Rep. Michael J. Zalewski

Filed: 1/12/2021

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1199

2    AMENDMENT NO. ______. Amend Senate Bill 1199, AS AMENDED,
3by replacing everything after the enacting clause with the
4following:
 
5    "Section 5. The Department of Commerce and Economic
6Opportunity Law of the Civil Administrative Code of Illinois is
7amended by changing Section 605-1025 as follows:
 
8    (20 ILCS 605/605-1025)
9    Sec. 605-1025. Data center investment.
10    (a) The Department shall issue certificates of exemption
11from the Retailers' Occupation Tax Act, the Use Tax Act, the
12Service Use Tax Act, and the Service Occupation Tax Act, all
13locally-imposed retailers' occupation taxes administered and
14collected by the Department, the Chicago non-titled Use Tax,
15and a credit certification against the taxes imposed under
16subsections (a) and (b) of Section 201 of the Illinois Income

 

 

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1Tax Act to qualifying Illinois data centers.
2    (b) For taxable years beginning on or after January 1,
32019, the Department shall award credits against the taxes
4imposed under subsections (a) and (b) of Section 201 of the
5Illinois Income Tax Act as provided in Section 229 of the
6Illinois Income Tax Act.
7    (c) For purposes of this Section:
8        "Data center" means a facility: (1) whose primary
9    services are the storage, management, and processing of
10    digital data; and (2) that is used to house (i) computer
11    and network systems, including associated components such
12    as servers, network equipment and appliances,
13    telecommunications, and data storage systems, (ii) systems
14    for monitoring and managing infrastructure performance,
15    (iii) Internet-related equipment and services, (iv) data
16    communications connections, (v) environmental controls,
17    (vi) fire protection systems, and (vii) security systems
18    and services.
19        "Qualifying Illinois data center" means a new or
20    existing data center that:
21            (1) is located in the State of Illinois;
22            (2) in the case of an existing data center, made a
23        capital investment of at least $250,000,000
24        collectively by the data center operator and the
25        tenants of the data center over the 60-month period
26        immediately prior to January 1, 2020 or committed to

 

 

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1        make a capital investment of at least $250,000,000 over
2        a 60-month period commencing before January 1, 2020 and
3        ending after January 1, 2020; or
4            (3) in the case of a new data center, or an
5        existing data center making an upgrade, makes a capital
6        investment of at least $250,000,000 over a 60-month
7        period beginning on or after January 1, 2020; and
8            (4) in the case of both existing and new data
9        centers, results in the creation of at least 20
10        full-time or full-time equivalent new jobs over a
11        period of 60 months by the data center operator and the
12        tenants of the data center, collectively, associated
13        with the operation or maintenance of the data center;
14        those jobs must have a total compensation equal to or
15        greater than 120% of the average wage paid to full-time
16        employees in the county where the data center is
17        located, as determined by the U.S. Bureau of Labor
18        Statistics; and
19            (5) within 2 years 90 days after being placed in
20        service, certifies to the Department that it is carbon
21        neutral or has attained certification under one or more
22        of the following green building standards:
23                (A) BREEAM for New Construction or BREEAM
24            In-Use;
25                (B) ENERGY STAR;
26                (C) Envision;

 

 

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1                (D) ISO 50001-energy management;
2                (E) LEED for Building Design and Construction
3            or LEED for Operations and Maintenance;
4                (F) Green Globes for New Construction or Green
5            Globes for Existing Buildings;
6                (G) UL 3223; or
7                (H) an equivalent program approved by the
8            Department of Commerce and Economic Opportunity.
9        "Full-time equivalent job" means a job in which the new
10    employee works for the owner, operator, contractor, or
11    tenant of a data center or for a corporation under contract
12    with the owner, operator or tenant of a data center at a
13    rate of at least 35 hours per week. An owner, operator or
14    tenant who employs labor or services at a specific site or
15    facility under contract with another may declare one
16    full-time, permanent job for every 1,820 man hours worked
17    per year under that contract. Vacations, paid holidays, and
18    sick time are included in this computation. Overtime is not
19    considered a part of regular hours.
20        "Qualified tangible personal property" means:
21    electrical systems and equipment; climate control and
22    chilling equipment and systems; mechanical systems and
23    equipment; monitoring and secure systems; emergency
24    generators; hardware; computers; servers; data storage
25    devices; network connectivity equipment; racks; cabinets;
26    telecommunications cabling infrastructure; raised floor

 

 

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1    systems; peripheral components or systems; software;
2    mechanical, electrical, or plumbing systems; battery
3    systems; cooling systems and towers; temperature control
4    systems; other cabling; and other data center
5    infrastructure equipment and systems necessary to operate
6    qualified tangible personal property, including fixtures;
7    and component parts of any of the foregoing, including
8    installation, maintenance, repair, refurbishment, and
9    replacement of qualified tangible personal property to
10    generate, transform, transmit, distribute, or manage
11    electricity necessary to operate qualified tangible
12    personal property; and all other tangible personal
13    property that is essential to the operations of a computer
14    data center. "Qualified tangible personal property" also
15    includes building materials physically incorporated in to
16    the qualifying data center.
17    To document the exemption allowed under this Section, the
18retailer must obtain from the purchaser a copy of the
19certificate of eligibility issued by the Department.
20    (d) New and existing data centers seeking a certificate of
21exemption for new or existing facilities shall apply to the
22Department in the manner specified by the Department. The
23Department shall determine the duration of the certificate of
24exemption awarded under this Act. The duration of the
25certificate of exemption may not exceed 20 calendar years. The
26Department and any data center seeking the exemption, including

 

 

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1a data center operator on behalf of itself and its tenants,
2must enter into a memorandum of understanding that at a minimum
3provides:
4        (1) the details for determining the amount of capital
5    investment to be made;
6        (2) the number of new jobs created;
7        (3) the timeline for achieving the capital investment
8    and new job goals;
9        (4) the repayment obligation should those goals not be
10    achieved and any conditions under which repayment by the
11    qualifying data center or data center tenant claiming the
12    exemption will be required;
13        (5) the duration of the exemption; and
14        (6) other provisions as deemed necessary by the
15    Department.
16    (e) Beginning July 1, 2021, and each year thereafter, the
17Department shall annually report to the Governor and the
18General Assembly on the outcomes and effectiveness of Public
19Act 101-31 that shall include the following:
20        (1) the name of each recipient business;
21        (2) the location of the project;
22        (3) the estimated value of the credit;
23        (4) the number of new jobs and, if applicable, retained
24    jobs pledged as a result of the project; and
25        (5) whether or not the project is located in an
26    underserved area.

 

 

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1    (f) New and existing data centers seeking a certificate of
2exemption related to the rehabilitation or construction of data
3centers in the State shall require the contractor and all
4subcontractors to comply with the requirements of Section 30-22
5of the Illinois Procurement Code as they apply to responsible
6bidders and to present satisfactory evidence of that compliance
7to the Department.
8    (g) New and existing data centers seeking a certificate of
9exemption for the rehabilitation or construction of data
10centers in the State shall require the contractor to enter into
11a project labor agreement approved by the Department.
12    (h) Any qualifying data center issued a certificate of
13exemption under this Section must annually report to the
14Department the total data center tax benefits that are received
15by the business. Reports are due no later than May 31 of each
16year and shall cover the previous calendar year. The first
17report is for the 2019 calendar year and is due no later than
18May 31, 2020.
19    To the extent that a business issued a certificate of
20exemption under this Section has obtained an Enterprise Zone
21Building Materials Exemption Certificate or a High Impact
22Business Building Materials Exemption Certificate, no
23additional reporting for those building materials exemption
24benefits is required under this Section.
25    Failure to file a report under this subsection (h) may
26result in suspension or revocation of the certificate of

 

 

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1exemption. Factors to be considered in determining whether a
2data center certificate of exemption shall be suspended or
3revoked include, but are not limited to, prior compliance with
4the reporting requirements, cooperation in discontinuing and
5correcting violations, the extent of the violation, and whether
6the violation was willful or inadvertent.
7    (i) The Department shall not issue any new certificates of
8exemption under the provisions of this Section after July 1,
92029. This sunset shall not affect any existing certificates of
10exemption in effect on July 1, 2029.
11    (j) The Department shall adopt rules to implement and
12administer this Section.
13(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 12-13-19.)
 
14    Section 10. The Brownfields Redevelopment and Intermodal
15Promotion Act is amended by changing Section 3-20 as follows:
 
16    (20 ILCS 607/3-20)
17    Sec. 3-20. South Suburban Brownfields Redevelopment Fund;
18eligible projects. In State fiscal years 2015 through 2022
192021, all moneys in the South Suburban Brownfields
20Redevelopment Fund shall be held solely to fund eligible
21projects undertaken pursuant to the provisions of Section 3-35
22of this Act and performed either directly by Cook County
23through a development agreement with the Department, by an
24entity designated by Cook County through a development

 

 

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1agreement with the Department to perform specific tasks, or by
2an Eligible Developer or an Eligible Employer through a
3development agreement. All Eligible Projects are subject to
4review and approval by the Managing Partner and by the
5Department. The life span of the Fund may be extended past 2026
6by law.
7(Source: P.A. 101-275, eff. 8-9-19.)
 
8    Section 15.The Illinois Income Tax Act is amended by
9changing Section 203 as follows:
 
10    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
11    Sec. 203. Base income defined.
12    (a) Individuals.
13        (1) In general. In the case of an individual, base
14    income means an amount equal to the taxpayer's adjusted
15    gross income for the taxable year as modified by paragraph
16    (2).
17        (2) Modifications. The adjusted gross income referred
18    to in paragraph (1) shall be modified by adding thereto the
19    sum of the following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest or dividends during the
22        taxable year to the extent excluded from gross income
23        in the computation of adjusted gross income, except
24        stock dividends of qualified public utilities

 

 

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1        described in Section 305(e) of the Internal Revenue
2        Code;
3            (B) An amount equal to the amount of tax imposed by
4        this Act to the extent deducted from gross income in
5        the computation of adjusted gross income for the
6        taxable year;
7            (C) An amount equal to the amount received during
8        the taxable year as a recovery or refund of real
9        property taxes paid with respect to the taxpayer's
10        principal residence under the Revenue Act of 1939 and
11        for which a deduction was previously taken under
12        subparagraph (L) of this paragraph (2) prior to July 1,
13        1991, the retrospective application date of Article 4
14        of Public Act 87-17. In the case of multi-unit or
15        multi-use structures and farm dwellings, the taxes on
16        the taxpayer's principal residence shall be that
17        portion of the total taxes for the entire property
18        which is attributable to such principal residence;
19            (D) An amount equal to the amount of the capital
20        gain deduction allowable under the Internal Revenue
21        Code, to the extent deducted from gross income in the
22        computation of adjusted gross income;
23            (D-5) An amount, to the extent not included in
24        adjusted gross income, equal to the amount of money
25        withdrawn by the taxpayer in the taxable year from a
26        medical care savings account and the interest earned on

 

 

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1        the account in the taxable year of a withdrawal
2        pursuant to subsection (b) of Section 20 of the Medical
3        Care Savings Account Act or subsection (b) of Section
4        20 of the Medical Care Savings Account Act of 2000;
5            (D-10) For taxable years ending after December 31,
6        1997, an amount equal to any eligible remediation costs
7        that the individual deducted in computing adjusted
8        gross income and for which the individual claims a
9        credit under subsection (l) of Section 201;
10            (D-15) For taxable years 2001 and thereafter, an
11        amount equal to the bonus depreciation deduction taken
12        on the taxpayer's federal income tax return for the
13        taxable year under subsection (k) of Section 168 of the
14        Internal Revenue Code;
15            (D-16) If the taxpayer sells, transfers, abandons,
16        or otherwise disposes of property for which the
17        taxpayer was required in any taxable year to make an
18        addition modification under subparagraph (D-15), then
19        an amount equal to the aggregate amount of the
20        deductions taken in all taxable years under
21        subparagraph (Z) with respect to that property.
22            If the taxpayer continues to own property through
23        the last day of the last tax year for which the
24        taxpayer may claim a depreciation deduction for
25        federal income tax purposes and for which the taxpayer
26        was allowed in any taxable year to make a subtraction

 

 

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1        modification under subparagraph (Z), then an amount
2        equal to that subtraction modification.
3            The taxpayer is required to make the addition
4        modification under this subparagraph only once with
5        respect to any one piece of property;
6            (D-17) An amount equal to the amount otherwise
7        allowed as a deduction in computing base income for
8        interest paid, accrued, or incurred, directly or
9        indirectly, (i) for taxable years ending on or after
10        December 31, 2004, to a foreign person who would be a
11        member of the same unitary business group but for the
12        fact that foreign person's business activity outside
13        the United States is 80% or more of the foreign
14        person's total business activity and (ii) for taxable
15        years ending on or after December 31, 2008, to a person
16        who would be a member of the same unitary business
17        group but for the fact that the person is prohibited
18        under Section 1501(a)(27) from being included in the
19        unitary business group because he or she is ordinarily
20        required to apportion business income under different
21        subsections of Section 304. The addition modification
22        required by this subparagraph shall be reduced to the
23        extent that dividends were included in base income of
24        the unitary group for the same taxable year and
25        received by the taxpayer or by a member of the
26        taxpayer's unitary business group (including amounts

 

 

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1        included in gross income under Sections 951 through 964
2        of the Internal Revenue Code and amounts included in
3        gross income under Section 78 of the Internal Revenue
4        Code) with respect to the stock of the same person to
5        whom the interest was paid, accrued, or incurred.
6            This paragraph shall not apply to the following:
7                (i) an item of interest paid, accrued, or
8            incurred, directly or indirectly, to a person who
9            is subject in a foreign country or state, other
10            than a state which requires mandatory unitary
11            reporting, to a tax on or measured by net income
12            with respect to such interest; or
13                (ii) an item of interest paid, accrued, or
14            incurred, directly or indirectly, to a person if
15            the taxpayer can establish, based on a
16            preponderance of the evidence, both of the
17            following:
18                    (a) the person, during the same taxable
19                year, paid, accrued, or incurred, the interest
20                to a person that is not a related member, and
21                    (b) the transaction giving rise to the
22                interest expense between the taxpayer and the
23                person did not have as a principal purpose the
24                avoidance of Illinois income tax, and is paid
25                pursuant to a contract or agreement that
26                reflects an arm's-length interest rate and

 

 

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1                terms; or
2                (iii) the taxpayer can establish, based on
3            clear and convincing evidence, that the interest
4            paid, accrued, or incurred relates to a contract or
5            agreement entered into at arm's-length rates and
6            terms and the principal purpose for the payment is
7            not federal or Illinois tax avoidance; or
8                (iv) an item of interest paid, accrued, or
9            incurred, directly or indirectly, to a person if
10            the taxpayer establishes by clear and convincing
11            evidence that the adjustments are unreasonable; or
12            if the taxpayer and the Director agree in writing
13            to the application or use of an alternative method
14            of apportionment under Section 304(f).
15                Nothing in this subsection shall preclude the
16            Director from making any other adjustment
17            otherwise allowed under Section 404 of this Act for
18            any tax year beginning after the effective date of
19            this amendment provided such adjustment is made
20            pursuant to regulation adopted by the Department
21            and such regulations provide methods and standards
22            by which the Department will utilize its authority
23            under Section 404 of this Act;
24            (D-18) An amount equal to the amount of intangible
25        expenses and costs otherwise allowed as a deduction in
26        computing base income, and that were paid, accrued, or

 

 

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1        incurred, directly or indirectly, (i) for taxable
2        years ending on or after December 31, 2004, to a
3        foreign person who would be a member of the same
4        unitary business group but for the fact that the
5        foreign person's business activity outside the United
6        States is 80% or more of that person's total business
7        activity and (ii) for taxable years ending on or after
8        December 31, 2008, to a person who would be a member of
9        the same unitary business group but for the fact that
10        the person is prohibited under Section 1501(a)(27)
11        from being included in the unitary business group
12        because he or she is ordinarily required to apportion
13        business income under different subsections of Section
14        304. The addition modification required by this
15        subparagraph shall be reduced to the extent that
16        dividends were included in base income of the unitary
17        group for the same taxable year and received by the
18        taxpayer or by a member of the taxpayer's unitary
19        business group (including amounts included in gross
20        income under Sections 951 through 964 of the Internal
21        Revenue Code and amounts included in gross income under
22        Section 78 of the Internal Revenue Code) with respect
23        to the stock of the same person to whom the intangible
24        expenses and costs were directly or indirectly paid,
25        incurred, or accrued. The preceding sentence does not
26        apply to the extent that the same dividends caused a

 

 

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1        reduction to the addition modification required under
2        Section 203(a)(2)(D-17) of this Act. As used in this
3        subparagraph, the term "intangible expenses and costs"
4        includes (1) expenses, losses, and costs for, or
5        related to, the direct or indirect acquisition, use,
6        maintenance or management, ownership, sale, exchange,
7        or any other disposition of intangible property; (2)
8        losses incurred, directly or indirectly, from
9        factoring transactions or discounting transactions;
10        (3) royalty, patent, technical, and copyright fees;
11        (4) licensing fees; and (5) other similar expenses and
12        costs. For purposes of this subparagraph, "intangible
13        property" includes patents, patent applications, trade
14        names, trademarks, service marks, copyrights, mask
15        works, trade secrets, and similar types of intangible
16        assets.
17            This paragraph shall not apply to the following:
18                (i) any item of intangible expenses or costs
19            paid, accrued, or incurred, directly or
20            indirectly, from a transaction with a person who is
21            subject in a foreign country or state, other than a
22            state which requires mandatory unitary reporting,
23            to a tax on or measured by net income with respect
24            to such item; or
25                (ii) any item of intangible expense or cost
26            paid, accrued, or incurred, directly or

 

 

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1            indirectly, if the taxpayer can establish, based
2            on a preponderance of the evidence, both of the
3            following:
4                    (a) the person during the same taxable
5                year paid, accrued, or incurred, the
6                intangible expense or cost to a person that is
7                not a related member, and
8                    (b) the transaction giving rise to the
9                intangible expense or cost between the
10                taxpayer and the person did not have as a
11                principal purpose the avoidance of Illinois
12                income tax, and is paid pursuant to a contract
13                or agreement that reflects arm's-length terms;
14                or
15                (iii) any item of intangible expense or cost
16            paid, accrued, or incurred, directly or
17            indirectly, from a transaction with a person if the
18            taxpayer establishes by clear and convincing
19            evidence, that the adjustments are unreasonable;
20            or if the taxpayer and the Director agree in
21            writing to the application or use of an alternative
22            method of apportionment under Section 304(f);
23                Nothing in this subsection shall preclude the
24            Director from making any other adjustment
25            otherwise allowed under Section 404 of this Act for
26            any tax year beginning after the effective date of

 

 

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1            this amendment provided such adjustment is made
2            pursuant to regulation adopted by the Department
3            and such regulations provide methods and standards
4            by which the Department will utilize its authority
5            under Section 404 of this Act;
6            (D-19) For taxable years ending on or after
7        December 31, 2008, an amount equal to the amount of
8        insurance premium expenses and costs otherwise allowed
9        as a deduction in computing base income, and that were
10        paid, accrued, or incurred, directly or indirectly, to
11        a person who would be a member of the same unitary
12        business group but for the fact that the person is
13        prohibited under Section 1501(a)(27) from being
14        included in the unitary business group because he or
15        she is ordinarily required to apportion business
16        income under different subsections of Section 304. The
17        addition modification required by this subparagraph
18        shall be reduced to the extent that dividends were
19        included in base income of the unitary group for the
20        same taxable year and received by the taxpayer or by a
21        member of the taxpayer's unitary business group
22        (including amounts included in gross income under
23        Sections 951 through 964 of the Internal Revenue Code
24        and amounts included in gross income under Section 78
25        of the Internal Revenue Code) with respect to the stock
26        of the same person to whom the premiums and costs were

 

 

10100SB1199ham002- 19 -LRB101 08044 HLH 74840 a

1        directly or indirectly paid, incurred, or accrued. The
2        preceding sentence does not apply to the extent that
3        the same dividends caused a reduction to the addition
4        modification required under Section 203(a)(2)(D-17) or
5        Section 203(a)(2)(D-18) of this Act; .
6            (D-20) For taxable years beginning on or after
7        January 1, 2002 and ending on or before December 31,
8        2006, in the case of a distribution from a qualified
9        tuition program under Section 529 of the Internal
10        Revenue Code, other than (i) a distribution from a
11        College Savings Pool created under Section 16.5 of the
12        State Treasurer Act or (ii) a distribution from the
13        Illinois Prepaid Tuition Trust Fund, an amount equal to
14        the amount excluded from gross income under Section
15        529(c)(3)(B). For taxable years beginning on or after
16        January 1, 2007, in the case of a distribution from a
17        qualified tuition program under Section 529 of the
18        Internal Revenue Code, other than (i) a distribution
19        from a College Savings Pool created under Section 16.5
20        of the State Treasurer Act, (ii) a distribution from
21        the Illinois Prepaid Tuition Trust Fund, or (iii) a
22        distribution from a qualified tuition program under
23        Section 529 of the Internal Revenue Code that (I)
24        adopts and determines that its offering materials
25        comply with the College Savings Plans Network's
26        disclosure principles and (II) has made reasonable

 

 

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1        efforts to inform in-state residents of the existence
2        of in-state qualified tuition programs by informing
3        Illinois residents directly and, where applicable, to
4        inform financial intermediaries distributing the
5        program to inform in-state residents of the existence
6        of in-state qualified tuition programs at least
7        annually, an amount equal to the amount excluded from
8        gross income under Section 529(c)(3)(B).
9            For the purposes of this subparagraph (D-20), a
10        qualified tuition program has made reasonable efforts
11        if it makes disclosures (which may use the term
12        "in-state program" or "in-state plan" and need not
13        specifically refer to Illinois or its qualified
14        programs by name) (i) directly to prospective
15        participants in its offering materials or makes a
16        public disclosure, such as a website posting; and (ii)
17        where applicable, to intermediaries selling the
18        out-of-state program in the same manner that the
19        out-of-state program distributes its offering
20        materials;
21            (D-20.5) For taxable years beginning on or after
22        January 1, 2018, in the case of a distribution from a
23        qualified ABLE program under Section 529A of the
24        Internal Revenue Code, other than a distribution from a
25        qualified ABLE program created under Section 16.6 of
26        the State Treasurer Act, an amount equal to the amount

 

 

10100SB1199ham002- 21 -LRB101 08044 HLH 74840 a

1        excluded from gross income under Section 529A(c)(1)(B)
2        of the Internal Revenue Code;
3            (D-21) For taxable years beginning on or after
4        January 1, 2007, in the case of transfer of moneys from
5        a qualified tuition program under Section 529 of the
6        Internal Revenue Code that is administered by the State
7        to an out-of-state program, an amount equal to the
8        amount of moneys previously deducted from base income
9        under subsection (a)(2)(Y) of this Section;
10            (D-21.5) For taxable years beginning on or after
11        January 1, 2018, in the case of the transfer of moneys
12        from a qualified tuition program under Section 529 or a
13        qualified ABLE program under Section 529A of the
14        Internal Revenue Code that is administered by this
15        State to an ABLE account established under an
16        out-of-state ABLE account program, an amount equal to
17        the contribution component of the transferred amount
18        that was previously deducted from base income under
19        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
20        Section;
21            (D-22) For taxable years beginning on or after
22        January 1, 2009, and prior to January 1, 2018, in the
23        case of a nonqualified withdrawal or refund of moneys
24        from a qualified tuition program under Section 529 of
25        the Internal Revenue Code administered by the State
26        that is not used for qualified expenses at an eligible

 

 

10100SB1199ham002- 22 -LRB101 08044 HLH 74840 a

1        education institution, an amount equal to the
2        contribution component of the nonqualified withdrawal
3        or refund that was previously deducted from base income
4        under subsection (a)(2)(y) of this Section, provided
5        that the withdrawal or refund did not result from the
6        beneficiary's death or disability. For taxable years
7        beginning on or after January 1, 2018: (1) in the case
8        of a nonqualified withdrawal or refund, as defined
9        under Section 16.5 of the State Treasurer Act, of
10        moneys from a qualified tuition program under Section
11        529 of the Internal Revenue Code administered by the
12        State, an amount equal to the contribution component of
13        the nonqualified withdrawal or refund that was
14        previously deducted from base income under subsection
15        (a)(2)(Y) of this Section, and (2) in the case of a
16        nonqualified withdrawal or refund from a qualified
17        ABLE program under Section 529A of the Internal Revenue
18        Code administered by the State that is not used for
19        qualified disability expenses, an amount equal to the
20        contribution component of the nonqualified withdrawal
21        or refund that was previously deducted from base income
22        under subsection (a)(2)(HH) of this Section;
23            (D-23) An amount equal to the credit allowable to
24        the taxpayer under Section 218(a) of this Act,
25        determined without regard to Section 218(c) of this
26        Act;

 

 

10100SB1199ham002- 23 -LRB101 08044 HLH 74840 a

1            (D-24) For taxable years ending on or after
2        December 31, 2017, an amount equal to the deduction
3        allowed under Section 199 of the Internal Revenue Code
4        for the taxable year;
5    and by deducting from the total so obtained the sum of the
6    following amounts:
7            (E) For taxable years ending before December 31,
8        2001, any amount included in such total in respect of
9        any compensation (including but not limited to any
10        compensation paid or accrued to a serviceman while a
11        prisoner of war or missing in action) paid to a
12        resident by reason of being on active duty in the Armed
13        Forces of the United States and in respect of any
14        compensation paid or accrued to a resident who as a
15        governmental employee was a prisoner of war or missing
16        in action, and in respect of any compensation paid to a
17        resident in 1971 or thereafter for annual training
18        performed pursuant to Sections 502 and 503, Title 32,
19        United States Code as a member of the Illinois National
20        Guard or, beginning with taxable years ending on or
21        after December 31, 2007, the National Guard of any
22        other state. For taxable years ending on or after
23        December 31, 2001, any amount included in such total in
24        respect of any compensation (including but not limited
25        to any compensation paid or accrued to a serviceman
26        while a prisoner of war or missing in action) paid to a

 

 

10100SB1199ham002- 24 -LRB101 08044 HLH 74840 a

1        resident by reason of being a member of any component
2        of the Armed Forces of the United States and in respect
3        of any compensation paid or accrued to a resident who
4        as a governmental employee was a prisoner of war or
5        missing in action, and in respect of any compensation
6        paid to a resident in 2001 or thereafter by reason of
7        being a member of the Illinois National Guard or,
8        beginning with taxable years ending on or after
9        December 31, 2007, the National Guard of any other
10        state. The provisions of this subparagraph (E) are
11        exempt from the provisions of Section 250;
12            (F) An amount equal to all amounts included in such
13        total pursuant to the provisions of Sections 402(a),
14        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the
15        Internal Revenue Code, or included in such total as
16        distributions under the provisions of any retirement
17        or disability plan for employees of any governmental
18        agency or unit, or retirement payments to retired
19        partners, which payments are excluded in computing net
20        earnings from self employment by Section 1402 of the
21        Internal Revenue Code and regulations adopted pursuant
22        thereto;
23            (G) The valuation limitation amount;
24            (H) An amount equal to the amount of any tax
25        imposed by this Act which was refunded to the taxpayer
26        and included in such total for the taxable year;

 

 

