes in paid-in capital and pay any franchise tax due
24pursuant to the report prior to the first day of its
25anniversary month or, in the case of a corporation which has

 

 

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1established an extended filing month, the extended filing month
2of the corporation shall pay a penalty of 10% of the amount of
3any delinquent franchise tax due for the report. From February
41, 2008 through March 15, 2008, no penalty shall be imposed
5with respect to any amount of delinquent franchise tax paid
6pursuant to the Franchise Tax and License Fee Amnesty Act of
72007. Notwithstanding the above, commencing on January 1, 2020,
8each corporation, domestic or foreign, that fails or refuses to
9file any annual report prior to the first day of its
10anniversary month, or in the case of a corporation which has
11established an extended filing month, the extended filing month
12of the corporation, shall pay a penalty of $50 plus $10 for
13each calendar month or part of the month that it is delinquent.
14    (b) Each corporation, domestic or foreign, that fails or
15refuses to file a report of issuance of shares or increase in
16paid-in capital within the time prescribed by this Act is
17subject to a penalty on any obligation occurring prior to
18January 1, 1991, and interest on those obligations on or after
19January 1, 1991, for each calendar month or part of month that
20it is delinquent in the amount of 2% of the amount of license
21fees and franchise taxes provided by this Act to be paid on
22account of the issuance of shares or increase in paid-in
23capital. From February 1, 2008 through March 15, 2008, no
24penalty shall be imposed, or interest charged, with respect to
25any amount of delinquent license fees and franchise taxes paid
26pursuant to the Franchise Tax and License Fee Amnesty Act of

 

 

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12007.
2    (c) Each corporation, domestic or foreign, that fails or
3refuses to file a report of cumulative changes in paid-in
4capital or report following merger within the time prescribed
5by this Act is subject to interest on or after January 1, 1992,
6for each calendar month or part of month that it is delinquent,
7in the amount of 2% of the amount of franchise taxes provided
8by this Act to be paid on account of the issuance of shares or
9increase in paid-in capital disclosed on the report of
10cumulative changes in paid-in capital or report following
11merger, or $1, whichever is greater. From February 1, 2008
12through March 15, 2008, no interest shall be charged with
13respect to any amount of delinquent franchise tax paid pursuant
14to the Franchise Tax and License Fee Amnesty Act of 2007.
15Notwithstanding the above, commencing on January 1, 2020, each
16corporation, domestic or foreign, that fails or refuses to file
17any report following merger within the time prescribed by this
18Act, shall pay a penalty of $50 plus $10 for each calendar
19month or part of the month that it is delinquent.
20    (d) If the annual franchise tax, or the supplemental annual
21franchise tax for any 12-month period commencing July 1, 1968,
22or July 1 of any subsequent year through June 30, 1983,
23assessed in accordance with this Act, is not paid by July 31,
24it is delinquent, and there is added a penalty prior to January
251, 1991, and interest on and after January 1, 1991, of 2% for
26each month or part of month that it is delinquent commencing

 

 

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1with the month of August, or $1, whichever is greater. From
2February 1, 2008 through March 15, 2008, no penalty shall be
3imposed, or interest charged, with respect to any amount of
4delinquent franchise taxes paid pursuant to the Franchise Tax
5and License Fee Amnesty Act of 2007.
6    (e) If the supplemental annual franchise tax assessed in
7accordance with the provisions of this Act for the 12-month
8period commencing July 1, 1967, is not paid by September 30,
91967, it is delinquent, and there is added a penalty prior to
10January 1, 1991, and interest on and after January 1, 1991, of
112% for each month or part of month that it is delinquent
12commencing with the month of October, 1967. From February 1,
132008 through March 15, 2008, no penalty shall be imposed, or
14interest charged, with respect to any amount of delinquent
15franchise taxes paid pursuant to the Franchise Tax and License
16Fee Amnesty Act of 2007.
17    (f) If any annual franchise tax for any period beginning on
18or after July 1, 1983, is not paid by the time period herein
19prescribed, it is delinquent and there is added a penalty prior
20to January 1, 1991, and interest on and after January 1, 1991,
21of 2% for each month or part of a month that it is delinquent
22commencing with the anniversary month or in the case of a
23corporation that has established an extended filing month, the
24extended filing month, or $1, whichever is greater. From
25February 1, 2008 through March 15, 2008, no penalty shall be
26imposed, or interest charged, with respect to any amount of

 

 

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1delinquent franchise taxes paid pursuant to the Franchise Tax
2and License Fee Amnesty Act of 2007.
3    (g) Any corporation, domestic or foreign, failing to pay
4the prescribed fee for assumed corporate name renewal when due
5and payable shall be given notice of nonpayment by the
6Secretary of State by regular mail; and if the fee together
7with a penalty fee of $5 is not paid within 90 days after the
8notice is mailed, the right to use the assumed name shall
9cease.
10    (h) Any corporation which (i) puts forth any sign or
11advertisement, assuming any name other than that by which it is
12incorporated or otherwise authorized by law to act or (ii)
13violates Section 3.25, shall be guilty of a Class C misdemeanor
14and shall be deemed guilty of an additional offense for each
15day it shall continue to so offend.
16    (i) Each corporation, domestic or foreign, that fails or
17refuses (1) to answer truthfully and fully within the time
18prescribed by this Act interrogatories propounded by the
19Secretary of State in accordance with this Act or (2) to
20perform any other act required by this Act to be performed by
21the corporation, is guilty of a Class C misdemeanor.
22    (j) Each corporation that fails or refuses to file articles
23of revocation of dissolution within the time prescribed by this
24Act is subject to a penalty for each calendar month or part of
25the month that it is delinquent in the amount of $50.
26(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08;

 

 

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196-1121, eff. 1-1-11.)