10100SB1199ham002- 25 -LRB101 08044 HLH 74840 a

1            (I) An amount equal to all amounts included in such
2        total pursuant to the provisions of Section 111 of the
3        Internal Revenue Code as a recovery of items previously
4        deducted from adjusted gross income in the computation
5        of taxable income;
6            (J) An amount equal to those dividends included in
7        such total which were paid by a corporation which
8        conducts business operations in a River Edge
9        Redevelopment Zone or zones created under the River
10        Edge Redevelopment Zone Act, and conducts
11        substantially all of its operations in a River Edge
12        Redevelopment Zone or zones. This subparagraph (J) is
13        exempt from the provisions of Section 250;
14            (K) An amount equal to those dividends included in
15        such total that were paid by a corporation that
16        conducts business operations in a federally designated
17        Foreign Trade Zone or Sub-Zone and that is designated a
18        High Impact Business located in Illinois; provided
19        that dividends eligible for the deduction provided in
20        subparagraph (J) of paragraph (2) of this subsection
21        shall not be eligible for the deduction provided under
22        this subparagraph (K);
23            (L) For taxable years ending after December 31,
24        1983, an amount equal to all social security benefits
25        and railroad retirement benefits included in such
26        total pursuant to Sections 72(r) and 86 of the Internal

 

 

10100SB1199ham002- 26 -LRB101 08044 HLH 74840 a

1        Revenue Code;
2            (M) With the exception of any amounts subtracted
3        under subparagraph (N), an amount equal to the sum of
4        all amounts disallowed as deductions by (i) Sections
5        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
6        and all amounts of expenses allocable to interest and
7        disallowed as deductions by Section 265(a)(1) of the
8        Internal Revenue Code; and (ii) for taxable years
9        ending on or after August 13, 1999, Sections 171(a)(2),
10        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
11        Code, plus, for taxable years ending on or after
12        December 31, 2011, Section 45G(e)(3) of the Internal
13        Revenue Code and, for taxable years ending on or after
14        December 31, 2008, any amount included in gross income
15        under Section 87 of the Internal Revenue Code; the
16        provisions of this subparagraph are exempt from the
17        provisions of Section 250;
18            (N) An amount equal to all amounts included in such
19        total which are exempt from taxation by this State
20        either by reason of its statutes or Constitution or by
21        reason of the Constitution, treaties or statutes of the
22        United States; provided that, in the case of any
23        statute of this State that exempts income derived from
24        bonds or other obligations from the tax imposed under
25        this Act, the amount exempted shall be the interest net
26        of bond premium amortization;

 

 

10100SB1199ham002- 27 -LRB101 08044 HLH 74840 a

1            (O) An amount equal to any contribution made to a
2        job training project established pursuant to the Tax
3        Increment Allocation Redevelopment Act;
4            (P) An amount equal to the amount of the deduction
5        used to compute the federal income tax credit for
6        restoration of substantial amounts held under claim of
7        right for the taxable year pursuant to Section 1341 of
8        the Internal Revenue Code or of any itemized deduction
9        taken from adjusted gross income in the computation of
10        taxable income for restoration of substantial amounts
11        held under claim of right for the taxable year;
12            (Q) An amount equal to any amounts included in such
13        total, received by the taxpayer as an acceleration in
14        the payment of life, endowment or annuity benefits in
15        advance of the time they would otherwise be payable as
16        an indemnity for a terminal illness;
17            (R) An amount equal to the amount of any federal or
18        State bonus paid to veterans of the Persian Gulf War;
19            (S) An amount, to the extent included in adjusted
20        gross income, equal to the amount of a contribution
21        made in the taxable year on behalf of the taxpayer to a
22        medical care savings account established under the
23        Medical Care Savings Account Act or the Medical Care
24        Savings Account Act of 2000 to the extent the
25        contribution is accepted by the account administrator
26        as provided in that Act;

 

 

10100SB1199ham002- 28 -LRB101 08044 HLH 74840 a

1            (T) An amount, to the extent included in adjusted
2        gross income, equal to the amount of interest earned in
3        the taxable year on a medical care savings account
4        established under the Medical Care Savings Account Act
5        or the Medical Care Savings Account Act of 2000 on
6        behalf of the taxpayer, other than interest added
7        pursuant to item (D-5) of this paragraph (2);
8            (U) For one taxable year beginning on or after
9        January 1, 1994, an amount equal to the total amount of
10        tax imposed and paid under subsections (a) and (b) of
11        Section 201 of this Act on grant amounts received by
12        the taxpayer under the Nursing Home Grant Assistance
13        Act during the taxpayer's taxable years 1992 and 1993;
14            (V) Beginning with tax years ending on or after
15        December 31, 1995 and ending with tax years ending on
16        or before December 31, 2004, an amount equal to the
17        amount paid by a taxpayer who is a self-employed
18        taxpayer, a partner of a partnership, or a shareholder
19        in a Subchapter S corporation for health insurance or
20        long-term care insurance for that taxpayer or that
21        taxpayer's spouse or dependents, to the extent that the
22        amount paid for that health insurance or long-term care
23        insurance may be deducted under Section 213 of the
24        Internal Revenue Code, has not been deducted on the
25        federal income tax return of the taxpayer, and does not
26        exceed the taxable income attributable to that

 

 

10100SB1199ham002- 29 -LRB101 08044 HLH 74840 a

1        taxpayer's income, self-employment income, or
2        Subchapter S corporation income; except that no
3        deduction shall be allowed under this item (V) if the
4        taxpayer is eligible to participate in any health
5        insurance or long-term care insurance plan of an
6        employer of the taxpayer or the taxpayer's spouse. The
7        amount of the health insurance and long-term care
8        insurance subtracted under this item (V) shall be
9        determined by multiplying total health insurance and
10        long-term care insurance premiums paid by the taxpayer
11        times a number that represents the fractional
12        percentage of eligible medical expenses under Section
13        213 of the Internal Revenue Code of 1986 not actually
14        deducted on the taxpayer's federal income tax return;
15            (W) For taxable years beginning on or after January
16        1, 1998, all amounts included in the taxpayer's federal
17        gross income in the taxable year from amounts converted
18        from a regular IRA to a Roth IRA. This paragraph is
19        exempt from the provisions of Section 250;
20            (X) For taxable year 1999 and thereafter, an amount
21        equal to the amount of any (i) distributions, to the
22        extent includible in gross income for federal income
23        tax purposes, made to the taxpayer because of his or
24        her status as a victim of persecution for racial or
25        religious reasons by Nazi Germany or any other Axis
26        regime or as an heir of the victim and (ii) items of

 

 

10100SB1199ham002- 30 -LRB101 08044 HLH 74840 a

1        income, to the extent includible in gross income for
2        federal income tax purposes, attributable to, derived
3        from or in any way related to assets stolen from,
4        hidden from, or otherwise lost to a victim of
5        persecution for racial or religious reasons by Nazi
6        Germany or any other Axis regime immediately prior to,
7        during, and immediately after World War II, including,
8        but not limited to, interest on the proceeds receivable
9        as insurance under policies issued to a victim of
10        persecution for racial or religious reasons by Nazi
11        Germany or any other Axis regime by European insurance
12        companies immediately prior to and during World War II;
13        provided, however, this subtraction from federal
14        adjusted gross income does not apply to assets acquired
15        with such assets or with the proceeds from the sale of
16        such assets; provided, further, this paragraph shall
17        only apply to a taxpayer who was the first recipient of
18        such assets after their recovery and who is a victim of
19        persecution for racial or religious reasons by Nazi
20        Germany or any other Axis regime or as an heir of the
21        victim. The amount of and the eligibility for any
22        public assistance, benefit, or similar entitlement is
23        not affected by the inclusion of items (i) and (ii) of
24        this paragraph in gross income for federal income tax
25        purposes. This paragraph is exempt from the provisions
26        of Section 250;

 

 

10100SB1199ham002- 31 -LRB101 08044 HLH 74840 a

1            (Y) For taxable years beginning on or after January
2        1, 2002 and ending on or before December 31, 2004,
3        moneys contributed in the taxable year to a College
4        Savings Pool account under Section 16.5 of the State
5        Treasurer Act, except that amounts excluded from gross
6        income under Section 529(c)(3)(C)(i) of the Internal
7        Revenue Code shall not be considered moneys
8        contributed under this subparagraph (Y). For taxable
9        years beginning on or after January 1, 2005, a maximum
10        of $10,000 contributed in the taxable year to (i) a
11        College Savings Pool account under Section 16.5 of the
12        State Treasurer Act or (ii) the Illinois Prepaid
13        Tuition Trust Fund, except that amounts excluded from
14        gross income under Section 529(c)(3)(C)(i) of the
15        Internal Revenue Code shall not be considered moneys
16        contributed under this subparagraph (Y). For purposes
17        of this subparagraph, contributions made by an
18        employer on behalf of an employee, or matching
19        contributions made by an employee, shall be treated as
20        made by the employee. This subparagraph (Y) is exempt
21        from the provisions of Section 250;
22            (Z) For taxable years 2001 and thereafter, for the
23        taxable year in which the bonus depreciation deduction
24        is taken on the taxpayer's federal income tax return
25        under subsection (k) of Section 168 of the Internal
26        Revenue Code and for each applicable taxable year

 

 

10100SB1199ham002- 32 -LRB101 08044 HLH 74840 a

1        thereafter, an amount equal to "x", where:
2                (1) "y" equals the amount of the depreciation
3            deduction taken for the taxable year on the
4            taxpayer's federal income tax return on property
5            for which the bonus depreciation deduction was
6            taken in any year under subsection (k) of Section
7            168 of the Internal Revenue Code, but not including
8            the bonus depreciation deduction;
9                (2) for taxable years ending on or before
10            December 31, 2005, "x" equals "y" multiplied by 30
11            and then divided by 70 (or "y" multiplied by
12            0.429); and
13                (3) for taxable years ending after December
14            31, 2005:
15                    (i) for property on which a bonus
16                depreciation deduction of 30% of the adjusted
17                basis was taken, "x" equals "y" multiplied by
18                30 and then divided by 70 (or "y" multiplied by
19                0.429); and
20                    (ii) for property on which a bonus
21                depreciation deduction of 50% of the adjusted
22                basis was taken, "x" equals "y" multiplied by
23                1.0.
24            The aggregate amount deducted under this
25        subparagraph in all taxable years for any one piece of
26        property may not exceed the amount of the bonus

 

 

10100SB1199ham002- 33 -LRB101 08044 HLH 74840 a

1        depreciation deduction taken on that property on the
2        taxpayer's federal income tax return under subsection
3        (k) of Section 168 of the Internal Revenue Code. This
4        subparagraph (Z) is exempt from the provisions of
5        Section 250;
6            (AA) If the taxpayer sells, transfers, abandons,
7        or otherwise disposes of property for which the
8        taxpayer was required in any taxable year to make an
9        addition modification under subparagraph (D-15), then
10        an amount equal to that addition modification.
11            If the taxpayer continues to own property through
12        the last day of the last tax year for which the
13        taxpayer may claim a depreciation deduction for
14        federal income tax purposes and for which the taxpayer
15        was required in any taxable year to make an addition
16        modification under subparagraph (D-15), then an amount
17        equal to that addition modification.
18            The taxpayer is allowed to take the deduction under
19        this subparagraph only once with respect to any one
20        piece of property.
21            This subparagraph (AA) is exempt from the
22        provisions of Section 250;
23            (BB) Any amount included in adjusted gross income,
24        other than salary, received by a driver in a
25        ridesharing arrangement using a motor vehicle;
26            (CC) The amount of (i) any interest income (net of

 

 

10100SB1199ham002- 34 -LRB101 08044 HLH 74840 a

1        the deductions allocable thereto) taken into account
2        for the taxable year with respect to a transaction with
3        a taxpayer that is required to make an addition
4        modification with respect to such transaction under
5        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
6        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
7        the amount of that addition modification, and (ii) any
8        income from intangible property (net of the deductions
9        allocable thereto) taken into account for the taxable
10        year with respect to a transaction with a taxpayer that
11        is required to make an addition modification with
12        respect to such transaction under Section
13        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
14        203(d)(2)(D-8), but not to exceed the amount of that
15        addition modification. This subparagraph (CC) is
16        exempt from the provisions of Section 250;
17            (DD) An amount equal to the interest income taken
18        into account for the taxable year (net of the
19        deductions allocable thereto) with respect to
20        transactions with (i) a foreign person who would be a
21        member of the taxpayer's unitary business group but for
22        the fact that the foreign person's business activity
23        outside the United States is 80% or more of that
24        person's total business activity and (ii) for taxable
25        years ending on or after December 31, 2008, to a person
26        who would be a member of the same unitary business

 

 

10100SB1199ham002- 35 -LRB101 08044 HLH 74840 a

1        group but for the fact that the person is prohibited
2        under Section 1501(a)(27) from being included in the
3        unitary business group because he or she is ordinarily
4        required to apportion business income under different
5        subsections of Section 304, but not to exceed the
6        addition modification required to be made for the same
7        taxable year under Section 203(a)(2)(D-17) for
8        interest paid, accrued, or incurred, directly or
9        indirectly, to the same person. This subparagraph (DD)
10        is exempt from the provisions of Section 250;
11            (EE) An amount equal to the income from intangible
12        property taken into account for the taxable year (net
13        of the deductions allocable thereto) with respect to
14        transactions with (i) a foreign person who would be a
15        member of the taxpayer's unitary business group but for
16        the fact that the foreign person's business activity
17        outside the United States is 80% or more of that
18        person's total business activity and (ii) for taxable
19        years ending on or after December 31, 2008, to a person
20        who would be a member of the same unitary business
21        group but for the fact that the person is prohibited
22        under Section 1501(a)(27) from being included in the
23        unitary business group because he or she is ordinarily
24        required to apportion business income under different
25        subsections of Section 304, but not to exceed the
26        addition modification required to be made for the same

 

 

10100SB1199ham002- 36 -LRB101 08044 HLH 74840 a

1        taxable year under Section 203(a)(2)(D-18) for
2        intangible expenses and costs paid, accrued, or
3        incurred, directly or indirectly, to the same foreign
4        person. This subparagraph (EE) is exempt from the
5        provisions of Section 250;
6            (FF) An amount equal to any amount awarded to the
7        taxpayer during the taxable year by the Court of Claims
8        under subsection (c) of Section 8 of the Court of
9        Claims Act for time unjustly served in a State prison.
10        This subparagraph (FF) is exempt from the provisions of
11        Section 250;
12            (GG) For taxable years ending on or after December
13        31, 2011, in the case of a taxpayer who was required to
14        add back any insurance premiums under Section
15        203(a)(2)(D-19), such taxpayer may elect to subtract
16        that part of a reimbursement received from the
17        insurance company equal to the amount of the expense or
18        loss (including expenses incurred by the insurance
19        company) that would have been taken into account as a
20        deduction for federal income tax purposes if the
21        expense or loss had been uninsured. If a taxpayer makes
22        the election provided for by this subparagraph (GG),
23        the insurer to which the premiums were paid must add
24        back to income the amount subtracted by the taxpayer
25        pursuant to this subparagraph (GG). This subparagraph
26        (GG) is exempt from the provisions of Section 250; and

 

 

10100SB1199ham002- 37 -LRB101 08044 HLH 74840 a

1            (HH) For taxable years beginning on or after
2        January 1, 2018 and prior to January 1, 2023, a maximum
3        of $10,000 contributed in the taxable year to a
4        qualified ABLE account under Section 16.6 of the State
5        Treasurer Act, except that amounts excluded from gross
6        income under Section 529(c)(3)(C)(i) or Section
7        529A(c)(1)(C) of the Internal Revenue Code shall not be
8        considered moneys contributed under this subparagraph
9        (HH). For purposes of this subparagraph (HH),
10        contributions made by an employer on behalf of an
11        employee, or matching contributions made by an
12        employee, shall be treated as made by the employee.
 
13    (b) Corporations.
14        (1) In general. In the case of a corporation, base
15    income means an amount equal to the taxpayer's taxable
16    income for the taxable year as modified by paragraph (2).
17        (2) Modifications. The taxable income referred to in
18    paragraph (1) shall be modified by adding thereto the sum
19    of the following amounts:
20            (A) An amount equal to all amounts paid or accrued
21        to the taxpayer as interest and all distributions
22        received from regulated investment companies during
23        the taxable year to the extent excluded from gross
24        income in the computation of taxable income;
25            (B) An amount equal to the amount of tax imposed by

 

 

10100SB1199ham002- 38 -LRB101 08044 HLH 74840 a

1        this Act to the extent deducted from gross income in
2        the computation of taxable income for the taxable year;
3            (C) In the case of a regulated investment company,
4        an amount equal to the excess of (i) the net long-term
5        capital gain for the taxable year, over (ii) the amount
6        of the capital gain dividends designated as such in
7        accordance with Section 852(b)(3)(C) of the Internal
8        Revenue Code and any amount designated under Section
9        852(b)(3)(D) of the Internal Revenue Code,
10        attributable to the taxable year (this amendatory Act
11        of 1995 (Public Act 89-89) is declarative of existing
12        law and is not a new enactment);
13            (D) The amount of any net operating loss deduction
14        taken in arriving at taxable income, other than a net
15        operating loss carried forward from a taxable year
16        ending prior to December 31, 1986;
17            (E) For taxable years in which a net operating loss
18        carryback or carryforward from a taxable year ending
19        prior to December 31, 1986 is an element of taxable
20        income under paragraph (1) of subsection (e) or
21        subparagraph (E) of paragraph (2) of subsection (e),
22        the amount by which addition modifications other than
23        those provided by this subparagraph (E) exceeded
24        subtraction modifications in such earlier taxable
25        year, with the following limitations applied in the
26        order that they are listed:

 

 

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1                (i) the addition modification relating to the
2            net operating loss carried back or forward to the
3            taxable year from any taxable year ending prior to
4            December 31, 1986 shall be reduced by the amount of
5            addition modification under this subparagraph (E)
6            which related to that net operating loss and which
7            was taken into account in calculating the base
8            income of an earlier taxable year, and
9                (ii) the addition modification relating to the
10            net operating loss carried back or forward to the
11            taxable year from any taxable year ending prior to
12            December 31, 1986 shall not exceed the amount of
13            such carryback or carryforward;
14            For taxable years in which there is a net operating
15        loss carryback or carryforward from more than one other
16        taxable year ending prior to December 31, 1986, the
17        addition modification provided in this subparagraph
18        (E) shall be the sum of the amounts computed
19        independently under the preceding provisions of this
20        subparagraph (E) for each such taxable year;
21            (E-5) For taxable years ending after December 31,
22        1997, an amount equal to any eligible remediation costs
23        that the corporation deducted in computing adjusted
24        gross income and for which the corporation claims a
25        credit under subsection (l) of Section 201;
26            (E-10) For taxable years 2001 and thereafter, an

 

 

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1        amount equal to the bonus depreciation deduction taken
2        on the taxpayer's federal income tax return for the
3        taxable year under subsection (k) of Section 168 of the
4        Internal Revenue Code;
5            (E-11) If the taxpayer sells, transfers, abandons,
6        or otherwise disposes of property for which the
7        taxpayer was required in any taxable year to make an
8        addition modification under subparagraph (E-10), then
9        an amount equal to the aggregate amount of the
10        deductions taken in all taxable years under
11        subparagraph (T) with respect to that property.
12            If the taxpayer continues to own property through
13        the last day of the last tax year for which the
14        taxpayer may claim a depreciation deduction for
15        federal income tax purposes and for which the taxpayer
16        was allowed in any taxable year to make a subtraction
17        modification under subparagraph (T), then an amount
18        equal to that subtraction modification.
19            The taxpayer is required to make the addition
20        modification under this subparagraph only once with
21        respect to any one piece of property;
22            (E-12) An amount equal to the amount otherwise
23        allowed as a deduction in computing base income for
24        interest paid, accrued, or incurred, directly or
25        indirectly, (i) for taxable years ending on or after
26        December 31, 2004, to a foreign person who would be a

 

 

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1        member of the same unitary business group but for the
2        fact the foreign person's business activity outside
3        the United States is 80% or more of the foreign
4        person's total business activity and (ii) for taxable
5        years ending on or after December 31, 2008, to a person
6        who would be a member of the same unitary business
7        group but for the fact that the person is prohibited
8        under Section 1501(a)(27) from being included in the
9        unitary business group because he or she is ordinarily
10        required to apportion business income under different
11        subsections of Section 304. The addition modification
12        required by this subparagraph shall be reduced to the
13        extent that dividends were included in base income of
14        the unitary group for the same taxable year and
15        received by the taxpayer or by a member of the
16        taxpayer's unitary business group (including amounts
17        included in gross income pursuant to Sections 951
18        through 964 of the Internal Revenue Code and amounts
19        included in gross income under Section 78 of the
20        Internal Revenue Code) with respect to the stock of the
21        same person to whom the interest was paid, accrued, or
22        incurred.
23            This paragraph shall not apply to the following:
24                (i) an item of interest paid, accrued, or
25            incurred, directly or indirectly, to a person who
26            is subject in a foreign country or state, other

 

 

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1            than a state which requires mandatory unitary
2            reporting, to a tax on or measured by net income
3            with respect to such interest; or
4                (ii) an item of interest paid, accrued, or
5            incurred, directly or indirectly, to a person if
6            the taxpayer can establish, based on a
7            preponderance of the evidence, both of the
8            following:
9                    (a) the person, during the same taxable
10                year, paid, accrued, or incurred, the interest
11                to a person that is not a related member, and
12                    (b) the transaction giving rise to the
13                interest expense between the taxpayer and the
14                person did not have as a principal purpose the
15                avoidance of Illinois income tax, and is paid
16                pursuant to a contract or agreement that
17                reflects an arm's-length interest rate and
18                terms; or
19                (iii) the taxpayer can establish, based on
20            clear and convincing evidence, that the interest
21            paid, accrued, or incurred relates to a contract or
22            agreement entered into at arm's-length rates and
23            terms and the principal purpose for the payment is
24            not federal or Illinois tax avoidance; or
25                (iv) an item of interest paid, accrued, or
26            incurred, directly or indirectly, to a person if

 

 

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1            the taxpayer establishes by clear and convincing
2            evidence that the adjustments are unreasonable; or
3            if the taxpayer and the Director agree in writing
4            to the application or use of an alternative method
5            of apportionment under Section 304(f).
6                Nothing in this subsection shall preclude the
7            Director from making any other adjustment
8            otherwise allowed under Section 404 of this Act for
9            any tax year beginning after the effective date of
10            this amendment provided such adjustment is made
11            pursuant to regulation adopted by the Department
12            and such regulations provide methods and standards
13            by which the Department will utilize its authority
14            under Section 404 of this Act;
15            (E-13) An amount equal to the amount of intangible
16        expenses and costs otherwise allowed as a deduction in
17        computing base income, and that were paid, accrued, or
18        incurred, directly or indirectly, (i) for taxable
19        years ending on or after December 31, 2004, to a
20        foreign person who would be a member of the same
21        unitary business group but for the fact that the
22        foreign person's business activity outside the United
23        States is 80% or more of that person's total business
24        activity and (ii) for taxable years ending on or after
25        December 31, 2008, to a person who would be a member of
26        the same unitary business group but for the fact that

 

 

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1        the person is prohibited under Section 1501(a)(27)
2        from being included in the unitary business group
3        because he or she is ordinarily required to apportion
4        business income under different subsections of Section
5        304. The addition modification required by this
6        subparagraph shall be reduced to the extent that
7        dividends were included in base income of the unitary
8        group for the same taxable year and received by the
9        taxpayer or by a member of the taxpayer's unitary
10        business group (including amounts included in gross
11        income pursuant to Sections 951 through 964 of the
12        Internal Revenue Code and amounts included in gross
13        income under Section 78 of the Internal Revenue Code)
14        with respect to the stock of the same person to whom
15        the intangible expenses and costs were directly or
16        indirectly paid, incurred, or accrued. The preceding
17        sentence shall not apply to the extent that the same
18        dividends caused a reduction to the addition
19        modification required under Section 203(b)(2)(E-12) of
20        this Act. As used in this subparagraph, the term
21        "intangible expenses and costs" includes (1) expenses,
22        losses, and costs for, or related to, the direct or
23        indirect acquisition, use, maintenance or management,
24        ownership, sale, exchange, or any other disposition of
25        intangible property; (2) losses incurred, directly or
26        indirectly, from factoring transactions or discounting

 

 

10100SB1199ham002- 45 -LRB101 08044 HLH 74840 a

1        transactions; (3) royalty, patent, technical, and
2        copyright fees; (4) licensing fees; and (5) other
3        similar expenses and costs. For purposes of this
4        subparagraph, "intangible property" includes patents,
5        patent applications, trade names, trademarks, service
6        marks, copyrights, mask works, trade secrets, and
7        similar types of intangible assets.
8            This paragraph shall not apply to the following:
9                (i) any item of intangible expenses or costs
10            paid, accrued, or incurred, directly or
11            indirectly, from a transaction with a person who is
12            subject in a foreign country or state, other than a
13            state which requires mandatory unitary reporting,
14            to a tax on or measured by net income with respect
15            to such item; or
16                (ii) any item of intangible expense or cost
17            paid, accrued, or incurred, directly or
18            indirectly, if the taxpayer can establish, based
19            on a preponderance of the evidence, both of the
20            following:
21                    (a) the person during the same taxable
22                year paid, accrued, or incurred, the
23                intangible expense or cost to a person that is
24                not a related member, and
25                    (b) the transaction giving rise to the
26                intangible expense or cost between the

 

 

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1                taxpayer and the person did not have as a
2                principal purpose the avoidance of Illinois
3                income tax, and is paid pursuant to a contract
4                or agreement that reflects arm's-length terms;
5                or
6                (iii) any item of intangible expense or cost
7            paid, accrued, or incurred, directly or
8            indirectly, from a transaction with a person if the
9            taxpayer establishes by clear and convincing
10            evidence, that the adjustments are unreasonable;
11            or if the taxpayer and the Director agree in
12            writing to the application or use of an alternative
13            method of apportionment under Section 304(f);
14                Nothing in this subsection shall preclude the
15            Director from making any other adjustment
16            otherwise allowed under Section 404 of this Act for
17            any tax year beginning after the effective date of
18            this amendment provided such adjustment is made
19            pursuant to regulation adopted by the Department
20            and such regulations provide methods and standards
21            by which the Department will utilize its authority
22            under Section 404 of this Act;
23            (E-14) For taxable years ending on or after
24        December 31, 2008, an amount equal to the amount of
25        insurance premium expenses and costs otherwise allowed
26        as a deduction in computing base income, and that were

 

 

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1        paid, accrued, or incurred, directly or indirectly, to
2        a person who would be a member of the same unitary
3        business group but for the fact that the person is
4        prohibited under Section 1501(a)(27) from being
5        included in the unitary business group because he or
6        she is ordinarily required to apportion business
7        income under different subsections of Section 304. The
8        addition modification required by this subparagraph
9        shall be reduced to the extent that dividends were
10        included in base income of the unitary group for the
11        same taxable year and received by the taxpayer or by a
12        member of the taxpayer's unitary business group
13        (including amounts included in gross income under
14        Sections 951 through 964 of the Internal Revenue Code
15        and amounts included in gross income under Section 78
16        of the Internal Revenue Code) with respect to the stock
17        of the same person to whom the premiums and costs were
18        directly or indirectly paid, incurred, or accrued. The
19        preceding sentence does not apply to the extent that
20        the same dividends caused a reduction to the addition
21        modification required under Section 203(b)(2)(E-12) or
22        Section 203(b)(2)(E-13) of this Act;
23            (E-15) For taxable years beginning after December
24        31, 2008, any deduction for dividends paid by a captive
25        real estate investment trust that is allowed to a real
26        estate investment trust under Section 857(b)(2)(B) of

 

 

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1        the Internal Revenue Code for dividends paid;
2            (E-16) An amount equal to the credit allowable to
3        the taxpayer under Section 218(a) of this Act,
4        determined without regard to Section 218(c) of this
5        Act;
6            (E-17) For taxable years ending on or after
7        December 31, 2017, an amount equal to the deduction
8        allowed under Section 199 of the Internal Revenue Code
9        for the taxable year;
10            (E-18) for taxable years beginning after December
11        31, 2018, an amount equal to the deduction allowed
12        under Section 250(a)(1)(A) of the Internal Revenue
13        Code for the taxable year.
14    and by deducting from the total so obtained the sum of the
15    following amounts:
16            (F) An amount equal to the amount of any tax
17        imposed by this Act which was refunded to the taxpayer
18        and included in such total for the taxable year;
19            (G) An amount equal to any amount included in such
20        total under Section 78 of the Internal Revenue Code;
21            (H) In the case of a regulated investment company,
22        an amount equal to the amount of exempt interest
23        dividends as defined in subsection (b)(5) of Section
24        852 of the Internal Revenue Code, paid to shareholders
25        for the taxable year;
26            (I) With the exception of any amounts subtracted

 

 

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1        under subparagraph (J), an amount equal to the sum of
2        all amounts disallowed as deductions by (i) Sections
3        171(a)(2), and 265(a)(2) and amounts disallowed as
4        interest expense by Section 291(a)(3) of the Internal
5        Revenue Code, and all amounts of expenses allocable to
6        interest and disallowed as deductions by Section
7        265(a)(1) of the Internal Revenue Code; and (ii) for
8        taxable years ending on or after August 13, 1999,
9        Sections 171(a)(2), 265, 280C, 291(a)(3), and
10        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
11        for tax years ending on or after December 31, 2011,
12        amounts disallowed as deductions by Section 45G(e)(3)
13        of the Internal Revenue Code and, for taxable years
14        ending on or after December 31, 2008, any amount
15        included in gross income under Section 87 of the
16        Internal Revenue Code and the policyholders' share of
17        tax-exempt interest of a life insurance company under
18        Section 807(a)(2)(B) of the Internal Revenue Code (in
19        the case of a life insurance company with gross income
20        from a decrease in reserves for the tax year) or
21        Section 807(b)(1)(B) of the Internal Revenue Code (in
22        the case of a life insurance company allowed a
23        deduction for an increase in reserves for the tax
24        year); the provisions of this subparagraph are exempt
25        from the provisions of Section 250;
26            (J) An amount equal to all amounts included in such

 

 

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1        total which are exempt from taxation by this State
2        either by reason of its statutes or Constitution or by
3        reason of the Constitution, treaties or statutes of the
4        United States; provided that, in the case of any
5        statute of this State that exempts income derived from
6        bonds or other obligations from the tax imposed under
7        this Act, the amount exempted shall be the interest net
8        of bond premium amortization;
9            (K) An amount equal to those dividends included in
10        such total which were paid by a corporation which
11        conducts business operations in a River Edge
12        Redevelopment Zone or zones created under the River
13        Edge Redevelopment Zone Act and conducts substantially
14        all of its operations in a River Edge Redevelopment
15        Zone or zones. This subparagraph (K) is exempt from the
16        provisions of Section 250;
17            (L) An amount equal to those dividends included in
18        such total that were paid by a corporation that
19        conducts business operations in a federally designated
20        Foreign Trade Zone or Sub-Zone and that is designated a
21        High Impact Business located in Illinois; provided
22        that dividends eligible for the deduction provided in
23        subparagraph (K) of paragraph 2 of this subsection
24        shall not be eligible for the deduction provided under
25        this subparagraph (L);
26            (M) For any taxpayer that is a financial

 

 

10100SB1199ham002- 51 -LRB101 08044 HLH 74840 a

1        organization within the meaning of Section 304(c) of
2        this Act, an amount included in such total as interest
3        income from a loan or loans made by such taxpayer to a
4        borrower, to the extent that such a loan is secured by
5        property which is eligible for the River Edge
6        Redevelopment Zone Investment Credit. To determine the
7        portion of a loan or loans that is secured by property
8        eligible for a Section 201(f) investment credit to the
9        borrower, the entire principal amount of the loan or
10        loans between the taxpayer and the borrower should be
11        divided into the basis of the Section 201(f) investment
12        credit property which secures the loan or loans, using
13        for this purpose the original basis of such property on
14        the date that it was placed in service in the River
15        Edge Redevelopment Zone. The subtraction modification
16        available to the taxpayer in any year under this
17        subsection shall be that portion of the total interest
18        paid by the borrower with respect to such loan
19        attributable to the eligible property as calculated
20        under the previous sentence. This subparagraph (M) is
21        exempt from the provisions of Section 250;
22            (M-1) For any taxpayer that is a financial
23        organization within the meaning of Section 304(c) of
24        this Act, an amount included in such total as interest
25        income from a loan or loans made by such taxpayer to a
26        borrower, to the extent that such a loan is secured by

 

 

10100SB1199ham002- 52 -LRB101 08044 HLH 74840 a

1        property which is eligible for the High Impact Business
2        Investment Credit. To determine the portion of a loan
3        or loans that is secured by property eligible for a
4        Section 201(h) investment credit to the borrower, the
5        entire principal amount of the loan or loans between
6        the taxpayer and the borrower should be divided into
7        the basis of the Section 201(h) investment credit
8        property which secures the loan or loans, using for
9        this purpose the original basis of such property on the
10        date that it was placed in service in a federally
11        designated Foreign Trade Zone or Sub-Zone located in
12        Illinois. No taxpayer that is eligible for the
13        deduction provided in subparagraph (M) of paragraph
14        (2) of this subsection shall be eligible for the
15        deduction provided under this subparagraph (M-1). The
16        subtraction modification available to taxpayers in any
17        year under this subsection shall be that portion of the
18        total interest paid by the borrower with respect to
19        such loan attributable to the eligible property as
20        calculated under the previous sentence;
21            (N) Two times any contribution made during the
22        taxable year to a designated zone organization to the
23        extent that the contribution (i) qualifies as a
24        charitable contribution under subsection (c) of
25        Section 170 of the Internal Revenue Code and (ii) must,
26        by its terms, be used for a project approved by the

 

 

10100SB1199ham002- 53 -LRB101 08044 HLH 74840 a

1        Department of Commerce and Economic Opportunity under
2        Section 11 of the Illinois Enterprise Zone Act or under
3        Section 10-10 of the River Edge Redevelopment Zone Act.
4        This subparagraph (N) is exempt from the provisions of
5        Section 250;
6            (O) An amount equal to: (i) 85% for taxable years
7        ending on or before December 31, 1992, or, a percentage
8        equal to the percentage allowable under Section
9        243(a)(1) of the Internal Revenue Code of 1986 for
10        taxable years ending after December 31, 1992, of the
11        amount by which dividends included in taxable income
12        and received from a corporation that is not created or
13        organized under the laws of the United States or any
14        state or political subdivision thereof, including, for
15        taxable years ending on or after December 31, 1988,
16        dividends received or deemed received or paid or deemed
17        paid under Sections 951 through 965 of the Internal
18        Revenue Code, exceed the amount of the modification
19        provided under subparagraph (G) of paragraph (2) of
20        this subsection (b) which is related to such dividends,
21        and including, for taxable years ending on or after
22        December 31, 2008, dividends received from a captive
23        real estate investment trust; plus (ii) 100% of the
24        amount by which dividends, included in taxable income
25        and received, including, for taxable years ending on or
26        after December 31, 1988, dividends received or deemed

 

 

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1        received or paid or deemed paid under Sections 951
2        through 964 of the Internal Revenue Code and including,
3        for taxable years ending on or after December 31, 2008,
4        dividends received from a captive real estate
5        investment trust, from any such corporation specified
6        in clause (i) that would but for the provisions of
7        Section 1504(b)(3) of the Internal Revenue Code be
8        treated as a member of the affiliated group which
9        includes the dividend recipient, exceed the amount of
10        the modification provided under subparagraph (G) of
11        paragraph (2) of this subsection (b) which is related
12        to such dividends. This subparagraph (O) is exempt from
13        the provisions of Section 250 of this Act;
14            (P) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (Q) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code;
22            (R) On and after July 20, 1999, in the case of an
23        attorney-in-fact with respect to whom an interinsurer
24        or a reciprocal insurer has made the election under
25        Section 835 of the Internal Revenue Code, 26 U.S.C.
26        835, an amount equal to the excess, if any, of the

 

 

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1        amounts paid or incurred by that interinsurer or
2        reciprocal insurer in the taxable year to the
3        attorney-in-fact over the deduction allowed to that
4        interinsurer or reciprocal insurer with respect to the
5        attorney-in-fact under Section 835(b) of the Internal
6        Revenue Code for the taxable year; the provisions of
7        this subparagraph are exempt from the provisions of
8        Section 250;
9            (S) For taxable years ending on or after December
10        31, 1997, in the case of a Subchapter S corporation, an
11        amount equal to all amounts of income allocable to a
12        shareholder subject to the Personal Property Tax
13        Replacement Income Tax imposed by subsections (c) and
14        (d) of Section 201 of this Act, including amounts
15        allocable to organizations exempt from federal income
16        tax by reason of Section 501(a) of the Internal Revenue
17        Code. This subparagraph (S) is exempt from the
18        provisions of Section 250;
19            (T) For taxable years 2001 and thereafter, for the
20        taxable year in which the bonus depreciation deduction
21        is taken on the taxpayer's federal income tax return
22        under subsection (k) of Section 168 of the Internal
23        Revenue Code and for each applicable taxable year
24        thereafter, an amount equal to "x", where:
25                (1) "y" equals the amount of the depreciation
26            deduction taken for the taxable year on the

 

 

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1            taxpayer's federal income tax return on property
2            for which the bonus depreciation deduction was
3            taken in any year under subsection (k) of Section
4            168 of the Internal Revenue Code, but not including
5            the bonus depreciation deduction;
6                (2) for taxable years ending on or before
7            December 31, 2005, "x" equals "y" multiplied by 30
8            and then divided by 70 (or "y" multiplied by
9            0.429); and
10                (3) for taxable years ending after December
11            31, 2005:
12                    (i) for property on which a bonus
13                depreciation deduction of 30% of the adjusted
14                basis was taken, "x" equals "y" multiplied by
15                30 and then divided by 70 (or "y" multiplied by
16                0.429); and
17                    (ii) for property on which a bonus
18                depreciation deduction of 50% of the adjusted
19                basis was taken, "x" equals "y" multiplied by
20                1.0.
21            The aggregate amount deducted under this
22        subparagraph in all taxable years for any one piece of
23        property may not exceed the amount of the bonus
24        depreciation deduction taken on that property on the
25        taxpayer's federal income tax return under subsection
26        (k) of Section 168 of the Internal Revenue Code. This

 

 

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1        subparagraph (T) is exempt from the provisions of
2        Section 250;
3            (U) If the taxpayer sells, transfers, abandons, or
4        otherwise disposes of property for which the taxpayer
5        was required in any taxable year to make an addition
6        modification under subparagraph (E-10), then an amount
7        equal to that addition modification.
8            If the taxpayer continues to own property through
9        the last day of the last tax year for which the
10        taxpayer may claim a depreciation deduction for
11        federal income tax purposes and for which the taxpayer
12        was required in any taxable year to make an addition
13        modification under subparagraph (E-10), then an amount
14        equal to that addition modification.
15            The taxpayer is allowed to take the deduction under
16        this subparagraph only once with respect to any one
17        piece of property.
18            This subparagraph (U) is exempt from the
19        provisions of Section 250;
20            (V) The amount of: (i) any interest income (net of
21        the deductions allocable thereto) taken into account
22        for the taxable year with respect to a transaction with
23        a taxpayer that is required to make an addition
24        modification with respect to such transaction under
25        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
26        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed

 

 

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1        the amount of such addition modification, (ii) any
2        income from intangible property (net of the deductions
3        allocable thereto) taken into account for the taxable
4        year with respect to a transaction with a taxpayer that
5        is required to make an addition modification with
6        respect to such transaction under Section
7        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
8        203(d)(2)(D-8), but not to exceed the amount of such
9        addition modification, and (iii) any insurance premium
10        income (net of deductions allocable thereto) taken
11        into account for the taxable year with respect to a
12        transaction with a taxpayer that is required to make an
13        addition modification with respect to such transaction
14        under Section 203(a)(2)(D-19), Section
15        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
16        203(d)(2)(D-9), but not to exceed the amount of that
17        addition modification. This subparagraph (V) is exempt
18        from the provisions of Section 250;
19            (W) An amount equal to the interest income taken
20        into account for the taxable year (net of the
21        deductions allocable thereto) with respect to
22        transactions with (i) a foreign person who would be a
23        member of the taxpayer's unitary business group but for
24        the fact that the foreign person's business activity
25        outside the United States is 80% or more of that
26        person's total business activity and (ii) for taxable

 

 

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1        years ending on or after December 31, 2008, to a person
2        who would be a member of the same unitary business
3        group but for the fact that the person is prohibited
4        under Section 1501(a)(27) from being included in the
5        unitary business group because he or she is ordinarily
6        required to apportion business income under different
7        subsections of Section 304, but not to exceed the
8        addition modification required to be made for the same
9        taxable year under Section 203(b)(2)(E-12) for
10        interest paid, accrued, or incurred, directly or
11        indirectly, to the same person. This subparagraph (W)
12        is exempt from the provisions of Section 250;
13            (X) An amount equal to the income from intangible
14        property taken into account for the taxable year (net
15        of the deductions allocable thereto) with respect to
16        transactions with (i) a foreign person who would be a
17        member of the taxpayer's unitary business group but for
18        the fact that the foreign person's business activity
19        outside the United States is 80% or more of that
20        person's total business activity and (ii) for taxable
21        years ending on or after December 31, 2008, to a person
22        who would be a member of the same unitary business
23        group but for the fact that the person is prohibited
24        under Section 1501(a)(27) from being included in the
25        unitary business group because he or she is ordinarily
26        required to apportion business income under different

 

 

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1        subsections of Section 304, but not to exceed the
2        addition modification required to be made for the same
3        taxable year under Section 203(b)(2)(E-13) for
4        intangible expenses and costs paid, accrued, or
5        incurred, directly or indirectly, to the same foreign
6        person. This subparagraph (X) is exempt from the
7        provisions of Section 250;
8            (Y) For taxable years ending on or after December
9        31, 2011, in the case of a taxpayer who was required to
10        add back any insurance premiums under Section
11        203(b)(2)(E-14), such taxpayer may elect to subtract
12        that part of a reimbursement received from the
13        insurance company equal to the amount of the expense or
14        loss (including expenses incurred by the insurance
15        company) that would have been taken into account as a
16        deduction for federal income tax purposes if the
17        expense or loss had been uninsured. If a taxpayer makes
18        the election provided for by this subparagraph (Y), the
19        insurer to which the premiums were paid must add back
20        to income the amount subtracted by the taxpayer
21        pursuant to this subparagraph (Y). This subparagraph
22        (Y) is exempt from the provisions of Section 250; and
23            (Z) The difference between the nondeductible
24        controlled foreign corporation dividends under Section
25        965(e)(3) of the Internal Revenue Code over the taxable
26        income of the taxpayer, computed without regard to

 

 

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1        Section 965(e)(2)(A) of the Internal Revenue Code, and
2        without regard to any net operating loss deduction.
3        This subparagraph (Z) is exempt from the provisions of
4        Section 250.
5        (3) Special rule. For purposes of paragraph (2)(A),
6    "gross income" in the case of a life insurance company, for
7    tax years ending on and after December 31, 1994, and prior
8    to December 31, 2011, shall mean the gross investment
9    income for the taxable year and, for tax years ending on or
10    after December 31, 2011, shall mean all amounts included in
11    life insurance gross income under Section 803(a)(3) of the
12    Internal Revenue Code.
 
13    (c) Trusts and estates.
14        (1) In general. In the case of a trust or estate, base
15    income means an amount equal to the taxpayer's taxable
16    income for the taxable year as modified by paragraph (2).
17        (2) Modifications. Subject to the provisions of
18    paragraph (3), the taxable income referred to in paragraph
19    (1) shall be modified by adding thereto the sum of the
20    following amounts:
21            (A) An amount equal to all amounts paid or accrued
22        to the taxpayer as interest or dividends during the
23        taxable year to the extent excluded from gross income
24        in the computation of taxable income;
25            (B) In the case of (i) an estate, $600; (ii) a

 

 

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1        trust which, under its governing instrument, is
2        required to distribute all of its income currently,
3        $300; and (iii) any other trust, $100, but in each such
4        case, only to the extent such amount was deducted in
5        the computation of taxable income;
6            (C) An amount equal to the amount of tax imposed by
7        this Act to the extent deducted from gross income in
8        the computation of taxable income for the taxable year;
9            (D) The amount of any net operating loss deduction
10        taken in arriving at taxable income, other than a net
11        operating loss carried forward from a taxable year
12        ending prior to December 31, 1986;
13            (E) For taxable years in which a net operating loss
14        carryback or carryforward from a taxable year ending
15        prior to December 31, 1986 is an element of taxable
16        income under paragraph (1) of subsection (e) or
17        subparagraph (E) of paragraph (2) of subsection (e),
18        the amount by which addition modifications other than
19        those provided by this subparagraph (E) exceeded
20        subtraction modifications in such taxable year, with
21        the following limitations applied in the order that
22        they are listed:
23                (i) the addition modification relating to the
24            net operating loss carried back or forward to the
25            taxable year from any taxable year ending prior to
26            December 31, 1986 shall be reduced by the amount of

 

 

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1            addition modification under this subparagraph (E)
2            which related to that net operating loss and which
3            was taken into account in calculating the base
4            income of an earlier taxable year, and
5                (ii) the addition modification relating to the
6            net operating loss carried back or forward to the
7            taxable year from any taxable year ending prior to
8            December 31, 1986 shall not exceed the amount of
9            such carryback or carryforward;
10            For taxable years in which there is a net operating
11        loss carryback or carryforward from more than one other
12        taxable year ending prior to December 31, 1986, the
13        addition modification provided in this subparagraph
14        (E) shall be the sum of the amounts computed
15        independently under the preceding provisions of this
16        subparagraph (E) for each such taxable year;
17            (F) For taxable years ending on or after January 1,
18        1989, an amount equal to the tax deducted pursuant to
19        Section 164 of the Internal Revenue Code if the trust
20        or estate is claiming the same tax for purposes of the
21        Illinois foreign tax credit under Section 601 of this
22        Act;
23            (G) An amount equal to the amount of the capital
24        gain deduction allowable under the Internal Revenue
25        Code, to the extent deducted from gross income in the
26        computation of taxable income;

 

 

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1            (G-5) For taxable years ending after December 31,
2        1997, an amount equal to any eligible remediation costs
3        that the trust or estate deducted in computing adjusted
4        gross income and for which the trust or estate claims a
5        credit under subsection (l) of Section 201;
6            (G-10) For taxable years 2001 and thereafter, an
7        amount equal to the bonus depreciation deduction taken
8        on the taxpayer's federal income tax return for the
9        taxable year under subsection (k) of Section 168 of the
10        Internal Revenue Code; and
11            (G-11) If the taxpayer sells, transfers, abandons,
12        or otherwise disposes of property for which the
13        taxpayer was required in any taxable year to make an
14        addition modification under subparagraph (G-10), then
15        an amount equal to the aggregate amount of the
16        deductions taken in all taxable years under
17        subparagraph (R) with respect to that property.
18            If the taxpayer continues to own property through
19        the last day of the last tax year for which the
20        taxpayer may claim a depreciation deduction for
21        federal income tax purposes and for which the taxpayer
22        was allowed in any taxable year to make a subtraction
23        modification under subparagraph (R), then an amount
24        equal to that subtraction modification.
25            The taxpayer is required to make the addition
26        modification under this subparagraph only once with

 

 

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1        respect to any one piece of property;
2            (G-12) An amount equal to the amount otherwise
3        allowed as a deduction in computing base income for
4        interest paid, accrued, or incurred, directly or
5        indirectly, (i) for taxable years ending on or after
6        December 31, 2004, to a foreign person who would be a
7        member of the same unitary business group but for the
8        fact that the foreign person's business activity
9        outside the United States is 80% or more of the foreign
10        person's total business activity and (ii) for taxable
11        years ending on or after December 31, 2008, to a person
12        who would be a member of the same unitary business
13        group but for the fact that the person is prohibited
14        under Section 1501(a)(27) from being included in the
15        unitary business group because he or she is ordinarily
16        required to apportion business income under different
17        subsections of Section 304. The addition modification
18        required by this subparagraph shall be reduced to the
19        extent that dividends were included in base income of
20        the unitary group for the same taxable year and
21        received by the taxpayer or by a member of the
22        taxpayer's unitary business group (including amounts
23        included in gross income pursuant to Sections 951
24        through 964 of the Internal Revenue Code and amounts
25        included in gross income under Section 78 of the
26        Internal Revenue Code) with respect to the stock of the

 

 

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1        same person to whom the interest was paid, accrued, or
2        incurred.
3            This paragraph shall not apply to the following:
4                (i) an item of interest paid, accrued, or
5            incurred, directly or indirectly, to a person who
6            is subject in a foreign country or state, other
7            than a state which requires mandatory unitary
8            reporting, to a tax on or measured by net income
9            with respect to such interest; or
10                (ii) an item of interest paid, accrued, or
11            incurred, directly or indirectly, to a person if
12            the taxpayer can establish, based on a
13            preponderance of the evidence, both of the
14            following:
15                    (a) the person, during the same taxable
16                year, paid, accrued, or incurred, the interest
17                to a person that is not a related member, and
18                    (b) the transaction giving rise to the
19                interest expense between the taxpayer and the
20                person did not have as a principal purpose the
21                avoidance of Illinois income tax, and is paid
22                pursuant to a contract or agreement that
23                reflects an arm's-length interest rate and
24                terms; or
25                (iii) the taxpayer can establish, based on
26            clear and convincing evidence, that the interest

 

 

10100SB1199ham002- 67 -LRB101 08044 HLH 74840 a

1            paid, accrued, or incurred relates to a contract or
2            agreement entered into at arm's-length rates and
3            terms and the principal purpose for the payment is
4            not federal or Illinois tax avoidance; or
5                (iv) an item of interest paid, accrued, or
6            incurred, directly or indirectly, to a person if
7            the taxpayer establishes by clear and convincing
8            evidence that the adjustments are unreasonable; or
9            if the taxpayer and the Director agree in writing
10            to the application or use of an alternative method
11            of apportionment under Section 304(f).
12                Nothing in this subsection shall preclude the
13            Director from making any other adjustment
14            otherwise allowed under Section 404 of this Act for
15            any tax year beginning after the effective date of
16            this amendment provided such adjustment is made
17            pursuant to regulation adopted by the Department
18            and such regulations provide methods and standards
19            by which the Department will utilize its authority
20            under Section 404 of this Act;
21            (G-13) An amount equal to the amount of intangible
22        expenses and costs otherwise allowed as a deduction in
23        computing base income, and that were paid, accrued, or
24        incurred, directly or indirectly, (i) for taxable
25        years ending on or after December 31, 2004, to a
26        foreign person who would be a member of the same

 

 

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1        unitary business group but for the fact that the
2        foreign person's business activity outside the United
3        States is 80% or more of that person's total business
4        activity and (ii) for taxable years ending on or after
5        December 31, 2008, to a person who would be a member of
6        the same unitary business group but for the fact that
7        the person is prohibited under Section 1501(a)(27)
8        from being included in the unitary business group
9        because he or she is ordinarily required to apportion
10        business income under different subsections of Section
11        304. The addition modification required by this
12        subparagraph shall be reduced to the extent that
13        dividends were included in base income of the unitary
14        group for the same taxable year and received by the
15        taxpayer or by a member of the taxpayer's unitary
16        business group (including amounts included in gross
17        income pursuant to Sections 951 through 964 of the
18        Internal Revenue Code and amounts included in gross
19        income under Section 78 of the Internal Revenue Code)
20        with respect to the stock of the same person to whom
21        the intangible expenses and costs were directly or
22        indirectly paid, incurred, or accrued. The preceding
23        sentence shall not apply to the extent that the same
24        dividends caused a reduction to the addition
25        modification required under Section 203(c)(2)(G-12) of
26        this Act. As used in this subparagraph, the term

 

 

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1        "intangible expenses and costs" includes: (1)
2        expenses, losses, and costs for or related to the
3        direct or indirect acquisition, use, maintenance or
4        management, ownership, sale, exchange, or any other
5        disposition of intangible property; (2) losses
6        incurred, directly or indirectly, from factoring
7        transactions or discounting transactions; (3) royalty,
8        patent, technical, and copyright fees; (4) licensing
9        fees; and (5) other similar expenses and costs. For
10        purposes of this subparagraph, "intangible property"
11        includes patents, patent applications, trade names,
12        trademarks, service marks, copyrights, mask works,
13        trade secrets, and similar types of intangible assets.
14            This paragraph shall not apply to the following:
15                (i) any item of intangible expenses or costs
16            paid, accrued, or incurred, directly or
17            indirectly, from a transaction with a person who is
18            subject in a foreign country or state, other than a
19            state which requires mandatory unitary reporting,
20            to a tax on or measured by net income with respect
21            to such item; or
22                (ii) any item of intangible expense or cost
23            paid, accrued, or incurred, directly or
24            indirectly, if the taxpayer can establish, based
25            on a preponderance of the evidence, both of the
26            following:

 

 

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1                    (a) the person during the same taxable
2                year paid, accrued, or incurred, the
3                intangible expense or cost to a person that is
4                not a related member, and
5                    (b) the transaction giving rise to the
6                intangible expense or cost between the
7                taxpayer and the person did not have as a
8                principal purpose the avoidance of Illinois
9                income tax, and is paid pursuant to a contract
10                or agreement that reflects arm's-length terms;
11                or
12                (iii) any item of intangible expense or cost
13            paid, accrued, or incurred, directly or
14            indirectly, from a transaction with a person if the
15            taxpayer establishes by clear and convincing
16            evidence, that the adjustments are unreasonable;
17            or if the taxpayer and the Director agree in
18            writing to the application or use of an alternative
19            method of apportionment under Section 304(f);
20                Nothing in this subsection shall preclude the
21            Director from making any other adjustment
22            otherwise allowed under Section 404 of this Act for
23            any tax year beginning after the effective date of
24            this amendment provided such adjustment is made
25            pursuant to regulation adopted by the Department
26            and such regulations provide methods and standards

 

 

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1            by which the Department will utilize its authority
2            under Section 404 of this Act;
3            (G-14) For taxable years ending on or after
4        December 31, 2008, an amount equal to the amount of
5        insurance premium expenses and costs otherwise allowed
6        as a deduction in computing base income, and that were
7        paid, accrued, or incurred, directly or indirectly, to
8        a person who would be a member of the same unitary
9        business group but for the fact that the person is
10        prohibited under Section 1501(a)(27) from being
11        included in the unitary business group because he or
12        she is ordinarily required to apportion business
13        income under different subsections of Section 304. The
14        addition modification required by this subparagraph
15        shall be reduced to the extent that dividends were
16        included in base income of the unitary group for the
17        same taxable year and received by the taxpayer or by a
18        member of the taxpayer's unitary business group
19        (including amounts included in gross income under
20        Sections 951 through 964 of the Internal Revenue Code
21        and amounts included in gross income under Section 78
22        of the Internal Revenue Code) with respect to the stock
23        of the same person to whom the premiums and costs were
24        directly or indirectly paid, incurred, or accrued. The
25        preceding sentence does not apply to the extent that
26        the same dividends caused a reduction to the addition

 

 

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1        modification required under Section 203(c)(2)(G-12) or
2        Section 203(c)(2)(G-13) of this Act;
3            (G-15) An amount equal to the credit allowable to
4        the taxpayer under Section 218(a) of this Act,
5        determined without regard to Section 218(c) of this
6        Act;
7            (G-16) For taxable years ending on or after
8        December 31, 2017, an amount equal to the deduction
9        allowed under Section 199 of the Internal Revenue Code
10        for the taxable year;
11    and by deducting from the total so obtained the sum of the
12    following amounts:
13            (H) An amount equal to all amounts included in such
14        total pursuant to the provisions of Sections 402(a),
15        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
16        Internal Revenue Code or included in such total as
17        distributions under the provisions of any retirement
18        or disability plan for employees of any governmental
19        agency or unit, or retirement payments to retired
20        partners, which payments are excluded in computing net
21        earnings from self employment by Section 1402 of the
22        Internal Revenue Code and regulations adopted pursuant
23        thereto;
24            (I) The valuation limitation amount;
25            (J) An amount equal to the amount of any tax
26        imposed by this Act which was refunded to the taxpayer

 

 

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1        and included in such total for the taxable year;
2            (K) An amount equal to all amounts included in
3        taxable income as modified by subparagraphs (A), (B),
4        (C), (D), (E), (F) and (G) which are exempt from
5        taxation by this State either by reason of its statutes
6        or Constitution or by reason of the Constitution,
7        treaties or statutes of the United States; provided
8        that, in the case of any statute of this State that
9        exempts income derived from bonds or other obligations
10        from the tax imposed under this Act, the amount
11        exempted shall be the interest net of bond premium
12        amortization;
13            (L) With the exception of any amounts subtracted
14        under subparagraph (K), an amount equal to the sum of
15        all amounts disallowed as deductions by (i) Sections
16        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
17        and all amounts of expenses allocable to interest and
18        disallowed as deductions by Section 265(a)(1) of the
19        Internal Revenue Code; and (ii) for taxable years
20        ending on or after August 13, 1999, Sections 171(a)(2),
21        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
22        Code, plus, (iii) for taxable years ending on or after
23        December 31, 2011, Section 45G(e)(3) of the Internal
24        Revenue Code and, for taxable years ending on or after
25        December 31, 2008, any amount included in gross income
26        under Section 87 of the Internal Revenue Code; the

 

 

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1        provisions of this subparagraph are exempt from the
2        provisions of Section 250;
3            (M) An amount equal to those dividends included in
4        such total which were paid by a corporation which
5        conducts business operations in a River Edge
6        Redevelopment Zone or zones created under the River
7        Edge Redevelopment Zone Act and conducts substantially
8        all of its operations in a River Edge Redevelopment
9        Zone or zones. This subparagraph (M) is exempt from the
10        provisions of Section 250;
11            (N) An amount equal to any contribution made to a
12        job training project established pursuant to the Tax
13        Increment Allocation Redevelopment Act;
14            (O) An amount equal to those dividends included in
15        such total that were paid by a corporation that
16        conducts business operations in a federally designated
17        Foreign Trade Zone or Sub-Zone and that is designated a
18        High Impact Business located in Illinois; provided
19        that dividends eligible for the deduction provided in
20        subparagraph (M) of paragraph (2) of this subsection
21        shall not be eligible for the deduction provided under
22        this subparagraph (O);
23            (P) An amount equal to the amount of the deduction
24        used to compute the federal income tax credit for
25        restoration of substantial amounts held under claim of
26        right for the taxable year pursuant to Section 1341 of

 

 

10100SB1199ham002- 75 -LRB101 08044 HLH 74840 a

1        the Internal Revenue Code;
2            (Q) For taxable year 1999 and thereafter, an amount
3        equal to the amount of any (i) distributions, to the
4        extent includible in gross income for federal income
5        tax purposes, made to the taxpayer because of his or
6        her status as a victim of persecution for racial or
7        religious reasons by Nazi Germany or any other Axis
8        regime or as an heir of the victim and (ii) items of
9        income, to the extent includible in gross income for
10        federal income tax purposes, attributable to, derived
11        from or in any way related to assets stolen from,
12        hidden from, or otherwise lost to a victim of
13        persecution for racial or religious reasons by Nazi
14        Germany or any other Axis regime immediately prior to,
15        during, and immediately after World War II, including,
16        but not limited to, interest on the proceeds receivable
17        as insurance under policies issued to a victim of
18        persecution for racial or religious reasons by Nazi
19        Germany or any other Axis regime by European insurance
20        companies immediately prior to and during World War II;
21        provided, however, this subtraction from federal
22        adjusted gross income does not apply to assets acquired
23        with such assets or with the proceeds from the sale of
24        such assets; provided, further, this paragraph shall
25        only apply to a taxpayer who was the first recipient of
26        such assets after their recovery and who is a victim of

 

 

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1        persecution for racial or religious reasons by Nazi
2        Germany or any other Axis regime or as an heir of the
3        victim. The amount of and the eligibility for any
4        public assistance, benefit, or similar entitlement is
5        not affected by the inclusion of items (i) and (ii) of
6        this paragraph in gross income for federal income tax
7        purposes. This paragraph is exempt from the provisions
8        of Section 250;
9            (R) For taxable years 2001 and thereafter, for the
10        taxable year in which the bonus depreciation deduction
11        is taken on the taxpayer's federal income tax return
12        under subsection (k) of Section 168 of the Internal
13        Revenue Code and for each applicable taxable year
14        thereafter, an amount equal to "x", where:
15                (1) "y" equals the amount of the depreciation
16            deduction taken for the taxable year on the
17            taxpayer's federal income tax return on property
18            for which the bonus depreciation deduction was
19            taken in any year under subsection (k) of Section
20            168 of the Internal Revenue Code, but not including
21            the bonus depreciation deduction;
22                (2) for taxable years ending on or before
23            December 31, 2005, "x" equals "y" multiplied by 30
24            and then divided by 70 (or "y" multiplied by
25            0.429); and
26                (3) for taxable years ending after December

 

 

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1            31, 2005:
2                    (i) for property on which a bonus
3                depreciation deduction of 30% of the adjusted
4                basis was taken, "x" equals "y" multiplied by
5                30 and then divided by 70 (or "y" multiplied by
6                0.429); and
7                    (ii) for property on which a bonus
8                depreciation deduction of 50% of the adjusted
9                basis was taken, "x" equals "y" multiplied by
10                1.0.
11            The aggregate amount deducted under this
12        subparagraph in all taxable years for any one piece of
13        property may not exceed the amount of the bonus
14        depreciation deduction taken on that property on the
15        taxpayer's federal income tax return under subsection
16        (k) of Section 168 of the Internal Revenue Code. This
17        subparagraph (R) is exempt from the provisions of
18        Section 250;
19            (S) If the taxpayer sells, transfers, abandons, or
20        otherwise disposes of property for which the taxpayer
21        was required in any taxable year to make an addition
22        modification under subparagraph (G-10), then an amount
23        equal to that addition modification.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

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1        federal income tax purposes and for which the taxpayer
2        was required in any taxable year to make an addition
3        modification under subparagraph (G-10), then an amount
4        equal to that addition modification.
5            The taxpayer is allowed to take the deduction under
6        this subparagraph only once with respect to any one
7        piece of property.
8            This subparagraph (S) is exempt from the
9        provisions of Section 250;
10            (T) The amount of (i) any interest income (net of
11        the deductions allocable thereto) taken into account
12        for the taxable year with respect to a transaction with
13        a taxpayer that is required to make an addition
14        modification with respect to such transaction under
15        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
16        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
17        the amount of such addition modification and (ii) any
18        income from intangible property (net of the deductions
19        allocable thereto) taken into account for the taxable
20        year with respect to a transaction with a taxpayer that
21        is required to make an addition modification with
22        respect to such transaction under Section
23        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
24        203(d)(2)(D-8), but not to exceed the amount of such
25        addition modification. This subparagraph (T) is exempt
26        from the provisions of Section 250;

 

 

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1            (U) An amount equal to the interest income taken
2        into account for the taxable year (net of the
3        deductions allocable thereto) with respect to
4        transactions with (i) a foreign person who would be a
5        member of the taxpayer's unitary business group but for
6        the fact the foreign person's business activity
7        outside the United States is 80% or more of that
8        person's total business activity and (ii) for taxable
9        years ending on or after December 31, 2008, to a person
10        who would be a member of the same unitary business
11        group but for the fact that the person is prohibited
12        under Section 1501(a)(27) from being included in the
13        unitary business group because he or she is ordinarily
14        required to apportion business income under different
15        subsections of Section 304, but not to exceed the
16        addition modification required to be made for the same
17        taxable year under Section 203(c)(2)(G-12) for
18        interest paid, accrued, or incurred, directly or
19        indirectly, to the same person. This subparagraph (U)
20        is exempt from the provisions of Section 250;
21            (V) An amount equal to the income from intangible
22        property taken into account for the taxable year (net
23        of the deductions allocable thereto) with respect to
24        transactions with (i) a foreign person who would be a
25        member of the taxpayer's unitary business group but for
26        the fact that the foreign person's business activity

 

 

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1        outside the United States is 80% or more of that
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304, but not to exceed the
10        addition modification required to be made for the same
11        taxable year under Section 203(c)(2)(G-13) for
12        intangible expenses and costs paid, accrued, or
13        incurred, directly or indirectly, to the same foreign
14        person. This subparagraph (V) is exempt from the
15        provisions of Section 250;
16            (W) in the case of an estate, an amount equal to
17        all amounts included in such total pursuant to the
18        provisions of Section 111 of the Internal Revenue Code
19        as a recovery of items previously deducted by the
20        decedent from adjusted gross income in the computation
21        of taxable income. This subparagraph (W) is exempt from
22        Section 250;
23            (X) an amount equal to the refund included in such
24        total of any tax deducted for federal income tax
25        purposes, to the extent that deduction was added back
26        under subparagraph (F). This subparagraph (X) is

 

 

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1        exempt from the provisions of Section 250;
2            (Y) For taxable years ending on or after December
3        31, 2011, in the case of a taxpayer who was required to
4        add back any insurance premiums under Section
5        203(c)(2)(G-14), such taxpayer may elect to subtract
6        that part of a reimbursement received from the
7        insurance company equal to the amount of the expense or
8        loss (including expenses incurred by the insurance
9        company) that would have been taken into account as a
10        deduction for federal income tax purposes if the
11        expense or loss had been uninsured. If a taxpayer makes
12        the election provided for by this subparagraph (Y), the
13        insurer to which the premiums were paid must add back
14        to income the amount subtracted by the taxpayer
15        pursuant to this subparagraph (Y). This subparagraph
16        (Y) is exempt from the provisions of Section 250; and
17            (Z) For taxable years beginning after December 31,
18        2018 and before January 1, 2026, the amount of excess
19        business loss of the taxpayer disallowed as a deduction
20        by Section 461(l)(1)(B) of the Internal Revenue Code.
21        (3) Limitation. The amount of any modification
22    otherwise required under this subsection shall, under
23    regulations prescribed by the Department, be adjusted by
24    any amounts included therein which were properly paid,
25    credited, or required to be distributed, or permanently set
26    aside for charitable purposes pursuant to Internal Revenue

 

 

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1    Code Section 642(c) during the taxable year.
 
2    (d) Partnerships.
3        (1) In general. In the case of a partnership, base
4    income means an amount equal to the taxpayer's taxable
5    income for the taxable year as modified by paragraph (2).
6        (2) Modifications. The taxable income referred to in
7    paragraph (1) shall be modified by adding thereto the sum
8    of the following amounts:
9            (A) An amount equal to all amounts paid or accrued
10        to the taxpayer as interest or dividends during the
11        taxable year to the extent excluded from gross income
12        in the computation of taxable income;
13            (B) An amount equal to the amount of tax imposed by
14        this Act to the extent deducted from gross income for
15        the taxable year;
16            (C) The amount of deductions allowed to the
17        partnership pursuant to Section 707 (c) of the Internal
18        Revenue Code in calculating its taxable income;
19            (D) An amount equal to the amount of the capital
20        gain deduction allowable under the Internal Revenue
21        Code, to the extent deducted from gross income in the
22        computation of taxable income;
23            (D-5) For taxable years 2001 and thereafter, an
24        amount equal to the bonus depreciation deduction taken
25        on the taxpayer's federal income tax return for the

 

 

10100SB1199ham002- 83 -LRB101 08044 HLH 74840 a

1        taxable year under subsection (k) of Section 168 of the
2        Internal Revenue Code;
3            (D-6) If the taxpayer sells, transfers, abandons,
4        or otherwise disposes of property for which the
5        taxpayer was required in any taxable year to make an
6        addition modification under subparagraph (D-5), then
7        an amount equal to the aggregate amount of the
8        deductions taken in all taxable years under
9        subparagraph (O) with respect to that property.
10            If the taxpayer continues to own property through
11        the last day of the last tax year for which the
12        taxpayer may claim a depreciation deduction for
13        federal income tax purposes and for which the taxpayer
14        was allowed in any taxable year to make a subtraction
15        modification under subparagraph (O), then an amount
16        equal to that subtraction modification.
17            The taxpayer is required to make the addition
18        modification under this subparagraph only once with
19        respect to any one piece of property;
20            (D-7) An amount equal to the amount otherwise
21        allowed as a deduction in computing base income for
22        interest paid, accrued, or incurred, directly or
23        indirectly, (i) for taxable years ending on or after
24        December 31, 2004, to a foreign person who would be a
25        member of the same unitary business group but for the
26        fact the foreign person's business activity outside

 

 

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1        the United States is 80% or more of the foreign
2        person's total business activity and (ii) for taxable
3        years ending on or after December 31, 2008, to a person
4        who would be a member of the same unitary business
5        group but for the fact that the person is prohibited
6        under Section 1501(a)(27) from being included in the
7        unitary business group because he or she is ordinarily
8        required to apportion business income under different
9        subsections of Section 304. The addition modification
10        required by this subparagraph shall be reduced to the
11        extent that dividends were included in base income of
12        the unitary group for the same taxable year and
13        received by the taxpayer or by a member of the
14        taxpayer's unitary business group (including amounts
15        included in gross income pursuant to Sections 951
16        through 964 of the Internal Revenue Code and amounts
17        included in gross income under Section 78 of the
18        Internal Revenue Code) with respect to the stock of the
19        same person to whom the interest was paid, accrued, or
20        incurred.
21            This paragraph shall not apply to the following:
22                (i) an item of interest paid, accrued, or
23            incurred, directly or indirectly, to a person who
24            is subject in a foreign country or state, other
25            than a state which requires mandatory unitary
26            reporting, to a tax on or measured by net income

 

 

10100SB1199ham002- 85 -LRB101 08044 HLH 74840 a

1            with respect to such interest; or
2                (ii) an item of interest paid, accrued, or
3            incurred, directly or indirectly, to a person if
4            the taxpayer can establish, based on a
5            preponderance of the evidence, both of the
6            following:
7                    (a) the person, during the same taxable
8                year, paid, accrued, or incurred, the interest
9                to a person that is not a related member, and
10                    (b) the transaction giving rise to the
11                interest expense between the taxpayer and the
12                person did not have as a principal purpose the
13                avoidance of Illinois income tax, and is paid
14                pursuant to a contract or agreement that
15                reflects an arm's-length interest rate and
16                terms; or
17                (iii) the taxpayer can establish, based on
18            clear and convincing evidence, that the interest
19            paid, accrued, or incurred relates to a contract or
20            agreement entered into at arm's-length rates and
21            terms and the principal purpose for the payment is
22            not federal or Illinois tax avoidance; or
23                (iv) an item of interest paid, accrued, or
24            incurred, directly or indirectly, to a person if
25            the taxpayer establishes by clear and convincing
26            evidence that the adjustments are unreasonable; or

 

 

10100SB1199ham002- 86 -LRB101 08044 HLH 74840 a

1            if the taxpayer and the Director agree in writing
2            to the application or use of an alternative method
3            of apportionment under Section 304(f).
4                Nothing in this subsection shall preclude the
5            Director from making any other adjustment
6            otherwise allowed under Section 404 of this Act for
7            any tax year beginning after the effective date of
8            this amendment provided such adjustment is made
9            pursuant to regulation adopted by the Department
10            and such regulations provide methods and standards
11            by which the Department will utilize its authority
12            under Section 404 of this Act; and
13            (D-8) An amount equal to the amount of intangible
14        expenses and costs otherwise allowed as a deduction in
15        computing base income, and that were paid, accrued, or
16        incurred, directly or indirectly, (i) for taxable
17        years ending on or after December 31, 2004, to a
18        foreign person who would be a member of the same
19        unitary business group but for the fact that the
20        foreign person's business activity outside the United
21        States is 80% or more of that person's total business
22        activity and (ii) for taxable years ending on or after
23        December 31, 2008, to a person who would be a member of
24        the same unitary business group but for the fact that
25        the person is prohibited under Section 1501(a)(27)
26        from being included in the unitary business group

 

 

10100SB1199ham002- 87 -LRB101 08044 HLH 74840 a

1        because he or she is ordinarily required to apportion
2        business income under different subsections of Section
3        304. The addition modification required by this
4        subparagraph shall be reduced to the extent that
5        dividends were included in base income of the unitary
6        group for the same taxable year and received by the
7        taxpayer or by a member of the taxpayer's unitary
8        business group (including amounts included in gross
9        income pursuant to Sections 951 through 964 of the
10        Internal Revenue Code and amounts included in gross
11        income under Section 78 of the Internal Revenue Code)
12        with respect to the stock of the same person to whom
13        the intangible expenses and costs were directly or
14        indirectly paid, incurred or accrued. The preceding
15        sentence shall not apply to the extent that the same
16        dividends caused a reduction to the addition
17        modification required under Section 203(d)(2)(D-7) of
18        this Act. As used in this subparagraph, the term
19        "intangible expenses and costs" includes (1) expenses,
20        losses, and costs for, or related to, the direct or
21        indirect acquisition, use, maintenance or management,
22        ownership, sale, exchange, or any other disposition of
23        intangible property; (2) losses incurred, directly or
24        indirectly, from factoring transactions or discounting
25        transactions; (3) royalty, patent, technical, and
26        copyright fees; (4) licensing fees; and (5) other

 

 

10100SB1199ham002- 88 -LRB101 08044 HLH 74840 a

1        similar expenses and costs. For purposes of this
2        subparagraph, "intangible property" includes patents,
3        patent applications, trade names, trademarks, service
4        marks, copyrights, mask works, trade secrets, and
5        similar types of intangible assets;
6            This paragraph shall not apply to the following:
7                (i) any item of intangible expenses or costs
8            paid, accrued, or incurred, directly or
9            indirectly, from a transaction with a person who is
10            subject in a foreign country or state, other than a
11            state which requires mandatory unitary reporting,
12            to a tax on or measured by net income with respect
13            to such item; or
14                (ii) any item of intangible expense or cost
15            paid, accrued, or incurred, directly or
16            indirectly, if the taxpayer can establish, based
17            on a preponderance of the evidence, both of the
18            following:
19                    (a) the person during the same taxable
20                year paid, accrued, or incurred, the
21                intangible expense or cost to a person that is
22                not a related member, and
23                    (b) the transaction giving rise to the
24                intangible expense or cost between the
25                taxpayer and the person did not have as a
26                principal purpose the avoidance of Illinois

 

 

10100SB1199ham002- 89 -LRB101 08044 HLH 74840 a

1                income tax, and is paid pursuant to a contract
2                or agreement that reflects arm's-length terms;
3                or
4                (iii) any item of intangible expense or cost
5            paid, accrued, or incurred, directly or
6            indirectly, from a transaction with a person if the
7            taxpayer establishes by clear and convincing
8            evidence, that the adjustments are unreasonable;
9            or if the taxpayer and the Director agree in
10            writing to the application or use of an alternative
11            method of apportionment under Section 304(f);
12                Nothing in this subsection shall preclude the
13            Director from making any other adjustment
14            otherwise allowed under Section 404 of this Act for
15            any tax year beginning after the effective date of
16            this amendment provided such adjustment is made
17            pursuant to regulation adopted by the Department
18            and such regulations provide methods and standards
19            by which the Department will utilize its authority
20            under Section 404 of this Act;
21            (D-9) For taxable years ending on or after December
22        31, 2008, an amount equal to the amount of insurance
23        premium expenses and costs otherwise allowed as a
24        deduction in computing base income, and that were paid,
25        accrued, or incurred, directly or indirectly, to a
26        person who would be a member of the same unitary

 

 

10100SB1199ham002- 90 -LRB101 08044 HLH 74840 a

1        business group but for the fact that the person is
2        prohibited under Section 1501(a)(27) from being
3        included in the unitary business group because he or
4        she is ordinarily required to apportion business
5        income under different subsections of Section 304. The
6        addition modification required by this subparagraph
7        shall be reduced to the extent that dividends were
8        included in base income of the unitary group for the
9        same taxable year and received by the taxpayer or by a
10        member of the taxpayer's unitary business group
11        (including amounts included in gross income under
12        Sections 951 through 964 of the Internal Revenue Code
13        and amounts included in gross income under Section 78
14        of the Internal Revenue Code) with respect to the stock
15        of the same person to whom the premiums and costs were
16        directly or indirectly paid, incurred, or accrued. The
17        preceding sentence does not apply to the extent that
18        the same dividends caused a reduction to the addition
19        modification required under Section 203(d)(2)(D-7) or
20        Section 203(d)(2)(D-8) of this Act;
21            (D-10) An amount equal to the credit allowable to
22        the taxpayer under Section 218(a) of this Act,
23        determined without regard to Section 218(c) of this
24        Act;
25            (D-11) For taxable years ending on or after
26        December 31, 2017, an amount equal to the deduction

 

 

10100SB1199ham002- 91 -LRB101 08044 HLH 74840 a

1        allowed under Section 199 of the Internal Revenue Code
2        for the taxable year;
3    and by deducting from the total so obtained the following
4    amounts:
5            (E) The valuation limitation amount;
6            (F) An amount equal to the amount of any tax
7        imposed by this Act which was refunded to the taxpayer
8        and included in such total for the taxable year;
9            (G) An amount equal to all amounts included in
10        taxable income as modified by subparagraphs (A), (B),
11        (C) and (D) which are exempt from taxation by this
12        State either by reason of its statutes or Constitution
13        or by reason of the Constitution, treaties or statutes
14        of the United States; provided that, in the case of any
15        statute of this State that exempts income derived from
16        bonds or other obligations from the tax imposed under
17        this Act, the amount exempted shall be the interest net
18        of bond premium amortization;
19            (H) Any income of the partnership which
20        constitutes personal service income as defined in
21        Section 1348(b)(1) of the Internal Revenue Code (as in
22        effect December 31, 1981) or a reasonable allowance for
23        compensation paid or accrued for services rendered by
24        partners to the partnership, whichever is greater;
25        this subparagraph (H) is exempt from the provisions of
26        Section 250;

 

 

10100SB1199ham002- 92 -LRB101 08044 HLH 74840 a

1            (I) An amount equal to all amounts of income
2        distributable to an entity subject to the Personal
3        Property Tax Replacement Income Tax imposed by
4        subsections (c) and (d) of Section 201 of this Act
5        including amounts distributable to organizations
6        exempt from federal income tax by reason of Section
7        501(a) of the Internal Revenue Code; this subparagraph
8        (I) is exempt from the provisions of Section 250;
9            (J) With the exception of any amounts subtracted
10        under subparagraph (G), an amount equal to the sum of
11        all amounts disallowed as deductions by (i) Sections
12        171(a)(2), and 265(a)(2) of the Internal Revenue Code,
13        and all amounts of expenses allocable to interest and
14        disallowed as deductions by Section 265(a)(1) of the
15        Internal Revenue Code; and (ii) for taxable years
16        ending on or after August 13, 1999, Sections 171(a)(2),
17        265, 280C, and 832(b)(5)(B)(i) of the Internal Revenue
18        Code, plus, (iii) for taxable years ending on or after
19        December 31, 2011, Section 45G(e)(3) of the Internal
20        Revenue Code and, for taxable years ending on or after
21        December 31, 2008, any amount included in gross income
22        under Section 87 of the Internal Revenue Code; the
23        provisions of this subparagraph are exempt from the
24        provisions of Section 250;
25            (K) An amount equal to those dividends included in
26        such total which were paid by a corporation which

 

 

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1        conducts business operations in a River Edge
2        Redevelopment Zone or zones created under the River
3        Edge Redevelopment Zone Act and conducts substantially
4        all of its operations from a River Edge Redevelopment
5        Zone or zones. This subparagraph (K) is exempt from the
6        provisions of Section 250;
7            (L) An amount equal to any contribution made to a
8        job training project established pursuant to the Real
9        Property Tax Increment Allocation Redevelopment Act;
10            (M) An amount equal to those dividends included in
11        such total that were paid by a corporation that
12        conducts business operations in a federally designated
13        Foreign Trade Zone or Sub-Zone and that is designated a
14        High Impact Business located in Illinois; provided
15        that dividends eligible for the deduction provided in
16        subparagraph (K) of paragraph (2) of this subsection
17        shall not be eligible for the deduction provided under
18        this subparagraph (M);
19            (N) An amount equal to the amount of the deduction
20        used to compute the federal income tax credit for
21        restoration of substantial amounts held under claim of
22        right for the taxable year pursuant to Section 1341 of
23        the Internal Revenue Code;
24            (O) For taxable years 2001 and thereafter, for the
25        taxable year in which the bonus depreciation deduction
26        is taken on the taxpayer's federal income tax return

 

 

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1        under subsection (k) of Section 168 of the Internal
2        Revenue Code and for each applicable taxable year
3        thereafter, an amount equal to "x", where:
4                (1) "y" equals the amount of the depreciation
5            deduction taken for the taxable year on the
6            taxpayer's federal income tax return on property
7            for which the bonus depreciation deduction was
8            taken in any year under subsection (k) of Section
9            168 of the Internal Revenue Code, but not including
10            the bonus depreciation deduction;
11                (2) for taxable years ending on or before
12            December 31, 2005, "x" equals "y" multiplied by 30
13            and then divided by 70 (or "y" multiplied by
14            0.429); and
15                (3) for taxable years ending after December
16            31, 2005:
17                    (i) for property on which a bonus
18                depreciation deduction of 30% of the adjusted
19                basis was taken, "x" equals "y" multiplied by
20                30 and then divided by 70 (or "y" multiplied by
21                0.429); and
22                    (ii) for property on which a bonus
23                depreciation deduction of 50% of the adjusted
24                basis was taken, "x" equals "y" multiplied by
25                1.0.
26            The aggregate amount deducted under this

 

 

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1        subparagraph in all taxable years for any one piece of
2        property may not exceed the amount of the bonus
3        depreciation deduction taken on that property on the
4        taxpayer's federal income tax return under subsection
5        (k) of Section 168 of the Internal Revenue Code. This
6        subparagraph (O) is exempt from the provisions of
7        Section 250;
8            (P) If the taxpayer sells, transfers, abandons, or
9        otherwise disposes of property for which the taxpayer
10        was required in any taxable year to make an addition
11        modification under subparagraph (D-5), then an amount
12        equal to that addition modification.
13            If the taxpayer continues to own property through
14        the last day of the last tax year for which the
15        taxpayer may claim a depreciation deduction for
16        federal income tax purposes and for which the taxpayer
17        was required in any taxable year to make an addition
18        modification under subparagraph (D-5), then an amount
19        equal to that addition modification.
20            The taxpayer is allowed to take the deduction under
21        this subparagraph only once with respect to any one
22        piece of property.
23            This subparagraph (P) is exempt from the
24        provisions of Section 250;
25            (Q) The amount of (i) any interest income (net of
26        the deductions allocable thereto) taken into account

 

 

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1        for the taxable year with respect to a transaction with
2        a taxpayer that is required to make an addition
3        modification with respect to such transaction under
4        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
5        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
6        the amount of such addition modification and (ii) any
7        income from intangible property (net of the deductions
8        allocable thereto) taken into account for the taxable
9        year with respect to a transaction with a taxpayer that
10        is required to make an addition modification with
11        respect to such transaction under Section
12        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
13        203(d)(2)(D-8), but not to exceed the amount of such
14        addition modification. This subparagraph (Q) is exempt
15        from Section 250;
16            (R) An amount equal to the interest income taken
17        into account for the taxable year (net of the
18        deductions allocable thereto) with respect to
19        transactions with (i) a foreign person who would be a
20        member of the taxpayer's unitary business group but for
21        the fact that the foreign person's business activity
22        outside the United States is 80% or more of that
23        person's total business activity and (ii) for taxable
24        years ending on or after December 31, 2008, to a person
25        who would be a member of the same unitary business
26        group but for the fact that the person is prohibited

 

 

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1        under Section 1501(a)(27) from being included in the
2        unitary business group because he or she is ordinarily
3        required to apportion business income under different
4        subsections of Section 304, but not to exceed the
5        addition modification required to be made for the same
6        taxable year under Section 203(d)(2)(D-7) for interest
7        paid, accrued, or incurred, directly or indirectly, to
8        the same person. This subparagraph (R) is exempt from
9        Section 250;
10            (S) An amount equal to the income from intangible
11        property taken into account for the taxable year (net
12        of the deductions allocable thereto) with respect to
13        transactions with (i) a foreign person who would be a
14        member of the taxpayer's unitary business group but for
15        the fact that the foreign person's business activity
16        outside the United States is 80% or more of that
17        person's total business activity and (ii) for taxable
18        years ending on or after December 31, 2008, to a person
19        who would be a member of the same unitary business
20        group but for the fact that the person is prohibited
21        under Section 1501(a)(27) from being included in the
22        unitary business group because he or she is ordinarily
23        required to apportion business income under different
24        subsections of Section 304, but not to exceed the
25        addition modification required to be made for the same
26        taxable year under Section 203(d)(2)(D-8) for

 

 

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1        intangible expenses and costs paid, accrued, or
2        incurred, directly or indirectly, to the same person.
3        This subparagraph (S) is exempt from Section 250; and
4            (T) For taxable years ending on or after December
5        31, 2011, in the case of a taxpayer who was required to
6        add back any insurance premiums under Section
7        203(d)(2)(D-9), such taxpayer may elect to subtract
8        that part of a reimbursement received from the
9        insurance company equal to the amount of the expense or
10        loss (including expenses incurred by the insurance
11        company) that would have been taken into account as a
12        deduction for federal income tax purposes if the
13        expense or loss had been uninsured. If a taxpayer makes
14        the election provided for by this subparagraph (T), the
15        insurer to which the premiums were paid must add back
16        to income the amount subtracted by the taxpayer
17        pursuant to this subparagraph (T). This subparagraph
18        (T) is exempt from the provisions of Section 250.
 
19    (e) Gross income; adjusted gross income; taxable income.
20        (1) In general. Subject to the provisions of paragraph
21    (2) and subsection (b)(3), for purposes of this Section and
22    Section 803(e), a taxpayer's gross income, adjusted gross
23    income, or taxable income for the taxable year shall mean
24    the amount of gross income, adjusted gross income or
25    taxable income properly reportable for federal income tax

 

 

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1    purposes for the taxable year under the provisions of the
2    Internal Revenue Code; provided that, with respect to an
3    individual, for purposes of this Section, for taxable years
4    beginning after December 31, 2019, adjusted gross income
5    properly reportable for federal income tax purposes shall
6    be computed with the following adjustments: (i) the
7    provisions of Section 172(a)(1) of the Internal Revenue
8    Code shall apply by substituting "January 1, 2020" for
9    "January 1, 2021", (ii) the provisions of Section 172(a)(2)
10    of the Internal Revenue Code shall apply by substituting
11    "December 31, 2019" for "December 31, 2020", (iii) the
12    provisions of Section 172(b)(1)(D)(i) of the Internal
13    Revenue Code shall apply by substituting "January 1, 2020"
14    for "January 1, 2021", (iv) the provisions of Section
15    172(b)(2)(C) shall apply by substituting "December 31,
16    2019" for "December 31, 2020", and (v) the provisions of
17    Section 461(l)(1)(B) of the Internal Revenue Code shall
18    apply by substituting "December 31, 2019" for "December 31,
19    2020". Taxable income may be less than zero. However, for
20    taxable years ending on or after December 31, 1986, net
21    operating loss carryforwards from taxable years ending
22    prior to December 31, 1986, may not exceed the sum of
23    federal taxable income for the taxable year before net
24    operating loss deduction, plus the excess of addition
25    modifications over subtraction modifications for the
26    taxable year. For taxable years ending prior to December

 

 

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1    31, 1986, taxable income may never be an amount in excess
2    of the net operating loss for the taxable year as defined
3    in subsections (c) and (d) of Section 172 of the Internal
4    Revenue Code, provided that when taxable income of a
5    corporation (other than a Subchapter S corporation),
6    trust, or estate is less than zero and addition
7    modifications, other than those provided by subparagraph
8    (E) of paragraph (2) of subsection (b) for corporations or
9    subparagraph (E) of paragraph (2) of subsection (c) for
10    trusts and estates, exceed subtraction modifications, an
11    addition modification must be made under those
12    subparagraphs for any other taxable year to which the
13    taxable income less than zero (net operating loss) is
14    applied under Section 172 of the Internal Revenue Code or
15    under subparagraph (E) of paragraph (2) of this subsection
16    (e) applied in conjunction with Section 172 of the Internal
17    Revenue Code.
18        (2) Special rule. For purposes of paragraph (1) of this
19    subsection, the taxable income properly reportable for
20    federal income tax purposes shall mean:
21            (A) Certain life insurance companies. In the case
22        of a life insurance company subject to the tax imposed
23        by Section 801 of the Internal Revenue Code, life
24        insurance company taxable income, plus the amount of
25        distribution from pre-1984 policyholder surplus
26        accounts as calculated under Section 815a of the

 

 

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1        Internal Revenue Code;
2            (B) Certain other insurance companies. In the case
3        of mutual insurance companies subject to the tax
4        imposed by Section 831 of the Internal Revenue Code,
5        insurance company taxable income;
6            (C) Regulated investment companies. In the case of
7        a regulated investment company subject to the tax
8        imposed by Section 852 of the Internal Revenue Code,
9        investment company taxable income;
10            (D) Real estate investment trusts. In the case of a
11        real estate investment trust subject to the tax imposed
12        by Section 857 of the Internal Revenue Code, real
13        estate investment trust taxable income;
14            (E) Consolidated corporations. In the case of a
15        corporation which is a member of an affiliated group of
16        corporations filing a consolidated income tax return
17        for the taxable year for federal income tax purposes,
18        taxable income determined as if such corporation had
19        filed a separate return for federal income tax purposes
20        for the taxable year and each preceding taxable year
21        for which it was a member of an affiliated group. For
22        purposes of this subparagraph, the taxpayer's separate
23        taxable income shall be determined as if the election
24        provided by Section 243(b)(2) of the Internal Revenue
25        Code had been in effect for all such years;
26            (F) Cooperatives. In the case of a cooperative

 

 

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1        corporation or association, the taxable income of such
2        organization determined in accordance with the
3        provisions of Section 1381 through 1388 of the Internal
4        Revenue Code, but without regard to the prohibition
5        against offsetting losses from patronage activities
6        against income from nonpatronage activities; except
7        that a cooperative corporation or association may make
8        an election to follow its federal income tax treatment
9        of patronage losses and nonpatronage losses. In the
10        event such election is made, such losses shall be
11        computed and carried over in a manner consistent with
12        subsection (a) of Section 207 of this Act and
13        apportioned by the apportionment factor reported by
14        the cooperative on its Illinois income tax return filed
15        for the taxable year in which the losses are incurred.
16        The election shall be effective for all taxable years
17        with original returns due on or after the date of the
18        election. In addition, the cooperative may file an
19        amended return or returns, as allowed under this Act,
20        to provide that the election shall be effective for
21        losses incurred or carried forward for taxable years
22        occurring prior to the date of the election. Once made,
23        the election may only be revoked upon approval of the
24        Director. The Department shall adopt rules setting
25        forth requirements for documenting the elections and
26        any resulting Illinois net loss and the standards to be

 

 

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1        used by the Director in evaluating requests to revoke
2        elections. Public Act 96-932 is declaratory of
3        existing law;
4            (G) Subchapter S corporations. In the case of: (i)
5        a Subchapter S corporation for which there is in effect
6        an election for the taxable year under Section 1362 of
7        the Internal Revenue Code, the taxable income of such
8        corporation determined in accordance with Section
9        1363(b) of the Internal Revenue Code, except that
10        taxable income shall take into account those items
11        which are required by Section 1363(b)(1) of the
12        Internal Revenue Code to be separately stated; and (ii)
13        a Subchapter S corporation for which there is in effect
14        a federal election to opt out of the provisions of the
15        Subchapter S Revision Act of 1982 and have applied
16        instead the prior federal Subchapter S rules as in
17        effect on July 1, 1982, the taxable income of such
18        corporation determined in accordance with the federal
19        Subchapter S rules as in effect on July 1, 1982; and
20            (H) Partnerships. In the case of a partnership,
21        taxable income determined in accordance with Section
22        703 of the Internal Revenue Code, except that taxable
23        income shall take into account those items which are
24        required by Section 703(a)(1) to be separately stated
25        but which would be taken into account by an individual
26        in calculating his taxable income.

 

 

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1        (3) Recapture of business expenses on disposition of
2    asset or business. Notwithstanding any other law to the
3    contrary, if in prior years income from an asset or
4    business has been classified as business income and in a
5    later year is demonstrated to be non-business income, then
6    all expenses, without limitation, deducted in such later
7    year and in the 2 immediately preceding taxable years
8    related to that asset or business that generated the
9    non-business income shall be added back and recaptured as
10    business income in the year of the disposition of the asset
11    or business. Such amount shall be apportioned to Illinois
12    using the greater of the apportionment fraction computed
13    for the business under Section 304 of this Act for the
14    taxable year or the average of the apportionment fractions
15    computed for the business under Section 304 of this Act for
16    the taxable year and for the 2 immediately preceding
17    taxable years.
 
18    (f) Valuation limitation amount.
19        (1) In general. The valuation limitation amount
20    referred to in subsections (a)(2)(G), (c)(2)(I) and
21    (d)(2)(E) is an amount equal to:
22            (A) The sum of the pre-August 1, 1969 appreciation
23        amounts (to the extent consisting of gain reportable
24        under the provisions of Section 1245 or 1250 of the
25        Internal Revenue Code) for all property in respect of

 

 

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1        which such gain was reported for the taxable year; plus
2            (B) The lesser of (i) the sum of the pre-August 1,
3        1969 appreciation amounts (to the extent consisting of
4        capital gain) for all property in respect of which such
5        gain was reported for federal income tax purposes for
6        the taxable year, or (ii) the net capital gain for the
7        taxable year, reduced in either case by any amount of
8        such gain included in the amount determined under
9        subsection (a)(2)(F) or (c)(2)(H).
10        (2) Pre-August 1, 1969 appreciation amount.
11            (A) If the fair market value of property referred
12        to in paragraph (1) was readily ascertainable on August
13        1, 1969, the pre-August 1, 1969 appreciation amount for
14        such property is the lesser of (i) the excess of such
15        fair market value over the taxpayer's basis (for
16        determining gain) for such property on that date
17        (determined under the Internal Revenue Code as in
18        effect on that date), or (ii) the total gain realized
19        and reportable for federal income tax purposes in
20        respect of the sale, exchange or other disposition of
21        such property.
22            (B) If the fair market value of property referred
23        to in paragraph (1) was not readily ascertainable on
24        August 1, 1969, the pre-August 1, 1969 appreciation
25        amount for such property is that amount which bears the
26        same ratio to the total gain reported in respect of the

 

 

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1        property for federal income tax purposes for the
2        taxable year, as the number of full calendar months in
3        that part of the taxpayer's holding period for the
4        property ending July 31, 1969 bears to the number of
5        full calendar months in the taxpayer's entire holding
6        period for the property.
7            (C) The Department shall prescribe such
8        regulations as may be necessary to carry out the
9        purposes of this paragraph.
 
10    (g) Double deductions. Unless specifically provided
11otherwise, nothing in this Section shall permit the same item
12to be deducted more than once.
 
13    (h) Legislative intention. Except as expressly provided by
14this Section there shall be no modifications or limitations on
15the amounts of income, gain, loss or deduction taken into
16account in determining gross income, adjusted gross income or
17taxable income for federal income tax purposes for the taxable
18year, or in the amount of such items entering into the
19computation of base income and net income under this Act for
20such taxable year, whether in respect of property values as of
21August 1, 1969 or otherwise.
22(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
23101-9, eff. 6-5-19; 101-81, eff. 7-12-19; revised 9-20-19.)
 

 

 

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1    Section 20. The Service Use Tax Act is amended by changing
2Section 3-10 as follows:
 
3    (35 ILCS 110/3-10)  (from Ch. 120, par. 439.33-10)
4    Sec. 3-10. Rate of tax. Unless otherwise provided in this
5Section, the tax imposed by this Act is at the rate of 6.25% of
6the selling price of tangible personal property transferred as
7an incident to the sale of service, but, for the purpose of
8computing this tax, in no event shall the selling price be less
9than the cost price of the property to the serviceman.
10    Beginning on July 1, 2000 and through December 31, 2000,
11with respect to motor fuel, as defined in Section 1.1 of the
12Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
13the Use Tax Act, the tax is imposed at the rate of 1.25%.
14    With respect to gasohol, as defined in the Use Tax Act, the
15tax imposed by this Act applies to (i) 70% of the selling price
16of property transferred as an incident to the sale of service
17on or after January 1, 1990, and before July 1, 2003, (ii) 80%
18of the selling price of property transferred as an incident to
19the sale of service on or after July 1, 2003 and on or before
20July 1, 2017, and (iii) 100% of the selling price thereafter.
21If, at any time, however, the tax under this Act on sales of
22gasohol, as defined in the Use Tax Act, is imposed at the rate
23of 1.25%, then the tax imposed by this Act applies to 100% of
24the proceeds of sales of gasohol made during that time.
25    With respect to majority blended ethanol fuel, as defined

 

 

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1in the Use Tax Act, the tax imposed by this Act does not apply
2to the selling price of property transferred as an incident to
3the sale of service on or after July 1, 2003 and on or before
4December 31, 2023 but applies to 100% of the selling price
5thereafter.
6    With respect to biodiesel blends, as defined in the Use Tax
7Act, with no less than 1% and no more than 10% biodiesel, the
8tax imposed by this Act applies to (i) 80% of the selling price
9of property transferred as an incident to the sale of service
10on or after July 1, 2003 and on or before December 31, 2018 and
11(ii) 100% of the proceeds of the selling price thereafter. If,
12at any time, however, the tax under this Act on sales of
13biodiesel blends, as defined in the Use Tax Act, with no less
14than 1% and no more than 10% biodiesel is imposed at the rate
15of 1.25%, then the tax imposed by this Act applies to 100% of
16the proceeds of sales of biodiesel blends with no less than 1%
17and no more than 10% biodiesel made during that time.
18    With respect to 100% biodiesel, as defined in the Use Tax
19Act, and biodiesel blends, as defined in the Use Tax Act, with
20more than 10% but no more than 99% biodiesel, the tax imposed
21by this Act does not apply to the proceeds of the selling price
22of property transferred as an incident to the sale of service
23on or after July 1, 2003 and on or before December 31, 2023 but
24applies to 100% of the selling price thereafter.
25    At the election of any registered serviceman made for each
26fiscal year, sales of service in which the aggregate annual

 

 

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1cost price of tangible personal property transferred as an
2incident to the sales of service is less than 35%, or 75% in
3the case of servicemen transferring prescription drugs or
4servicemen engaged in graphic arts production, of the aggregate
5annual total gross receipts from all sales of service, the tax
6imposed by this Act shall be based on the serviceman's cost
7price of the tangible personal property transferred as an
8incident to the sale of those services.
9    The tax shall be imposed at the rate of 1% on food prepared
10for immediate consumption and transferred incident to a sale of
11service subject to this Act or the Service Occupation Tax Act
12by an entity licensed under the Hospital Licensing Act, the
13Nursing Home Care Act, the Assisted Living and Shared Housing
14Act, the ID/DD Community Care Act, the MC/DD Act, the
15Specialized Mental Health Rehabilitation Act of 2013, or the
16Child Care Act of 1969, or an entity that holds a permit issued
17pursuant to the Life Care Facilities Act. The tax shall also be
18imposed at the rate of 1% on food for human consumption that is
19to be consumed off the premises where it is sold (other than
20alcoholic beverages, food consisting of or infused with adult
21use cannabis, soft drinks, and food that has been prepared for
22immediate consumption and is not otherwise included in this
23paragraph) and prescription and nonprescription medicines,
24drugs, medical appliances, products classified as Class III
25medical devices by the United States Food and Drug
26Administration that are used for cancer treatment pursuant to a

 

 

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1prescription, as well as any accessories and components related
2to those devices, modifications to a motor vehicle for the
3purpose of rendering it usable by a person with a disability,
4and insulin, urine testing materials, syringes, and needles
5used by diabetics, for human use. For the purposes of this
6Section, until September 1, 2009: the term "soft drinks" means
7any complete, finished, ready-to-use, non-alcoholic drink,
8whether carbonated or not, including but not limited to soda
9water, cola, fruit juice, vegetable juice, carbonated water,
10and all other preparations commonly known as soft drinks of
11whatever kind or description that are contained in any closed
12or sealed bottle, can, carton, or container, regardless of
13size; but "soft drinks" does not include coffee, tea,
14non-carbonated water, infant formula, milk or milk products as
15defined in the Grade A Pasteurized Milk and Milk Products Act,
16or drinks containing 50% or more natural fruit or vegetable
17juice.
18    Notwithstanding any other provisions of this Act,
19beginning September 1, 2009, "soft drinks" means non-alcoholic
20beverages that contain natural or artificial sweeteners. "Soft
21drinks" do not include beverages that contain milk or milk
22products, soy, rice or similar milk substitutes, or greater
23than 50% of vegetable or fruit juice by volume.
24    Until August 1, 2009, and notwithstanding any other
25provisions of this Act, "food for human consumption that is to
26be consumed off the premises where it is sold" includes all

 

 

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1food sold through a vending machine, except soft drinks and
2food products that are dispensed hot from a vending machine,
3regardless of the location of the vending machine. Beginning
4August 1, 2009, and notwithstanding any other provisions of
5this Act, "food for human consumption that is to be consumed
6off the premises where it is sold" includes all food sold
7through a vending machine, except soft drinks, candy, and food
8products that are dispensed hot from a vending machine,
9regardless of the location of the vending machine.
10    Notwithstanding any other provisions of this Act,
11beginning September 1, 2009, "food for human consumption that
12is to be consumed off the premises where it is sold" does not
13include candy. For purposes of this Section, "candy" means a
14preparation of sugar, honey, or other natural or artificial
15sweeteners in combination with chocolate, fruits, nuts or other
16ingredients or flavorings in the form of bars, drops, or
17pieces. "Candy" does not include any preparation that contains
18flour or requires refrigeration.
19    Notwithstanding any other provisions of this Act,
20beginning September 1, 2009, "nonprescription medicines and
21drugs" does not include grooming and hygiene products. For
22purposes of this Section, "grooming and hygiene products"
23includes, but is not limited to, soaps and cleaning solutions,
24shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
25lotions and screens, unless those products are available by
26prescription only, regardless of whether the products meet the

 

 

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1definition of "over-the-counter-drugs". For the purposes of
2this paragraph, "over-the-counter-drug" means a drug for human
3use that contains a label that identifies the product as a drug
4as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
5label includes:
6        (A) A "Drug Facts" panel; or
7        (B) A statement of the "active ingredient(s)" with a
8    list of those ingredients contained in the compound,
9    substance or preparation.
10    Beginning on January 1, 2014 (the effective date of Public
11Act 98-122), "prescription and nonprescription medicines and
12drugs" includes medical cannabis purchased from a registered
13dispensing organization under the Compassionate Use of Medical
14Cannabis Program Act.
15    As used in this Section, "adult use cannabis" means
16cannabis subject to tax under the Cannabis Cultivation
17Privilege Tax Law and the Cannabis Purchaser Excise Tax Law and
18does not include cannabis subject to tax under the
19Compassionate Use of Medical Cannabis Program Act.
20    If the property that is acquired from a serviceman is
21acquired outside Illinois and used outside Illinois before
22being brought to Illinois for use here and is taxable under
23this Act, the "selling price" on which the tax is computed
24shall be reduced by an amount that represents a reasonable
25allowance for depreciation for the period of prior out-of-state
26use.

 

 

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1(Source: P.A. 100-22, eff. 7-6-17; 101-363, eff. 8-9-19;
2101-593, eff. 12-4-19.)
 
3    Section 25. The Service Occupation Tax Act is amended by
4changing Section 3-10 as follows:
 
5    (35 ILCS 115/3-10)  (from Ch. 120, par. 439.103-10)
6    Sec. 3-10. Rate of tax. Unless otherwise provided in this
7Section, the tax imposed by this Act is at the rate of 6.25% of
8the "selling price", as defined in Section 2 of the Service Use
9Tax Act, of the tangible personal property. For the purpose of
10computing this tax, in no event shall the "selling price" be
11less than the cost price to the serviceman of the tangible
12personal property transferred. The selling price of each item
13of tangible personal property transferred as an incident of a
14sale of service may be shown as a distinct and separate item on
15the serviceman's billing to the service customer. If the
16selling price is not so shown, the selling price of the
17tangible personal property is deemed to be 50% of the
18serviceman's entire billing to the service customer. When,
19however, a serviceman contracts to design, develop, and produce
20special order machinery or equipment, the tax imposed by this
21Act shall be based on the serviceman's cost price of the
22tangible personal property transferred incident to the
23completion of the contract.
24    Beginning on July 1, 2000 and through December 31, 2000,

 

 

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1with respect to motor fuel, as defined in Section 1.1 of the
2Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
3the Use Tax Act, the tax is imposed at the rate of 1.25%.
4    With respect to gasohol, as defined in the Use Tax Act, the
5tax imposed by this Act shall apply to (i) 70% of the cost
6price of property transferred as an incident to the sale of
7service on or after January 1, 1990, and before July 1, 2003,
8(ii) 80% of the selling price of property transferred as an
9incident to the sale of service on or after July 1, 2003 and on
10or before July 1, 2017, and (iii) 100% of the cost price
11thereafter. If, at any time, however, the tax under this Act on
12sales of gasohol, as defined in the Use Tax Act, is imposed at
13the rate of 1.25%, then the tax imposed by this Act applies to
14100% of the proceeds of sales of gasohol made during that time.
15    With respect to majority blended ethanol fuel, as defined
16in the Use Tax Act, the tax imposed by this Act does not apply
17to the selling price of property transferred as an incident to
18the sale of service on or after July 1, 2003 and on or before
19December 31, 2023 but applies to 100% of the selling price
20thereafter.
21    With respect to biodiesel blends, as defined in the Use Tax
22Act, with no less than 1% and no more than 10% biodiesel, the
23tax imposed by this Act applies to (i) 80% of the selling price
24of property transferred as an incident to the sale of service
25on or after July 1, 2003 and on or before December 31, 2018 and
26(ii) 100% of the proceeds of the selling price thereafter. If,

 

 

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1at any time, however, the tax under this Act on sales of
2biodiesel blends, as defined in the Use Tax Act, with no less
3than 1% and no more than 10% biodiesel is imposed at the rate
4of 1.25%, then the tax imposed by this Act applies to 100% of
5the proceeds of sales of biodiesel blends with no less than 1%
6and no more than 10% biodiesel made during that time.
7    With respect to 100% biodiesel, as defined in the Use Tax
8Act, and biodiesel blends, as defined in the Use Tax Act, with
9more than 10% but no more than 99% biodiesel material, the tax
10imposed by this Act does not apply to the proceeds of the
11selling price of property transferred as an incident to the
12sale of service on or after July 1, 2003 and on or before
13December 31, 2023 but applies to 100% of the selling price
14thereafter.
15    At the election of any registered serviceman made for each
16fiscal year, sales of service in which the aggregate annual
17cost price of tangible personal property transferred as an
18incident to the sales of service is less than 35%, or 75% in
19the case of servicemen transferring prescription drugs or
20servicemen engaged in graphic arts production, of the aggregate
21annual total gross receipts from all sales of service, the tax
22imposed by this Act shall be based on the serviceman's cost
23price of the tangible personal property transferred incident to
24the sale of those services.
25    The tax shall be imposed at the rate of 1% on food prepared
26for immediate consumption and transferred incident to a sale of

 

 

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1service subject to this Act or the Service Occupation Tax Act
2by an entity licensed under the Hospital Licensing Act, the
3Nursing Home Care Act, the Assisted Living and Shared Housing
4Act, the ID/DD Community Care Act, the MC/DD Act, the
5Specialized Mental Health Rehabilitation Act of 2013, or the
6Child Care Act of 1969, or an entity that holds a permit issued
7pursuant to the Life Care Facilities Act. The tax shall also be
8imposed at the rate of 1% on food for human consumption that is
9to be consumed off the premises where it is sold (other than
10alcoholic beverages, food consisting of or infused with adult
11use cannabis, soft drinks, and food that has been prepared for
12immediate consumption and is not otherwise included in this
13paragraph) and prescription and nonprescription medicines,
14drugs, medical appliances, products classified as Class III
15medical devices by the United States Food and Drug
16Administration that are used for cancer treatment pursuant to a
17prescription, as well as any accessories and components related
18to those devices, modifications to a motor vehicle for the
19purpose of rendering it usable by a person with a disability,
20and insulin, urine testing materials, syringes, and needles
21used by diabetics, for human use. For the purposes of this
22Section, until September 1, 2009: the term "soft drinks" means
23any complete, finished, ready-to-use, non-alcoholic drink,
24whether carbonated or not, including but not limited to soda
25water, cola, fruit juice, vegetable juice, carbonated water,
26and all other preparations commonly known as soft drinks of

 

 

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1whatever kind or description that are contained in any closed
2or sealed can, carton, or container, regardless of size; but
3"soft drinks" does not include coffee, tea, non-carbonated
4water, infant formula, milk or milk products as defined in the
5Grade A Pasteurized Milk and Milk Products Act, or drinks
6containing 50% or more natural fruit or vegetable juice.
7    Notwithstanding any other provisions of this Act,
8beginning September 1, 2009, "soft drinks" means non-alcoholic
9beverages that contain natural or artificial sweeteners. "Soft
10drinks" do not include beverages that contain milk or milk
11products, soy, rice or similar milk substitutes, or greater
12than 50% of vegetable or fruit juice by volume.
13    Until August 1, 2009, and notwithstanding any other
14provisions of this Act, "food for human consumption that is to
15be consumed off the premises where it is sold" includes all
16food sold through a vending machine, except soft drinks and
17food products that are dispensed hot from a vending machine,
18regardless of the location of the vending machine. Beginning
19August 1, 2009, and notwithstanding any other provisions of
20this Act, "food for human consumption that is to be consumed
21off the premises where it is sold" includes all food sold
22through a vending machine, except soft drinks, candy, and food
23products that are dispensed hot from a vending machine,
24regardless of the location of the vending machine.
25    Notwithstanding any other provisions of this Act,
26beginning September 1, 2009, "food for human consumption that

 

 

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1is to be consumed off the premises where it is sold" does not
2include candy. For purposes of this Section, "candy" means a
3preparation of sugar, honey, or other natural or artificial
4sweeteners in combination with chocolate, fruits, nuts or other
5ingredients or flavorings in the form of bars, drops, or
6pieces. "Candy" does not include any preparation that contains
7flour or requires refrigeration.
8    Notwithstanding any other provisions of this Act,
9beginning September 1, 2009, "nonprescription medicines and
10drugs" does not include grooming and hygiene products. For
11purposes of this Section, "grooming and hygiene products"
12includes, but is not limited to, soaps and cleaning solutions,
13shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
14lotions and screens, unless those products are available by
15prescription only, regardless of whether the products meet the
16definition of "over-the-counter-drugs". For the purposes of
17this paragraph, "over-the-counter-drug" means a drug for human
18use that contains a label that identifies the product as a drug
19as required by 21 C.F.R. 201.66. The "over-the-counter-drug"
20label includes:
21        (A) A "Drug Facts" panel; or
22        (B) A statement of the "active ingredient(s)" with a
23    list of those ingredients contained in the compound,
24    substance or preparation.
25    Beginning on January 1, 2014 (the effective date of Public
26Act 98-122), "prescription and nonprescription medicines and

 

 

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1drugs" includes medical cannabis purchased from a registered
2dispensing organization under the Compassionate Use of Medical
3Cannabis Program Act.
4    As used in this Section, "adult use cannabis" means
5cannabis subject to tax under the Cannabis Cultivation
6Privilege Tax Law and the Cannabis Purchaser Excise Tax Law and
7does not include cannabis subject to tax under the
8Compassionate Use of Medical Cannabis Program Act.
9(Source: P.A. 100-22, eff. 7-6-17; 101-363, eff. 8-9-19;
10101-593, eff. 12-4-19.)
 
11    Section 30. The Retailers' Occupation Tax Act is amended by
12changing Sections 1, 2-5, and 3 as follows:
 
13    (35 ILCS 120/1)  (from Ch. 120, par. 440)
14    Sec. 1. Definitions. "Sale at retail" means any transfer of
15the ownership of or title to tangible personal property to a
16purchaser, for the purpose of use or consumption, and not for
17the purpose of resale in any form as tangible personal property
18to the extent not first subjected to a use for which it was
19purchased, for a valuable consideration: Provided that the
20property purchased is deemed to be purchased for the purpose of
21resale, despite first being used, to the extent to which it is
22resold as an ingredient of an intentionally produced product or
23byproduct of manufacturing. For this purpose, slag produced as
24an incident to manufacturing pig iron or steel and sold is

 

 

10100SB1199ham002- 120 -LRB101 08044 HLH 74840 a

1considered to be an intentionally produced byproduct of
2manufacturing. Transactions whereby the possession of the
3property is transferred but the seller retains the title as
4security for payment of the selling price shall be deemed to be
5sales.
6    "Sale at retail" shall be construed to include any transfer
7of the ownership of or title to tangible personal property to a
8purchaser, for use or consumption by any other person to whom
9such purchaser may transfer the tangible personal property
10without a valuable consideration, and to include any transfer,
11whether made for or without a valuable consideration, for
12resale in any form as tangible personal property unless made in
13compliance with Section 2c of this Act.
14    Sales of tangible personal property, which property, to the
15extent not first subjected to a use for which it was purchased,
16as an ingredient or constituent, goes into and forms a part of
17tangible personal property subsequently the subject of a "Sale
18at retail", are not sales at retail as defined in this Act:
19Provided that the property purchased is deemed to be purchased
20for the purpose of resale, despite first being used, to the
21extent to which it is resold as an ingredient of an
22intentionally produced product or byproduct of manufacturing.
23    "Sale at retail" shall be construed to include any Illinois
24florist's sales transaction in which the purchase order is
25received in Illinois by a florist and the sale is for use or
26consumption, but the Illinois florist has a florist in another

 

 

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1state deliver the property to the purchaser or the purchaser's
2donee in such other state.
3    Nonreusable tangible personal property that is used by
4persons engaged in the business of operating a restaurant,
5cafeteria, or drive-in is a sale for resale when it is
6transferred to customers in the ordinary course of business as
7part of the sale of food or beverages and is used to deliver,
8package, or consume food or beverages, regardless of where
9consumption of the food or beverages occurs. Examples of those
10items include, but are not limited to nonreusable, paper and
11plastic cups, plates, baskets, boxes, sleeves, buckets or other
12containers, utensils, straws, placemats, napkins, doggie bags,
13and wrapping or packaging materials that are transferred to
14customers as part of the sale of food or beverages in the
15ordinary course of business.
16    The purchase, employment and transfer of such tangible
17personal property as newsprint and ink for the primary purpose
18of conveying news (with or without other information) is not a
19purchase, use or sale of tangible personal property.
20    A person whose activities are organized and conducted
21primarily as a not-for-profit service enterprise, and who
22engages in selling tangible personal property at retail
23(whether to the public or merely to members and their guests)
24is engaged in the business of selling tangible personal
25property at retail with respect to such transactions, excepting
26only a person organized and operated exclusively for

 

 

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1charitable, religious or educational purposes either (1), to
2the extent of sales by such person to its members, students,
3patients or inmates of tangible personal property to be used
4primarily for the purposes of such person, or (2), to the
5extent of sales by such person of tangible personal property
6which is not sold or offered for sale by persons organized for
7profit. The selling of school books and school supplies by
8schools at retail to students is not "primarily for the
9purposes of" the school which does such selling. The provisions
10of this paragraph shall not apply to nor subject to taxation
11occasional dinners, socials or similar activities of a person
12organized and operated exclusively for charitable, religious
13or educational purposes, whether or not such activities are
14open to the public.
15    A person who is the recipient of a grant or contract under
16Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
17serves meals to participants in the federal Nutrition Program
18for the Elderly in return for contributions established in
19amount by the individual participant pursuant to a schedule of
20suggested fees as provided for in the federal Act is not
21engaged in the business of selling tangible personal property
22at retail with respect to such transactions.
23    "Purchaser" means anyone who, through a sale at retail,
24acquires the ownership of or title to tangible personal
25property for a valuable consideration.
26    "Reseller of motor fuel" means any person engaged in the

 

 

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1business of selling or delivering or transferring title of
2motor fuel to another person other than for use or consumption.
3No person shall act as a reseller of motor fuel within this
4State without first being registered as a reseller pursuant to
5Section 2c or a retailer pursuant to Section 2a.
6    "Selling price" or the "amount of sale" means the
7consideration for a sale valued in money whether received in
8money or otherwise, including cash, credits, property, other
9than as hereinafter provided, and services, but, prior to
10January 1, 2020, not including the value of or credit given for
11traded-in tangible personal property where the item that is
12traded-in is of like kind and character as that which is being
13sold; beginning January 1, 2020, "selling price" includes the
14portion of the value of or credit given for traded-in motor
15vehicles of the First Division as defined in Section 1-146 of
16the Illinois Vehicle Code of like kind and character as that
17which is being sold that exceeds $10,000. "Selling price" shall
18be determined without any deduction on account of the cost of
19the property sold, the cost of materials used, labor or service
20cost or any other expense whatsoever, but does not include
21charges that are added to prices by sellers on account of the
22seller's tax liability under this Act, or on account of the
23seller's duty to collect, from the purchaser, the tax that is
24imposed by the Use Tax Act, or, except as otherwise provided
25with respect to any cigarette tax imposed by a home rule unit,
26on account of the seller's tax liability under any local

 

 

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1occupation tax administered by the Department, or, except as
2otherwise provided with respect to any cigarette tax imposed by
3a home rule unit on account of the seller's duty to collect,
4from the purchasers, the tax that is imposed under any local
5use tax administered by the Department. Effective December 1,
61985, "selling price" shall include charges that are added to
7prices by sellers on account of the seller's tax liability
8under the Cigarette Tax Act, on account of the sellers' duty to
9collect, from the purchaser, the tax imposed under the
10Cigarette Use Tax Act, and on account of the seller's duty to
11collect, from the purchaser, any cigarette tax imposed by a
12home rule unit.
13    Notwithstanding any law to the contrary, for any motor
14vehicle, as defined in Section 1-146 of the Vehicle Code, that
15is sold on or after January 1, 2015 for the purpose of leasing
16the vehicle for a defined period that is longer than one year
17and (1) is a motor vehicle of the second division that: (A) is
18a self-contained motor vehicle designed or permanently
19converted to provide living quarters for recreational,
20camping, or travel use, with direct walk through access to the
21living quarters from the driver's seat; (B) is of the van
22configuration designed for the transportation of not less than
237 nor more than 16 passengers; or (C) has a gross vehicle
24weight rating of 8,000 pounds or less or (2) is a motor vehicle
25of the first division, "selling price" or "amount of sale"
26means the consideration received by the lessor pursuant to the

 

 

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1lease contract, including amounts due at lease signing and all
2monthly or other regular payments charged over the term of the
3lease. Also included in the selling price is any amount
4received by the lessor from the lessee for the leased vehicle
5that is not calculated at the time the lease is executed,
6including, but not limited to, excess mileage charges and
7charges for excess wear and tear. For sales that occur in
8Illinois, with respect to any amount received by the lessor
9from the lessee for the leased vehicle that is not calculated
10at the time the lease is executed, the lessor who purchased the
11motor vehicle does not incur the tax imposed by the Use Tax Act
12on those amounts, and the retailer who makes the retail sale of
13the motor vehicle to the lessor is not required to collect the
14tax imposed by the Use Tax Act or to pay the tax imposed by this
15Act on those amounts. However, the lessor who purchased the
16motor vehicle assumes the liability for reporting and paying
17the tax on those amounts directly to the Department in the same
18form (Illinois Retailers' Occupation Tax, and local retailers'
19occupation taxes, if applicable) in which the retailer would
20have reported and paid such tax if the retailer had accounted
21for the tax to the Department. For amounts received by the
22lessor from the lessee that are not calculated at the time the
23lease is executed, the lessor must file the return and pay the
24tax to the Department by the due date otherwise required by
25this Act for returns other than transaction returns. If the
26retailer is entitled under this Act to a discount for

 

 

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1collecting and remitting the tax imposed under this Act to the
2Department with respect to the sale of the motor vehicle to the
3lessor, then the right to the discount provided in this Act
4shall be transferred to the lessor with respect to the tax paid
5by the lessor for any amount received by the lessor from the
6lessee for the leased vehicle that is not calculated at the
7time the lease is executed; provided that the discount is only
8allowed if the return is timely filed and for amounts timely
9paid. The "selling price" of a motor vehicle that is sold on or
10after January 1, 2015 for the purpose of leasing for a defined
11period of longer than one year shall not be reduced by the
12value of or credit given for traded-in tangible personal
13property owned by the lessor, nor shall it be reduced by the
14value of or credit given for traded-in tangible personal
15property owned by the lessee, regardless of whether the
16trade-in value thereof is assigned by the lessee to the lessor.
17In the case of a motor vehicle that is sold for the purpose of
18leasing for a defined period of longer than one year, the sale
19occurs at the time of the delivery of the vehicle, regardless
20of the due date of any lease payments. A lessor who incurs a
21Retailers' Occupation Tax liability on the sale of a motor
22vehicle coming off lease may not take a credit against that
23liability for the Use Tax the lessor paid upon the purchase of
24the motor vehicle (or for any tax the lessor paid with respect
25to any amount received by the lessor from the lessee for the
26leased vehicle that was not calculated at the time the lease

 

 

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1was executed) if the selling price of the motor vehicle at the
2time of purchase was calculated using the definition of
3"selling price" as defined in this paragraph. Notwithstanding
4any other provision of this Act to the contrary, lessors shall
5file all returns and make all payments required under this
6paragraph to the Department by electronic means in the manner
7and form as required by the Department. This paragraph does not
8apply to leases of motor vehicles for which, at the time the
9lease is entered into, the term of the lease is not a defined
10period, including leases with a defined initial period with the
11option to continue the lease on a month-to-month or other basis
12beyond the initial defined period.
13    The phrase "like kind and character" shall be liberally
14construed (including but not limited to any form of motor
15vehicle for any form of motor vehicle, or any kind of farm or
16agricultural implement for any other kind of farm or
17agricultural implement), while not including a kind of item
18which, if sold at retail by that retailer, would be exempt from
19retailers' occupation tax and use tax as an isolated or
20occasional sale.
21    "Gross receipts" from the sales of tangible personal
22property at retail means the total selling price or the amount
23of such sales, as hereinbefore defined. In the case of charge
24and time sales, the amount thereof shall be included only as
25and when payments are received by the seller. Receipts or other
26consideration derived by a seller from the sale, transfer or

 

 

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1assignment of accounts receivable to a wholly owned subsidiary
2will not be deemed payments prior to the time the purchaser
3makes payment on such accounts.
4    "Department" means the Department of Revenue.
5    "Person" means any natural individual, firm, partnership,
6association, joint stock company, joint adventure, public or
7private corporation, limited liability company, or a receiver,
8executor, trustee, guardian or other representative appointed
9by order of any court.
10    The isolated or occasional sale of tangible personal
11property at retail by a person who does not hold himself out as
12being engaged (or who does not habitually engage) in selling
13such tangible personal property at retail, or a sale through a
14bulk vending machine, does not constitute engaging in a
15business of selling such tangible personal property at retail
16within the meaning of this Act; provided that any person who is
17engaged in a business which is not subject to the tax imposed
18by this Act because of involving the sale of or a contract to
19sell real estate or a construction contract to improve real
20estate or a construction contract to engineer, install, and
21maintain an integrated system of products, but who, in the
22course of conducting such business, transfers tangible
23personal property to users or consumers in the finished form in
24which it was purchased, and which does not become real estate
25or was not engineered and installed, under any provision of a
26construction contract or real estate sale or real estate sales

 

 

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1agreement entered into with some other person arising out of or
2because of such nontaxable business, is engaged in the business
3of selling tangible personal property at retail to the extent
4of the value of the tangible personal property so transferred.
5If, in such a transaction, a separate charge is made for the
6tangible personal property so transferred, the value of such
7property, for the purpose of this Act, shall be the amount so
8separately charged, but not less than the cost of such property
9to the transferor; if no separate charge is made, the value of
10such property, for the purposes of this Act, is the cost to the
11transferor of such tangible personal property. Construction
12contracts for the improvement of real estate consisting of
13engineering, installation, and maintenance of voice, data,
14video, security, and all telecommunication systems do not
15constitute engaging in a business of selling tangible personal
16property at retail within the meaning of this Act if they are
17sold at one specified contract price.
18    A person who holds himself or herself out as being engaged
19(or who habitually engages) in selling tangible personal
20property at retail is a person engaged in the business of
21selling tangible personal property at retail hereunder with
22respect to such sales (and not primarily in a service
23occupation) notwithstanding the fact that such person designs
24and produces such tangible personal property on special order
25for the purchaser and in such a way as to render the property
26of value only to such purchaser, if such tangible personal

 

 

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1property so produced on special order serves substantially the
2same function as stock or standard items of tangible personal
3property that are sold at retail.
4    Persons who engage in the business of transferring tangible
5personal property upon the redemption of trading stamps are
6engaged in the business of selling such property at retail and
7shall be liable for and shall pay the tax imposed by this Act
8on the basis of the retail value of the property transferred
9upon redemption of such stamps.
10    "Bulk vending machine" means a vending machine, containing
11unsorted confections, nuts, toys, or other items designed
12primarily to be used or played with by children which, when a
13coin or coins of a denomination not larger than $0.50 are
14inserted, are dispensed in equal portions, at random and
15without selection by the customer.
16    "Remote retailer" means a retailer that does not maintain
17within this State, directly or by a subsidiary, an office,
18distribution house, sales house, warehouse or other place of
19business, or any agent or other representative operating within
20this State under the authority of the retailer or its
21subsidiary, irrespective of whether such place of business or
22agent is located here permanently or temporarily or whether
23such retailer or subsidiary is licensed to do business in this
24State.
25    "Marketplace" means a physical or electronic place, forum,
26platform, application, or other method by which a marketplace

 

 

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1seller sells or offers to sell items.
2    "Marketplace facilitator" means a person who, pursuant to
3an agreement with an unrelated third-party marketplace seller,
4directly or indirectly through one or more affiliates
5facilitates a retail sale by an unrelated third party
6marketplace seller by:
7        (1) listing or advertising for sale by the marketplace
8    seller in a marketplace, tangible personal property that is
9    subject to tax under this Act; and
10        (2) either directly or indirectly, through agreements
11    or arrangements with third parties, collecting payment
12    from the customer and transmitting that payment to the
13    marketplace seller regardless of whether the marketplace
14    facilitator receives compensation or other consideration
15    in exchange for its services.
16    A person who provides advertising services, including
17listing products for sale, is not considered a marketplace
18facilitator, so long as the advertising service platform or
19forum does not engage, directly or indirectly through one or
20more affiliated persons, in the activities described in
21paragraph (2) of this definition of "marketplace facilitator".
22    "Marketplace facilitator" does not include any person
23licensed under the Auction License Act. This exemption does not
24apply to any person who is an Internet auction listing service,
25as defined by the Auction License Act.
26    "Marketplace seller" means a person that makes sales

 

 

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1through a marketplace operated by an unrelated third party
2marketplace facilitator.
3(Source: P.A. 101-31, eff. 6-28-19; 101-604, eff. 1-1-20.)
 
4    (35 ILCS 120/2-5)
5    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
6sale of the following tangible personal property are exempt
7from the tax imposed by this Act:
8        (1) Farm chemicals.
9        (2) Farm machinery and equipment, both new and used,
10    including that manufactured on special order, certified by
11    the purchaser to be used primarily for production
12    agriculture or State or federal agricultural programs,
13    including individual replacement parts for the machinery
14    and equipment, including machinery and equipment purchased
15    for lease, and including implements of husbandry defined in
16    Section 1-130 of the Illinois Vehicle Code, farm machinery
17    and agricultural chemical and fertilizer spreaders, and
18    nurse wagons required to be registered under Section 3-809
19    of the Illinois Vehicle Code, but excluding other motor
20    vehicles required to be registered under the Illinois
21    Vehicle Code. Horticultural polyhouses or hoop houses used
22    for propagating, growing, or overwintering plants shall be
23    considered farm machinery and equipment under this item
24    (2). Agricultural chemical tender tanks and dry boxes shall
25    include units sold separately from a motor vehicle required

 

 

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1    to be licensed and units sold mounted on a motor vehicle
2    required to be licensed, if the selling price of the tender
3    is separately stated.
4        Farm machinery and equipment shall include precision
5    farming equipment that is installed or purchased to be
6    installed on farm machinery and equipment including, but
7    not limited to, tractors, harvesters, sprayers, planters,
8    seeders, or spreaders. Precision farming equipment
9    includes, but is not limited to, soil testing sensors,
10    computers, monitors, software, global positioning and
11    mapping systems, and other such equipment.
12        Farm machinery and equipment also includes computers,
13    sensors, software, and related equipment used primarily in
14    the computer-assisted operation of production agriculture
15    facilities, equipment, and activities such as, but not
16    limited to, the collection, monitoring, and correlation of
17    animal and crop data for the purpose of formulating animal
18    diets and agricultural chemicals. This item (2) is exempt
19    from the provisions of Section 2-70.
20        (3) Until July 1, 2003, distillation machinery and
21    equipment, sold as a unit or kit, assembled or installed by
22    the retailer, certified by the user to be used only for the
23    production of ethyl alcohol that will be used for
24    consumption as motor fuel or as a component of motor fuel
25    for the personal use of the user, and not subject to sale
26    or resale.

 

 

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1        (4) Until July 1, 2003 and beginning again September 1,
2    2004 through August 30, 2014, graphic arts machinery and
3    equipment, including repair and replacement parts, both
4    new and used, and including that manufactured on special
5    order or purchased for lease, certified by the purchaser to
6    be used primarily for graphic arts production. Equipment
7    includes chemicals or chemicals acting as catalysts but
8    only if the chemicals or chemicals acting as catalysts
9    effect a direct and immediate change upon a graphic arts
10    product. Beginning on July 1, 2017, graphic arts machinery
11    and equipment is included in the manufacturing and
12    assembling machinery and equipment exemption under
13    paragraph (14).
14        (5) A motor vehicle that is used for automobile
15    renting, as defined in the Automobile Renting Occupation
16    and Use Tax Act. This paragraph is exempt from the
17    provisions of Section 2-70.
18        (6) Personal property sold by a teacher-sponsored
19    student organization affiliated with an elementary or
20    secondary school located in Illinois.
21        (7) Until July 1, 2003, proceeds of that portion of the
22    selling price of a passenger car the sale of which is
23    subject to the Replacement Vehicle Tax.
24        (8) Personal property sold to an Illinois county fair
25    association for use in conducting, operating, or promoting
26    the county fair.

 

 

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1        (9) Personal property sold to a not-for-profit arts or
2    cultural organization that establishes, by proof required
3    by the Department by rule, that it has received an
4    exemption under Section 501(c)(3) of the Internal Revenue
5    Code and that is organized and operated primarily for the
6    presentation or support of arts or cultural programming,
7    activities, or services. These organizations include, but
8    are not limited to, music and dramatic arts organizations
9    such as symphony orchestras and theatrical groups, arts and
10    cultural service organizations, local arts councils,
11    visual arts organizations, and media arts organizations.
12    On and after July 1, 2001 (the effective date of Public Act
13    92-35), however, an entity otherwise eligible for this
14    exemption shall not make tax-free purchases unless it has
15    an active identification number issued by the Department.
16        (10) Personal property sold by a corporation, society,
17    association, foundation, institution, or organization,
18    other than a limited liability company, that is organized
19    and operated as a not-for-profit service enterprise for the
20    benefit of persons 65 years of age or older if the personal
21    property was not purchased by the enterprise for the
22    purpose of resale by the enterprise.
23        (11) Personal property sold to a governmental body, to
24    a corporation, society, association, foundation, or
25    institution organized and operated exclusively for
26    charitable, religious, or educational purposes, or to a

 

 

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1    not-for-profit corporation, society, association,
2    foundation, institution, or organization that has no
3    compensated officers or employees and that is organized and
4    operated primarily for the recreation of persons 55 years
5    of age or older. A limited liability company may qualify
6    for the exemption under this paragraph only if the limited
7    liability company is organized and operated exclusively
8    for educational purposes. On and after July 1, 1987,
9    however, no entity otherwise eligible for this exemption
10    shall make tax-free purchases unless it has an active
11    identification number issued by the Department.
12        (12) (Blank).
13        (12-5) On and after July 1, 2003 and through June 30,
14    2004, motor vehicles of the second division with a gross
15    vehicle weight in excess of 8,000 pounds that are subject
16    to the commercial distribution fee imposed under Section
17    3-815.1 of the Illinois Vehicle Code. Beginning on July 1,
18    2004 and through June 30, 2005, the use in this State of
19    motor vehicles of the second division: (i) with a gross
20    vehicle weight rating in excess of 8,000 pounds; (ii) that
21    are subject to the commercial distribution fee imposed
22    under Section 3-815.1 of the Illinois Vehicle Code; and
23    (iii) that are primarily used for commercial purposes.
24    Through June 30, 2005, this exemption applies to repair and
25    replacement parts added after the initial purchase of such
26    a motor vehicle if that motor vehicle is used in a manner

 

 

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1    that would qualify for the rolling stock exemption
2    otherwise provided for in this Act. For purposes of this
3    paragraph, "used for commercial purposes" means the
4    transportation of persons or property in furtherance of any
5    commercial or industrial enterprise whether for-hire or
6    not.
7        (13) Proceeds from sales to owners, lessors, or
8    shippers of tangible personal property that is utilized by
9    interstate carriers for hire for use as rolling stock
10    moving in interstate commerce and equipment operated by a
11    telecommunications provider, licensed as a common carrier
12    by the Federal Communications Commission, which is
13    permanently installed in or affixed to aircraft moving in
14    interstate commerce.
15        (14) Machinery and equipment that will be used by the
16    purchaser, or a lessee of the purchaser, primarily in the
17    process of manufacturing or assembling tangible personal
18    property for wholesale or retail sale or lease, whether the
19    sale or lease is made directly by the manufacturer or by
20    some other person, whether the materials used in the
21    process are owned by the manufacturer or some other person,
22    or whether the sale or lease is made apart from or as an
23    incident to the seller's engaging in the service occupation
24    of producing machines, tools, dies, jigs, patterns,
25    gauges, or other similar items of no commercial value on
26    special order for a particular purchaser. The exemption

 

 

10100SB1199ham002- 138 -LRB101 08044 HLH 74840 a

1    provided by this paragraph (14) does not include machinery
2    and equipment used in (i) the generation of electricity for
3    wholesale or retail sale; (ii) the generation or treatment
4    of natural or artificial gas for wholesale or retail sale
5    that is delivered to customers through pipes, pipelines, or
6    mains; or (iii) the treatment of water for wholesale or
7    retail sale that is delivered to customers through pipes,
8    pipelines, or mains. The provisions of Public Act 98-583
9    are declaratory of existing law as to the meaning and scope
10    of this exemption. Beginning on July 1, 2017, the exemption
11    provided by this paragraph (14) includes, but is not
12    limited to, graphic arts machinery and equipment, as
13    defined in paragraph (4) of this Section.
14        (15) Proceeds of mandatory service charges separately
15    stated on customers' bills for purchase and consumption of
16    food and beverages, to the extent that the proceeds of the
17    service charge are in fact turned over as tips or as a
18    substitute for tips to the employees who participate
19    directly in preparing, serving, hosting or cleaning up the
20    food or beverage function with respect to which the service
21    charge is imposed.
22        (16) Tangible personal property sold to a purchaser if
23    the purchaser is exempt from use tax by operation of
24    federal law. This paragraph is exempt from the provisions
25    of Section 2-70.
26        (17) Tangible personal property sold to a common

 

 

10100SB1199ham002- 139 -LRB101 08044 HLH 74840 a

1    carrier by rail or motor that receives the physical
2    possession of the property in Illinois and that transports
3    the property, or shares with another common carrier in the
4    transportation of the property, out of Illinois on a
5    standard uniform bill of lading showing the seller of the
6    property as the shipper or consignor of the property to a
7    destination outside Illinois, for use outside Illinois.
8        (18) Legal tender, currency, medallions, or gold or
9    silver coinage issued by the State of Illinois, the
10    government of the United States of America, or the
11    government of any foreign country, and bullion.
12        (19) Until July 1, 2003, oil field exploration,
13    drilling, and production equipment, including (i) rigs and
14    parts of rigs, rotary rigs, cable tool rigs, and workover
15    rigs, (ii) pipe and tubular goods, including casing and
16    drill strings, (iii) pumps and pump-jack units, (iv)
17    storage tanks and flow lines, (v) any individual
18    replacement part for oil field exploration, drilling, and
19    production equipment, and (vi) machinery and equipment
20    purchased for lease; but excluding motor vehicles required
21    to be registered under the Illinois Vehicle Code.
22        (20) Photoprocessing machinery and equipment,
23    including repair and replacement parts, both new and used,
24    including that manufactured on special order, certified by
25    the purchaser to be used primarily for photoprocessing, and
26    including photoprocessing machinery and equipment

 

 

10100SB1199ham002- 140 -LRB101 08044 HLH 74840 a

1    purchased for lease.
2        (21) Until July 1, 2023, coal and aggregate
3    exploration, mining, off-highway hauling, processing,
4    maintenance, and reclamation equipment, including
5    replacement parts and equipment, and including equipment
6    purchased for lease, but excluding motor vehicles required
7    to be registered under the Illinois Vehicle Code. The
8    changes made to this Section by Public Act 97-767 apply on
9    and after July 1, 2003, but no claim for credit or refund
10    is allowed on or after August 16, 2013 (the effective date
11    of Public Act 98-456) for such taxes paid during the period
12    beginning July 1, 2003 and ending on August 16, 2013 (the
13    effective date of Public Act 98-456).
14        (22) Until June 30, 2013, fuel and petroleum products
15    sold to or used by an air carrier, certified by the carrier
16    to be used for consumption, shipment, or storage in the
17    conduct of its business as an air common carrier, for a
18    flight destined for or returning from a location or
19    locations outside the United States without regard to
20    previous or subsequent domestic stopovers.
21        Beginning July 1, 2013, fuel and petroleum products
22    sold to or used by an air carrier, certified by the carrier
23    to be used for consumption, shipment, or storage in the
24    conduct of its business as an air common carrier, for a
25    flight that (i) is engaged in foreign trade or is engaged
26    in trade between the United States and any of its

 

 

10100SB1199ham002- 141 -LRB101 08044 HLH 74840 a

1    possessions and (ii) transports at least one individual or
2    package for hire from the city of origination to the city
3    of final destination on the same aircraft, without regard
4    to a change in the flight number of that aircraft.
5        (23) A transaction in which the purchase order is
6    received by a florist who is located outside Illinois, but
7    who has a florist located in Illinois deliver the property
8    to the purchaser or the purchaser's donee in Illinois.
9        (24) Fuel consumed or used in the operation of ships,
10    barges, or vessels that are used primarily in or for the
11    transportation of property or the conveyance of persons for
12    hire on rivers bordering on this State if the fuel is
13    delivered by the seller to the purchaser's barge, ship, or
14    vessel while it is afloat upon that bordering river.
15        (25) Except as provided in item (25-5) of this Section,
16    a motor vehicle sold in this State to a nonresident even
17    though the motor vehicle is delivered to the nonresident in
18    this State, if the motor vehicle is not to be titled in
19    this State, and if a drive-away permit is issued to the
20    motor vehicle as provided in Section 3-603 of the Illinois
21    Vehicle Code or if the nonresident purchaser has vehicle
22    registration plates to transfer to the motor vehicle upon
23    returning to his or her home state. The issuance of the
24    drive-away permit or having the out-of-state registration
25    plates to be transferred is prima facie evidence that the
26    motor vehicle will not be titled in this State.

 

 

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1        (25-5) The exemption under item (25) does not apply if
2    the state in which the motor vehicle will be titled does
3    not allow a reciprocal exemption for a motor vehicle sold
4    and delivered in that state to an Illinois resident but
5    titled in Illinois. The tax collected under this Act on the
6    sale of a motor vehicle in this State to a resident of
7    another state that does not allow a reciprocal exemption
8    shall be imposed at a rate equal to the state's rate of tax
9    on taxable property in the state in which the purchaser is
10    a resident, except that the tax shall not exceed the tax
11    that would otherwise be imposed under this Act. At the time
12    of the sale, the purchaser shall execute a statement,
13    signed under penalty of perjury, of his or her intent to
14    title the vehicle in the state in which the purchaser is a
15    resident within 30 days after the sale and of the fact of
16    the payment to the State of Illinois of tax in an amount
17    equivalent to the state's rate of tax on taxable property
18    in his or her state of residence and shall submit the
19    statement to the appropriate tax collection agency in his
20    or her state of residence. In addition, the retailer must
21    retain a signed copy of the statement in his or her
22    records. Nothing in this item shall be construed to require
23    the removal of the vehicle from this state following the
24    filing of an intent to title the vehicle in the purchaser's
25    state of residence if the purchaser titles the vehicle in
26    his or her state of residence within 30 days after the date

 

 

10100SB1199ham002- 143 -LRB101 08044 HLH 74840 a

1    of sale. The tax collected under this Act in accordance
2    with this item (25-5) shall be proportionately distributed
3    as if the tax were collected at the 6.25% general rate
4    imposed under this Act.
5        (25-7) Beginning on July 1, 2007, no tax is imposed
6    under this Act on the sale of an aircraft, as defined in
7    Section 3 of the Illinois Aeronautics Act, if all of the
8    following conditions are met:
9            (1) the aircraft leaves this State within 15 days
10        after the later of either the issuance of the final
11        billing for the sale of the aircraft, or the authorized
12        approval for return to service, completion of the
13        maintenance record entry, and completion of the test
14        flight and ground test for inspection, as required by
15        14 C.F.R. 91.407;
16            (2) the aircraft is not based or registered in this
17        State after the sale of the aircraft; and
18            (3) the seller retains in his or her books and
19        records and provides to the Department a signed and
20        dated certification from the purchaser, on a form
21        prescribed by the Department, certifying that the
22        requirements of this item (25-7) are met. The
23        certificate must also include the name and address of
24        the purchaser, the address of the location where the
25        aircraft is to be titled or registered, the address of
26        the primary physical location of the aircraft, and

 

 

10100SB1199ham002- 144 -LRB101 08044 HLH 74840 a

1        other information that the Department may reasonably
2        require.
3        For purposes of this item (25-7):
4        "Based in this State" means hangared, stored, or
5    otherwise used, excluding post-sale customizations as
6    defined in this Section, for 10 or more days in each
7    12-month period immediately following the date of the sale
8    of the aircraft.
9        "Registered in this State" means an aircraft
10    registered with the Department of Transportation,
11    Aeronautics Division, or titled or registered with the
12    Federal Aviation Administration to an address located in
13    this State.
14        This paragraph (25-7) is exempt from the provisions of
15    Section 2-70.
16        (26) Semen used for artificial insemination of
17    livestock for direct agricultural production.
18        (27) Horses, or interests in horses, registered with
19    and meeting the requirements of any of the Arabian Horse
20    Club Registry of America, Appaloosa Horse Club, American
21    Quarter Horse Association, United States Trotting
22    Association, or Jockey Club, as appropriate, used for
23    purposes of breeding or racing for prizes. This item (27)
24    is exempt from the provisions of Section 2-70, and the
25    exemption provided for under this item (27) applies for all
26    periods beginning May 30, 1995, but no claim for credit or

 

 

10100SB1199ham002- 145 -LRB101 08044 HLH 74840 a

1    refund is allowed on or after January 1, 2008 (the
2    effective date of Public Act 95-88) for such taxes paid
3    during the period beginning May 30, 2000 and ending on
4    January 1, 2008 (the effective date of Public Act 95-88).
5        (28) Computers and communications equipment utilized
6    for any hospital purpose and equipment used in the
7    diagnosis, analysis, or treatment of hospital patients
8    sold to a lessor who leases the equipment, under a lease of
9    one year or longer executed or in effect at the time of the
10    purchase, to a hospital that has been issued an active tax
11    exemption identification number by the Department under
12    Section 1g of this Act.
13        (29) Personal property sold to a lessor who leases the
14    property, under a lease of one year or longer executed or
15    in effect at the time of the purchase, to a governmental
16    body that has been issued an active tax exemption
17    identification number by the Department under Section 1g of
18    this Act.
19        (30) Beginning with taxable years ending on or after
20    December 31, 1995 and ending with taxable years ending on
21    or before December 31, 2004, personal property that is
22    donated for disaster relief to be used in a State or
23    federally declared disaster area in Illinois or bordering
24    Illinois by a manufacturer or retailer that is registered
25    in this State to a corporation, society, association,
26    foundation, or institution that has been issued a sales tax

 

 

10100SB1199ham002- 146 -LRB101 08044 HLH 74840 a

1    exemption identification number by the Department that
2    assists victims of the disaster who reside within the
3    declared disaster area.
4        (31) Beginning with taxable years ending on or after
5    December 31, 1995 and ending with taxable years ending on
6    or before December 31, 2004, personal property that is used
7    in the performance of infrastructure repairs in this State,
8    including but not limited to municipal roads and streets,
9    access roads, bridges, sidewalks, waste disposal systems,
10    water and sewer line extensions, water distribution and
11    purification facilities, storm water drainage and
12    retention facilities, and sewage treatment facilities,
13    resulting from a State or federally declared disaster in
14    Illinois or bordering Illinois when such repairs are
15    initiated on facilities located in the declared disaster
16    area within 6 months after the disaster.
17        (32) Beginning July 1, 1999, game or game birds sold at
18    a "game breeding and hunting preserve area" as that term is
19    used in the Wildlife Code. This paragraph is exempt from
20    the provisions of Section 2-70.
21        (33) A motor vehicle, as that term is defined in
22    Section 1-146 of the Illinois Vehicle Code, that is donated
23    to a corporation, limited liability company, society,
24    association, foundation, or institution that is determined
25    by the Department to be organized and operated exclusively
26    for educational purposes. For purposes of this exemption,

 

 

10100SB1199ham002- 147 -LRB101 08044 HLH 74840 a

1    "a corporation, limited liability company, society,
2    association, foundation, or institution organized and
3    operated exclusively for educational purposes" means all
4    tax-supported public schools, private schools that offer
5    systematic instruction in useful branches of learning by
6    methods common to public schools and that compare favorably
7    in their scope and intensity with the course of study
8    presented in tax-supported schools, and vocational or
9    technical schools or institutes organized and operated
10    exclusively to provide a course of study of not less than 6
11    weeks duration and designed to prepare individuals to
12    follow a trade or to pursue a manual, technical,
13    mechanical, industrial, business, or commercial
14    occupation.
15        (34) Beginning January 1, 2000, personal property,
16    including food, purchased through fundraising events for
17    the benefit of a public or private elementary or secondary
18    school, a group of those schools, or one or more school
19    districts if the events are sponsored by an entity
20    recognized by the school district that consists primarily
21    of volunteers and includes parents and teachers of the
22    school children. This paragraph does not apply to
23    fundraising events (i) for the benefit of private home
24    instruction or (ii) for which the fundraising entity
25    purchases the personal property sold at the events from
26    another individual or entity that sold the property for the

 

 

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1    purpose of resale by the fundraising entity and that
2    profits from the sale to the fundraising entity. This
3    paragraph is exempt from the provisions of Section 2-70.
4        (35) Beginning January 1, 2000 and through December 31,
5    2001, new or used automatic vending machines that prepare
6    and serve hot food and beverages, including coffee, soup,
7    and other items, and replacement parts for these machines.
8    Beginning January 1, 2002 and through June 30, 2003,
9    machines and parts for machines used in commercial,
10    coin-operated amusement and vending business if a use or
11    occupation tax is paid on the gross receipts derived from
12    the use of the commercial, coin-operated amusement and
13    vending machines. This paragraph is exempt from the
14    provisions of Section 2-70.
15        (35-5) Beginning August 23, 2001 and through June 30,
16    2016, food for human consumption that is to be consumed off
17    the premises where it is sold (other than alcoholic
18    beverages, soft drinks, and food that has been prepared for
19    immediate consumption) and prescription and
20    nonprescription medicines, drugs, medical appliances, and
21    insulin, urine testing materials, syringes, and needles
22    used by diabetics, for human use, when purchased for use by
23    a person receiving medical assistance under Article V of
24    the Illinois Public Aid Code who resides in a licensed
25    long-term care facility, as defined in the Nursing Home
26    Care Act, or a licensed facility as defined in the ID/DD

 

 

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1    Community Care Act, the MC/DD Act, or the Specialized
2    Mental Health Rehabilitation Act of 2013.
3        (36) Beginning August 2, 2001, computers and
4    communications equipment utilized for any hospital purpose
5    and equipment used in the diagnosis, analysis, or treatment
6    of hospital patients sold to a lessor who leases the
7    equipment, under a lease of one year or longer executed or
8    in effect at the time of the purchase, to a hospital that
9    has been issued an active tax exemption identification
10    number by the Department under Section 1g of this Act. This
11    paragraph is exempt from the provisions of Section 2-70.
12        (37) Beginning August 2, 2001, personal property sold
13    to a lessor who leases the property, under a lease of one
14    year or longer executed or in effect at the time of the
15    purchase, to a governmental body that has been issued an
16    active tax exemption identification number by the
17    Department under Section 1g of this Act. This paragraph is
18    exempt from the provisions of Section 2-70.
19        (38) Beginning on January 1, 2002 and through June 30,
20    2016, tangible personal property purchased from an
21    Illinois retailer by a taxpayer engaged in centralized
22    purchasing activities in Illinois who will, upon receipt of
23    the property in Illinois, temporarily store the property in
24    Illinois (i) for the purpose of subsequently transporting
25    it outside this State for use or consumption thereafter
26    solely outside this State or (ii) for the purpose of being

 

 

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1    processed, fabricated, or manufactured into, attached to,
2    or incorporated into other tangible personal property to be
3    transported outside this State and thereafter used or
4    consumed solely outside this State. The Director of Revenue
5    shall, pursuant to rules adopted in accordance with the
6    Illinois Administrative Procedure Act, issue a permit to
7    any taxpayer in good standing with the Department who is
8    eligible for the exemption under this paragraph (38). The
9    permit issued under this paragraph (38) shall authorize the
10    holder, to the extent and in the manner specified in the
11    rules adopted under this Act, to purchase tangible personal
12    property from a retailer exempt from the taxes imposed by
13    this Act. Taxpayers shall maintain all necessary books and
14    records to substantiate the use and consumption of all such
15    tangible personal property outside of the State of
16    Illinois.
17        (39) Beginning January 1, 2008, tangible personal
18    property used in the construction or maintenance of a
19    community water supply, as defined under Section 3.145 of
20    the Environmental Protection Act, that is operated by a
21    not-for-profit corporation that holds a valid water supply
22    permit issued under Title IV of the Environmental
23    Protection Act. This paragraph is exempt from the
24    provisions of Section 2-70.
25        (40) Beginning January 1, 2010 and continuing through
26    December 31, 2024, materials, parts, equipment,

 

 

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1    components, and furnishings incorporated into or upon an
2    aircraft as part of the modification, refurbishment,
3    completion, replacement, repair, or maintenance of the
4    aircraft. This exemption includes consumable supplies used
5    in the modification, refurbishment, completion,
6    replacement, repair, and maintenance of aircraft, but
7    excludes any materials, parts, equipment, components, and
8    consumable supplies used in the modification, replacement,
9    repair, and maintenance of aircraft engines or power
10    plants, whether such engines or power plants are installed
11    or uninstalled upon any such aircraft. "Consumable
12    supplies" include, but are not limited to, adhesive, tape,
13    sandpaper, general purpose lubricants, cleaning solution,
14    latex gloves, and protective films. This exemption applies
15    only to the sale of qualifying tangible personal property
16    to persons who modify, refurbish, complete, replace, or
17    maintain an aircraft and who (i) hold an Air Agency
18    Certificate and are empowered to operate an approved repair
19    station by the Federal Aviation Administration, (ii) have a
20    Class IV Rating, and (iii) conduct operations in accordance
21    with Part 145 of the Federal Aviation Regulations. The
22    exemption does not include aircraft operated by a
23    commercial air carrier providing scheduled passenger air
24    service pursuant to authority issued under Part 121 or Part
25    129 of the Federal Aviation Regulations. The changes made
26    to this paragraph (40) by Public Act 98-534 are declarative

 

 

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1    of existing law. It is the intent of the General Assembly
2    that the exemption under this paragraph (40) applies
3    continuously from January 1, 2010 through December 31,
4    2024; however, no claim for credit or refund is allowed for
5    taxes paid as a result of the disallowance of this
6    exemption on or after January 1, 2015 and prior to the
7    effective date of this amendatory Act of the 101st General
8    Assembly.
9        (41) Tangible personal property sold to a
10    public-facilities corporation, as described in Section
11    11-65-10 of the Illinois Municipal Code, for purposes of
12    constructing or furnishing a municipal convention hall,
13    but only if the legal title to the municipal convention
14    hall is transferred to the municipality without any further
15    consideration by or on behalf of the municipality at the
16    time of the completion of the municipal convention hall or
17    upon the retirement or redemption of any bonds or other
18    debt instruments issued by the public-facilities
19    corporation in connection with the development of the
20    municipal convention hall. This exemption includes
21    existing public-facilities corporations as provided in
22    Section 11-65-25 of the Illinois Municipal Code. This
23    paragraph is exempt from the provisions of Section 2-70.
24        (42) Beginning January 1, 2017, menstrual pads,
25    tampons, and menstrual cups.
26        (43) Merchandise that is subject to the Rental Purchase

 

 

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1    Agreement Occupation and Use Tax. The purchaser must
2    certify that the item is purchased to be rented subject to
3    a rental purchase agreement, as defined in the Rental
4    Purchase Agreement Act, and provide proof of registration
5    under the Rental Purchase Agreement Occupation and Use Tax
6    Act. This paragraph is exempt from the provisions of
7    Section 2-70.
8        (44) Qualified tangible personal property used in the
9    construction or operation of a data center that has been
10    granted a certificate of exemption by the Department of
11    Commerce and Economic Opportunity, whether that tangible
12    personal property is purchased by the owner, operator, or
13    tenant of the data center or by a contractor or
14    subcontractor of the owner, operator, or tenant. Data
15    centers that would have qualified for a certificate of
16    exemption prior to January 1, 2020 had this amendatory Act
17    of the 101st General Assembly been in effect, may apply for
18    and obtain an exemption for subsequent purchases of
19    computer equipment or enabling software purchased or
20    leased to upgrade, supplement, or replace computer
21    equipment or enabling software purchased or leased in the
22    original investment that would have qualified.
23        The Department of Commerce and Economic Opportunity
24    shall grant a certificate of exemption under this item (44)
25    to qualified data centers as defined by Section 605-1025 of
26    the Department of Commerce and Economic Opportunity Law of

 

 

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1    the Civil Administrative Code of Illinois.
2        For the purposes of this item (44):
3            "Data center" means a building or a series of
4        buildings rehabilitated or constructed to house
5        working servers in one physical location or multiple
6        sites within the State of Illinois.
7            "Qualified tangible personal property" means:
8        electrical systems and equipment; climate control and
9        chilling equipment and systems; mechanical systems and
10        equipment; monitoring and secure systems; emergency
11        generators; hardware; computers; servers; data storage
12        devices; network connectivity equipment; racks;
13        cabinets; telecommunications cabling infrastructure;
14        raised floor systems; peripheral components or
15        systems; software; mechanical, electrical, or plumbing
16        systems; battery systems; cooling systems and towers;
17        temperature control systems; other cabling; and other
18        data center infrastructure equipment and systems
19        necessary to operate qualified tangible personal
20        property, including fixtures; and component parts of
21        any of the foregoing, including installation,
22        maintenance, repair, refurbishment, and replacement of
23        qualified tangible personal property to generate,
24        transform, transmit, distribute, or manage electricity
25        necessary to operate qualified tangible personal
26        property; and all other tangible personal property

 

 

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1        that is essential to the operations of a computer data
2        center. The term "qualified tangible personal
3        property" also includes building materials physically
4        incorporated in to the qualifying data center. To
5        document the exemption allowed under this Section, the
6        retailer must obtain from the purchaser a copy of the
7        certificate of eligibility issued by the Department of
8        Commerce and Economic Opportunity.
9        This item (44) is exempt from the provisions of Section
10    2-70.
11        (45) Beginning January 1, 2020 and through December 31,
12    2020, sales of tangible personal property made by a
13    marketplace seller over a marketplace for which tax is due
14    under this Act but for which use tax has been collected and
15    remitted to the Department by a marketplace facilitator
16    under Section 2d of the Use Tax Act are exempt from tax
17    under this Act. A marketplace seller claiming this
18    exemption shall maintain books and records demonstrating
19    that the use tax on such sales has been collected and
20    remitted by a marketplace facilitator. Marketplace sellers
21    that have properly remitted tax under this Act on such
22    sales may file a claim for credit as provided in Section 6
23    of this Act. No claim is allowed, however, for such taxes
24    for which a credit or refund has been issued to the
25    marketplace facilitator under the Use Tax Act, or for which
26    the marketplace facilitator has filed a claim for credit or

 

 

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1    refund under the Use Tax Act.
2(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
3100-437, eff. 1-1-18; 100-594, eff. 6-29-18; 100-863, eff.
48-14-18; 100-1171, eff. 1-4-19; 101-31, eff. 6-28-19; 101-81,
5eff. 7-12-19; 101-629, eff. 2-5-20.)
 
6    (35 ILCS 120/3)  (from Ch. 120, par. 442)
7    Sec. 3. Except as provided in this Section, on or before
8the twentieth day of each calendar month, every person engaged
9in the business of selling tangible personal property at retail
10in this State during the preceding calendar month shall file a
11return with the Department, stating:
12        1. The name of the seller;
13        2. His residence address and the address of his
14    principal place of business and the address of the
15    principal place of business (if that is a different
16    address) from which he engages in the business of selling
17    tangible personal property at retail in this State;
18        3. Total amount of receipts received by him during the
19    preceding calendar month or quarter, as the case may be,
20    from sales of tangible personal property, and from services
21    furnished, by him during such preceding calendar month or
22    quarter;
23        4. Total amount received by him during the preceding
24    calendar month or quarter on charge and time sales of
25    tangible personal property, and from services furnished,

 

 

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1    by him prior to the month or quarter for which the return
2    is filed;
3        5. Deductions allowed by law;
4        6. Gross receipts which were received by him during the
5    preceding calendar month or quarter and upon the basis of
6    which the tax is imposed;
7        7. The amount of credit provided in Section 2d of this
8    Act;
9        8. The amount of tax due;
10        9. The signature of the taxpayer; and
11        10. Such other reasonable information as the
12    Department may require.
13    On and after January 1, 2018, except for returns for motor
14vehicles, watercraft, aircraft, and trailers that are required
15to be registered with an agency of this State, with respect to
16retailers whose annual gross receipts average $20,000 or more,
17all returns required to be filed pursuant to this Act shall be
18filed electronically. Retailers who demonstrate that they do
19not have access to the Internet or demonstrate hardship in
20filing electronically may petition the Department to waive the
21electronic filing requirement.
22    If a taxpayer fails to sign a return within 30 days after
23the proper notice and demand for signature by the Department,
24the return shall be considered valid and any amount shown to be
25due on the return shall be deemed assessed.
26    Each return shall be accompanied by the statement of

 

 

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1prepaid tax issued pursuant to Section 2e for which credit is
2claimed.
3    Prior to October 1, 2003, and on and after September 1,
42004 a retailer may accept a Manufacturer's Purchase Credit
5certification from a purchaser in satisfaction of Use Tax as
6provided in Section 3-85 of the Use Tax Act if the purchaser
7provides the appropriate documentation as required by Section
83-85 of the Use Tax Act. A Manufacturer's Purchase Credit
9certification, accepted by a retailer prior to October 1, 2003
10and on and after September 1, 2004 as provided in Section 3-85
11of the Use Tax Act, may be used by that retailer to satisfy
12Retailers' Occupation Tax liability in the amount claimed in
13the certification, not to exceed 6.25% of the receipts subject
14to tax from a qualifying purchase. A Manufacturer's Purchase
15Credit reported on any original or amended return filed under
16this Act after October 20, 2003 for reporting periods prior to
17September 1, 2004 shall be disallowed. Manufacturer's
18Purchaser Credit reported on annual returns due on or after
19January 1, 2005 will be disallowed for periods prior to
20September 1, 2004. No Manufacturer's Purchase Credit may be
21used after September 30, 2003 through August 31, 2004 to
22satisfy any tax liability imposed under this Act, including any
23audit liability.
24    The Department may require returns to be filed on a
25quarterly basis. If so required, a return for each calendar
26quarter shall be filed on or before the twentieth day of the

 

 

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1calendar month following the end of such calendar quarter. The
2taxpayer shall also file a return with the Department for each
3of the first two months of each calendar quarter, on or before
4the twentieth day of the following calendar month, stating:
5        1. The name of the seller;
6        2. The address of the principal place of business from
7    which he engages in the business of selling tangible
8    personal property at retail in this State;
9        3. The total amount of taxable receipts received by him
10    during the preceding calendar month from sales of tangible
11    personal property by him during such preceding calendar
12    month, including receipts from charge and time sales, but
13    less all deductions allowed by law;
14        4. The amount of credit provided in Section 2d of this
15    Act;
16        5. The amount of tax due; and
17        6. Such other reasonable information as the Department
18    may require.
19    Every person engaged in the business of selling aviation
20fuel at retail in this State during the preceding calendar
21month shall, instead of reporting and paying tax as otherwise
22required by this Section, report and pay such tax on a separate
23aviation fuel tax return. The requirements related to the
24return shall be as otherwise provided in this Section.
25Notwithstanding any other provisions of this Act to the
26contrary, retailers selling aviation fuel shall file all

 

 

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1aviation fuel tax returns and shall make all aviation fuel tax
2payments by electronic means in the manner and form required by
3the Department. For purposes of this Section, "aviation fuel"
4means jet fuel and aviation gasoline.
5    Beginning on October 1, 2003, any person who is not a
6licensed distributor, importing distributor, or manufacturer,
7as defined in the Liquor Control Act of 1934, but is engaged in
8the business of selling, at retail, alcoholic liquor shall file
9a statement with the Department of Revenue, in a format and at
10a time prescribed by the Department, showing the total amount
11paid for alcoholic liquor purchased during the preceding month
12and such other information as is reasonably required by the
13Department. The Department may adopt rules to require that this
14statement be filed in an electronic or telephonic format. Such
15rules may provide for exceptions from the filing requirements
16of this paragraph. For the purposes of this paragraph, the term
17"alcoholic liquor" shall have the meaning prescribed in the
18Liquor Control Act of 1934.
19    Beginning on October 1, 2003, every distributor, importing
20distributor, and manufacturer of alcoholic liquor as defined in
21the Liquor Control Act of 1934, shall file a statement with the
22Department of Revenue, no later than the 10th day of the month
23for the preceding month during which transactions occurred, by
24electronic means, showing the total amount of gross receipts
25from the sale of alcoholic liquor sold or distributed during
26the preceding month to purchasers; identifying the purchaser to

 

 

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1whom it was sold or distributed; the purchaser's tax
2registration number; and such other information reasonably
3required by the Department. A distributor, importing
4distributor, or manufacturer of alcoholic liquor must
5personally deliver, mail, or provide by electronic means to
6each retailer listed on the monthly statement a report
7containing a cumulative total of that distributor's, importing
8distributor's, or manufacturer's total sales of alcoholic
9liquor to that retailer no later than the 10th day of the month
10for the preceding month during which the transaction occurred.
11The distributor, importing distributor, or manufacturer shall
12notify the retailer as to the method by which the distributor,
13importing distributor, or manufacturer will provide the sales
14information. If the retailer is unable to receive the sales
15information by electronic means, the distributor, importing
16distributor, or manufacturer shall furnish the sales
17information by personal delivery or by mail. For purposes of
18this paragraph, the term "electronic means" includes, but is
19not limited to, the use of a secure Internet website, e-mail,
20or facsimile.
21    If a total amount of less than $1 is payable, refundable or
22creditable, such amount shall be disregarded if it is less than
2350 cents and shall be increased to $1 if it is 50 cents or more.
24    Notwithstanding any other provision of this Act to the
25contrary, retailers subject to tax on cannabis shall file all
26cannabis tax returns and shall make all cannabis tax payments

 

 

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1by electronic means in the manner and form required by the
2Department.
3    Beginning October 1, 1993, a taxpayer who has an average
4monthly tax liability of $150,000 or more shall make all
5payments required by rules of the Department by electronic
6funds transfer. Beginning October 1, 1994, a taxpayer who has
7an average monthly tax liability of $100,000 or more shall make
8all payments required by rules of the Department by electronic
9funds transfer. Beginning October 1, 1995, a taxpayer who has
10an average monthly tax liability of $50,000 or more shall make
11all payments required by rules of the Department by electronic
12funds transfer. Beginning October 1, 2000, a taxpayer who has
13an annual tax liability of $200,000 or more shall make all
14payments required by rules of the Department by electronic
15funds transfer. The term "annual tax liability" shall be the
16sum of the taxpayer's liabilities under this Act, and under all
17other State and local occupation and use tax laws administered
18by the Department, for the immediately preceding calendar year.
19The term "average monthly tax liability" shall be the sum of
20the taxpayer's liabilities under this Act, and under all other
21State and local occupation and use tax laws administered by the
22Department, for the immediately preceding calendar year
23divided by 12. Beginning on October 1, 2002, a taxpayer who has
24a tax liability in the amount set forth in subsection (b) of
25Section 2505-210 of the Department of Revenue Law shall make
26all payments required by rules of the Department by electronic

 

 

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1funds transfer.
2    Before August 1 of each year beginning in 1993, the
3Department shall notify all taxpayers required to make payments
4by electronic funds transfer. All taxpayers required to make
5payments by electronic funds transfer shall make those payments
6for a minimum of one year beginning on October 1.
7    Any taxpayer not required to make payments by electronic
8funds transfer may make payments by electronic funds transfer
9with the permission of the Department.
10    All taxpayers required to make payment by electronic funds
11transfer and any taxpayers authorized to voluntarily make
12payments by electronic funds transfer shall make those payments
13in the manner authorized by the Department.
14    The Department shall adopt such rules as are necessary to
15effectuate a program of electronic funds transfer and the
16requirements of this Section.
17    Any amount which is required to be shown or reported on any
18return or other document under this Act shall, if such amount
19is not a whole-dollar amount, be increased to the nearest
20whole-dollar amount in any case where the fractional part of a
21dollar is 50 cents or more, and decreased to the nearest
22whole-dollar amount where the fractional part of a dollar is
23less than 50 cents.
24    If the retailer is otherwise required to file a monthly
25return and if the retailer's average monthly tax liability to
26the Department does not exceed $200, the Department may

 

 

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1authorize his returns to be filed on a quarter annual basis,
2with the return for January, February and March of a given year
3being due by April 20 of such year; with the return for April,
4May and June of a given year being due by July 20 of such year;
5with the return for July, August and September of a given year
6being due by October 20 of such year, and with the return for
7October, November and December of a given year being due by
8January 20 of the following year.
9    If the retailer is otherwise required to file a monthly or
10quarterly return and if the retailer's average monthly tax
11liability with the Department does not exceed $50, the
12Department may authorize his returns to be filed on an annual
13basis, with the return for a given year being due by January 20
14of the following year.
15    Such quarter annual and annual returns, as to form and
16substance, shall be subject to the same requirements as monthly
17returns.
18    Notwithstanding any other provision in this Act concerning
19the time within which a retailer may file his return, in the
20case of any retailer who ceases to engage in a kind of business
21which makes him responsible for filing returns under this Act,
22such retailer shall file a final return under this Act with the
23Department not more than one month after discontinuing such
24business.
25    Where the same person has more than one business registered
26with the Department under separate registrations under this

 

 

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1Act, such person may not file each return that is due as a
2single return covering all such registered businesses, but
3shall file separate returns for each such registered business.
4    In addition, with respect to motor vehicles, watercraft,
5aircraft, and trailers that are required to be registered with
6an agency of this State, except as otherwise provided in this
7Section, every retailer selling this kind of tangible personal
8property shall file, with the Department, upon a form to be
9prescribed and supplied by the Department, a separate return
10for each such item of tangible personal property which the
11retailer sells, except that if, in the same transaction, (i) a
12retailer of aircraft, watercraft, motor vehicles or trailers
13transfers more than one aircraft, watercraft, motor vehicle or
14trailer to another aircraft, watercraft, motor vehicle
15retailer or trailer retailer for the purpose of resale or (ii)
16a retailer of aircraft, watercraft, motor vehicles, or trailers
17transfers more than one aircraft, watercraft, motor vehicle, or
18trailer to a purchaser for use as a qualifying rolling stock as
19provided in Section 2-5 of this Act, then that seller may
20report the transfer of all aircraft, watercraft, motor vehicles
21or trailers involved in that transaction to the Department on
22the same uniform invoice-transaction reporting return form.
23For purposes of this Section, "watercraft" means a Class 2,
24Class 3, or Class 4 watercraft as defined in Section 3-2 of the
25Boat Registration and Safety Act, a personal watercraft, or any
26boat equipped with an inboard motor.

 

 

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1    In addition, with respect to motor vehicles, watercraft,
2aircraft, and trailers that are required to be registered with
3an agency of this State, every person who is engaged in the
4business of leasing or renting such items and who, in
5connection with such business, sells any such item to a
6retailer for the purpose of resale is, notwithstanding any
7other provision of this Section to the contrary, authorized to
8meet the return-filing requirement of this Act by reporting the
9transfer of all the aircraft, watercraft, motor vehicles, or
10trailers transferred for resale during a month to the
11Department on the same uniform invoice-transaction reporting
12return form on or before the 20th of the month following the
13month in which the transfer takes place. Notwithstanding any
14other provision of this Act to the contrary, all returns filed
15under this paragraph must be filed by electronic means in the
16manner and form as required by the Department.
17    Any retailer who sells only motor vehicles, watercraft,
18aircraft, or trailers that are required to be registered with
19an agency of this State, so that all retailers' occupation tax
20liability is required to be reported, and is reported, on such
21transaction reporting returns and who is not otherwise required
22to file monthly or quarterly returns, need not file monthly or
23quarterly returns. However, those retailers shall be required
24to file returns on an annual basis.
25    The transaction reporting return, in the case of motor
26vehicles or trailers that are required to be registered with an

 

 

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1agency of this State, shall be the same document as the Uniform
2Invoice referred to in Section 5-402 of the Illinois Vehicle
3Code and must show the name and address of the seller; the name
4and address of the purchaser; the amount of the selling price
5including the amount allowed by the retailer for traded-in
6property, if any; the amount allowed by the retailer for the
7traded-in tangible personal property, if any, to the extent to
8which Section 1 of this Act allows an exemption for the value
9of traded-in property; the balance payable after deducting such
10trade-in allowance from the total selling price; the amount of
11tax due from the retailer with respect to such transaction; the
12amount of tax collected from the purchaser by the retailer on
13such transaction (or satisfactory evidence that such tax is not
14due in that particular instance, if that is claimed to be the
15fact); the place and date of the sale; a sufficient
16identification of the property sold; such other information as
17is required in Section 5-402 of the Illinois Vehicle Code, and
18such other information as the Department may reasonably
19require.
20    The transaction reporting return in the case of watercraft
21or aircraft must show the name and address of the seller; the
22name and address of the purchaser; the amount of the selling
23price including the amount allowed by the retailer for
24traded-in property, if any; the amount allowed by the retailer
25for the traded-in tangible personal property, if any, to the
26extent to which Section 1 of this Act allows an exemption for

 

 

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1the value of traded-in property; the balance payable after
2deducting such trade-in allowance from the total selling price;
3the amount of tax due from the retailer with respect to such
4transaction; the amount of tax collected from the purchaser by
5the retailer on such transaction (or satisfactory evidence that
6such tax is not due in that particular instance, if that is
7claimed to be the fact); the place and date of the sale, a
8sufficient identification of the property sold, and such other
9information as the Department may reasonably require.
10    Such transaction reporting return shall be filed not later
11than 20 days after the day of delivery of the item that is
12being sold, but may be filed by the retailer at any time sooner
13than that if he chooses to do so. The transaction reporting
14return and tax remittance or proof of exemption from the
15Illinois use tax may be transmitted to the Department by way of
16the State agency with which, or State officer with whom the
17tangible personal property must be titled or registered (if
18titling or registration is required) if the Department and such
19agency or State officer determine that this procedure will
20expedite the processing of applications for title or
21registration.
22    With each such transaction reporting return, the retailer
23shall remit the proper amount of tax due (or shall submit
24satisfactory evidence that the sale is not taxable if that is
25the case), to the Department or its agents, whereupon the
26Department shall issue, in the purchaser's name, a use tax

 

 

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1receipt (or a certificate of exemption if the Department is
2satisfied that the particular sale is tax exempt) which such
3purchaser may submit to the agency with which, or State officer
4with whom, he must title or register the tangible personal
5property that is involved (if titling or registration is
6required) in support of such purchaser's application for an
7Illinois certificate or other evidence of title or registration
8to such tangible personal property.
9    No retailer's failure or refusal to remit tax under this
10Act precludes a user, who has paid the proper tax to the
11retailer, from obtaining his certificate of title or other
12evidence of title or registration (if titling or registration
13is required) upon satisfying the Department that such user has
14paid the proper tax (if tax is due) to the retailer. The
15Department shall adopt appropriate rules to carry out the
16mandate of this paragraph.
17    If the user who would otherwise pay tax to the retailer
18wants the transaction reporting return filed and the payment of
19the tax or proof of exemption made to the Department before the
20retailer is willing to take these actions and such user has not
21paid the tax to the retailer, such user may certify to the fact
22of such delay by the retailer and may (upon the Department
23being satisfied of the truth of such certification) transmit
24the information required by the transaction reporting return
25and the remittance for tax or proof of exemption directly to
26the Department and obtain his tax receipt or exemption

 

 

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1determination, in which event the transaction reporting return
2and tax remittance (if a tax payment was required) shall be
3credited by the Department to the proper retailer's account
4with the Department, but without the 2.1% or 1.75% discount
5provided for in this Section being allowed. When the user pays
6the tax directly to the Department, he shall pay the tax in the
7same amount and in the same form in which it would be remitted
8if the tax had been remitted to the Department by the retailer.
9    Refunds made by the seller during the preceding return
10period to purchasers, on account of tangible personal property
11returned to the seller, shall be allowed as a deduction under
12subdivision 5 of his monthly or quarterly return, as the case
13may be, in case the seller had theretofore included the
14receipts from the sale of such tangible personal property in a
15return filed by him and had paid the tax imposed by this Act
16with respect to such receipts.
17    Where the seller is a corporation, the return filed on
18behalf of such corporation shall be signed by the president,
19vice-president, secretary or treasurer or by the properly
20accredited agent of such corporation.
21    Where the seller is a limited liability company, the return
22filed on behalf of the limited liability company shall be
23signed by a manager, member, or properly accredited agent of
24the limited liability company.
25    Except as provided in this Section, the retailer filing the
26return under this Section shall, at the time of filing such

 

 

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1return, pay to the Department the amount of tax imposed by this
2Act less a discount of 2.1% prior to January 1, 1990 and 1.75%
3on and after January 1, 1990, or $5 per calendar year,
4whichever is greater, which is allowed to reimburse the
5retailer for the expenses incurred in keeping records,
6preparing and filing returns, remitting the tax and supplying
7data to the Department on request. On and after January 1,
82021, a certified service provider, as defined in the Leveling
9the Playing Field for Illinois Retail Act, filing the return
10under this Section on behalf of a remote retailer shall, at the
11time of such return, pay to the Department the amount of tax
12imposed by this Act less a discount of 1.75%. A remote retailer
13using a certified service provider to file a return on its
14behalf, as provided in the Leveling the Playing Field for
15Illinois Retail Act, is not eligible for the discount. The
16discount under this Section is not allowed for the 1.25%
17portion of taxes paid on aviation fuel that is subject to the
18revenue use requirements of 49 U.S.C. 47107(b) and 49 U.S.C.
1947133. Any prepayment made pursuant to Section 2d of this Act
20shall be included in the amount on which such 2.1% or 1.75%
21discount is computed. In the case of retailers who report and
22pay the tax on a transaction by transaction basis, as provided
23in this Section, such discount shall be taken with each such
24tax remittance instead of when such retailer files his periodic
25return. The discount allowed under this Section is allowed only
26for returns that are filed in the manner required by this Act.

 

 

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1The Department may disallow the discount for retailers whose
2certificate of registration is revoked at the time the return
3is filed, but only if the Department's decision to revoke the
4certificate of registration has become final.
5    Before October 1, 2000, if the taxpayer's average monthly
6tax liability to the Department under this Act, the Use Tax
7Act, the Service Occupation Tax Act, and the Service Use Tax
8Act, excluding any liability for prepaid sales tax to be
9remitted in accordance with Section 2d of this Act, was $10,000
10or more during the preceding 4 complete calendar quarters, he
11shall file a return with the Department each month by the 20th
12day of the month next following the month during which such tax
13liability is incurred and shall make payments to the Department
14on or before the 7th, 15th, 22nd and last day of the month
15during which such liability is incurred. On and after October
161, 2000, if the taxpayer's average monthly tax liability to the
17Department under this Act, the Use Tax Act, the Service
18Occupation Tax Act, and the Service Use Tax Act, excluding any
19liability for prepaid sales tax to be remitted in accordance
20with Section 2d of this Act, was $20,000 or more during the
21preceding 4 complete calendar quarters, he shall file a return
22with the Department each month by the 20th day of the month
23next following the month during which such tax liability is
24incurred and shall make payment to the Department on or before
25the 7th, 15th, 22nd and last day of the month during which such
26liability is incurred. If the month during which such tax

 

 

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1liability is incurred began prior to January 1, 1985, each
2payment shall be in an amount equal to 1/4 of the taxpayer's
3actual liability for the month or an amount set by the
4Department not to exceed 1/4 of the average monthly liability
5of the taxpayer to the Department for the preceding 4 complete
6calendar quarters (excluding the month of highest liability and
7the month of lowest liability in such 4 quarter period). If the
8month during which such tax liability is incurred begins on or
9after January 1, 1985 and prior to January 1, 1987, each
10payment shall be in an amount equal to 22.5% of the taxpayer's
11actual liability for the month or 27.5% of the taxpayer's
12liability for the same calendar month of the preceding year. If
13the month during which such tax liability is incurred begins on
14or after January 1, 1987 and prior to January 1, 1988, each
15payment shall be in an amount equal to 22.5% of the taxpayer's
16actual liability for the month or 26.25% of the taxpayer's
17liability for the same calendar month of the preceding year. If
18the month during which such tax liability is incurred begins on
19or after January 1, 1988, and prior to January 1, 1989, or
20begins on or after January 1, 1996, each payment shall be in an
21amount equal to 22.5% of the taxpayer's actual liability for
22the month or 25% of the taxpayer's liability for the same
23calendar month of the preceding year. If the month during which
24such tax liability is incurred begins on or after January 1,
251989, and prior to January 1, 1996, each payment shall be in an
26amount equal to 22.5% of the taxpayer's actual liability for

 

 

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1the month or 25% of the taxpayer's liability for the same
2calendar month of the preceding year or 100% of the taxpayer's
3actual liability for the quarter monthly reporting period. The
4amount of such quarter monthly payments shall be credited
5against the final tax liability of the taxpayer's return for
6that month. Before October 1, 2000, once applicable, the
7requirement of the making of quarter monthly payments to the
8Department by taxpayers having an average monthly tax liability
9of $10,000 or more as determined in the manner provided above
10shall continue until such taxpayer's average monthly liability
11to the Department during the preceding 4 complete calendar
12quarters (excluding the month of highest liability and the
13month of lowest liability) is less than $9,000, or until such
14taxpayer's average monthly liability to the Department as
15computed for each calendar quarter of the 4 preceding complete
16calendar quarter period is less than $10,000. However, if a
17taxpayer can show the Department that a substantial change in
18the taxpayer's business has occurred which causes the taxpayer
19to anticipate that his average monthly tax liability for the
20reasonably foreseeable future will fall below the $10,000
21threshold stated above, then such taxpayer may petition the
22Department for a change in such taxpayer's reporting status. On
23and after October 1, 2000, once applicable, the requirement of
24the making of quarter monthly payments to the Department by
25taxpayers having an average monthly tax liability of $20,000 or
26more as determined in the manner provided above shall continue

 

 

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1until such taxpayer's average monthly liability to the
2Department during the preceding 4 complete calendar quarters
3(excluding the month of highest liability and the month of
4lowest liability) is less than $19,000 or until such taxpayer's
5average monthly liability to the Department as computed for
6each calendar quarter of the 4 preceding complete calendar
7quarter period is less than $20,000. However, if a taxpayer can
8show the Department that a substantial change in the taxpayer's
9business has occurred which causes the taxpayer to anticipate
10that his average monthly tax liability for the reasonably
11foreseeable future will fall below the $20,000 threshold stated
12above, then such taxpayer may petition the Department for a
13change in such taxpayer's reporting status. The Department
14shall change such taxpayer's reporting status unless it finds
15that such change is seasonal in nature and not likely to be
16long term. If any such quarter monthly payment is not paid at
17the time or in the amount required by this Section, then the
18taxpayer shall be liable for penalties and interest on the
19difference between the minimum amount due as a payment and the
20amount of such quarter monthly payment actually and timely
21paid, except insofar as the taxpayer has previously made
22payments for that month to the Department in excess of the
23minimum payments previously due as provided in this Section.
24The Department shall make reasonable rules and regulations to
25govern the quarter monthly payment amount and quarter monthly
26payment dates for taxpayers who file on other than a calendar

 

 

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1monthly basis.
2    The provisions of this paragraph apply before October 1,
32001. Without regard to whether a taxpayer is required to make
4quarter monthly payments as specified above, any taxpayer who
5is required by Section 2d of this Act to collect and remit
6prepaid taxes and has collected prepaid taxes which average in
7excess of $25,000 per month during the preceding 2 complete
8calendar quarters, shall file a return with the Department as
9required by Section 2f and shall make payments to the
10Department on or before the 7th, 15th, 22nd and last day of the
11month during which such liability is incurred. If the month
12during which such tax liability is incurred began prior to
13September 1, 1985 (the effective date of Public Act 84-221),
14each payment shall be in an amount not less than 22.5% of the
15taxpayer's actual liability under Section 2d. If the month
16during which such tax liability is incurred begins on or after
17January 1, 1986, each payment shall be in an amount equal to
1822.5% of the taxpayer's actual liability for the month or 27.5%
19of the taxpayer's liability for the same calendar month of the
20preceding calendar year. If the month during which such tax
21liability is incurred begins on or after January 1, 1987, each
22payment shall be in an amount equal to 22.5% of the taxpayer's
23actual liability for the month or 26.25% of the taxpayer's
24liability for the same calendar month of the preceding year.
25The amount of such quarter monthly payments shall be credited
26against the final tax liability of the taxpayer's return for

 

 

10100SB1199ham002- 177 -LRB101 08044 HLH 74840 a

1that month filed under this Section or Section 2f, as the case
2may be. Once applicable, the requirement of the making of
3quarter monthly payments to the Department pursuant to this
4paragraph shall continue until such taxpayer's average monthly
5prepaid tax collections during the preceding 2 complete
6calendar quarters is $25,000 or less. If any such quarter
7monthly payment is not paid at the time or in the amount
8required, the taxpayer shall be liable for penalties and
9interest on such difference, except insofar as the taxpayer has
10previously made payments for that month in excess of the
11minimum payments previously due.
12    The provisions of this paragraph apply on and after October
131, 2001. Without regard to whether a taxpayer is required to
14make quarter monthly payments as specified above, any taxpayer
15who is required by Section 2d of this Act to collect and remit
16prepaid taxes and has collected prepaid taxes that average in
17excess of $20,000 per month during the preceding 4 complete
18calendar quarters shall file a return with the Department as
19required by Section 2f and shall make payments to the
20Department on or before the 7th, 15th, 22nd and last day of the
21month during which the liability is incurred. Each payment
22shall be in an amount equal to 22.5% of the taxpayer's actual
23liability for the month or 25% of the taxpayer's liability for
24the same calendar month of the preceding year. The amount of
25the quarter monthly payments shall be credited against the
26final tax liability of the taxpayer's return for that month

 

 

10100SB1199ham002- 178 -LRB101 08044 HLH 74840 a

1filed under this Section or Section 2f, as the case may be.
2Once applicable, the requirement of the making of quarter
3monthly payments to the Department pursuant to this paragraph
4shall continue until the taxpayer's average monthly prepaid tax
5collections during the preceding 4 complete calendar quarters
6(excluding the month of highest liability and the month of
7lowest liability) is less than $19,000 or until such taxpayer's
8average monthly liability to the Department as computed for
9each calendar quarter of the 4 preceding complete calendar
10quarters is less than $20,000. If any such quarter monthly
11payment is not paid at the time or in the amount required, the
12taxpayer shall be liable for penalties and interest on such
13difference, except insofar as the taxpayer has previously made
14payments for that month in excess of the minimum payments
15previously due.
16    If any payment provided for in this Section exceeds the
17taxpayer's liabilities under this Act, the Use Tax Act, the
18Service Occupation Tax Act and the Service Use Tax Act, as
19shown on an original monthly return, the Department shall, if
20requested by the taxpayer, issue to the taxpayer a credit
21memorandum no later than 30 days after the date of payment. The
22credit evidenced by such credit memorandum may be assigned by
23the taxpayer to a similar taxpayer under this Act, the Use Tax
24Act, the Service Occupation Tax Act or the Service Use Tax Act,
25in accordance with reasonable rules and regulations to be
26prescribed by the Department. If no such request is made, the

 

 

10100SB1199ham002- 179 -LRB101 08044 HLH 74840 a

1taxpayer may credit such excess payment against tax liability
2subsequently to be remitted to the Department under this Act,
3the Use Tax Act, the Service Occupation Tax Act or the Service
4Use Tax Act, in accordance with reasonable rules and
5regulations prescribed by the Department. If the Department
6subsequently determined that all or any part of the credit
7taken was not actually due to the taxpayer, the taxpayer's 2.1%
8and 1.75% vendor's discount shall be reduced by 2.1% or 1.75%
9of the difference between the credit taken and that actually
10due, and that taxpayer shall be liable for penalties and
11interest on such difference.
12    If a retailer of motor fuel is entitled to a credit under
13Section 2d of this Act which exceeds the taxpayer's liability
14to the Department under this Act for the month which the
15taxpayer is filing a return, the Department shall issue the
16taxpayer a credit memorandum for the excess.
17    Beginning January 1, 1990, each month the Department shall
18pay into the Local Government Tax Fund, a special fund in the
19State treasury which is hereby created, the net revenue
20realized for the preceding month from the 1% tax imposed under
21this Act.
22    Beginning January 1, 1990, each month the Department shall
23pay into the County and Mass Transit District Fund, a special
24fund in the State treasury which is hereby created, 4% of the
25net revenue realized for the preceding month from the 6.25%
26general rate other than aviation fuel sold on or after December

 

 

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11, 2019. This exception for aviation fuel only applies for so
2long as the revenue use requirements of 49 U.S.C. 47107(b) and
349 U.S.C. 47133 are binding on the State.
4    Beginning August 1, 2000, each month the Department shall
5pay into the County and Mass Transit District Fund 20% of the
6net revenue realized for the preceding month from the 1.25%
7rate on the selling price of motor fuel and gasohol. Beginning
8September 1, 2010, each month the Department shall pay into the
9County and Mass Transit District Fund 20% of the net revenue
10realized for the preceding month from the 1.25% rate on the
11selling price of sales tax holiday items.
12    Beginning January 1, 1990, each month the Department shall
13pay into the Local Government Tax Fund 16% of the net revenue
14realized for the preceding month from the 6.25% general rate on
15the selling price of tangible personal property other than
16aviation fuel sold on or after December 1, 2019. This exception
17for aviation fuel only applies for so long as the revenue use
18requirements of 49 U.S.C. 47107(b) and 49 U.S.C. 47133 are
19binding on the State.
20    For aviation fuel sold on or after December 1, 2019, each
21month the Department shall pay into the State Aviation Program
22Fund 20% of the net revenue realized for the preceding month
23from the 6.25% general rate on the selling price of aviation
24fuel, less an amount estimated by the Department to be required
25for refunds of the 20% portion of the tax on aviation fuel
26under this Act, which amount shall be deposited into the

 

 

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1Aviation Fuel Sales Tax Refund Fund. The Department shall only
2pay moneys into the State Aviation Program Fund and the
3Aviation Fuel Sales Tax Refund Fund under this Act for so long
4as the revenue use requirements of 49 U.S.C. 47107(b) and 49
5U.S.C. 47133 are binding on the State.
6    Beginning August 1, 2000, each month the Department shall
7pay into the Local Government Tax Fund 80% of the net revenue
8realized for the preceding month from the 1.25% rate on the
9selling price of motor fuel and gasohol. Beginning September 1,
102010, each month the Department shall pay into the Local
11Government Tax Fund 80% of the net revenue realized for the
12preceding month from the 1.25% rate on the selling price of
13sales tax holiday items.
14    Beginning October 1, 2009, each month the Department shall
15pay into the Capital Projects Fund an amount that is equal to
16an amount estimated by the Department to represent 80% of the
17net revenue realized for the preceding month from the sale of
18candy, grooming and hygiene products, and soft drinks that had
19been taxed at a rate of 1% prior to September 1, 2009 but that
20are now taxed at 6.25%.
21    Beginning July 1, 2011, each month the Department shall pay
22into the Clean Air Act Permit Fund 80% of the net revenue
23realized for the preceding month from the 6.25% general rate on
24the selling price of sorbents used in Illinois in the process
25of sorbent injection as used to comply with the Environmental
26Protection Act or the federal Clean Air Act, but the total

 

 

10100SB1199ham002- 182 -LRB101 08044 HLH 74840 a

1payment into the Clean Air Act Permit Fund under this Act and
2the Use Tax Act shall not exceed $2,000,000 in any fiscal year.
3    Beginning July 1, 2013, each month the Department shall pay
4into the Underground Storage Tank Fund from the proceeds
5collected under this Act, the Use Tax Act, the Service Use Tax
6Act, and the Service Occupation Tax Act an amount equal to the
7average monthly deficit in the Underground Storage Tank Fund
8during the prior year, as certified annually by the Illinois
9Environmental Protection Agency, but the total payment into the
10Underground Storage Tank Fund under this Act, the Use Tax Act,
11the Service Use Tax Act, and the Service Occupation Tax Act
12shall not exceed $18,000,000 in any State fiscal year. As used
13in this paragraph, the "average monthly deficit" shall be equal
14to the difference between the average monthly claims for
15payment by the fund and the average monthly revenues deposited
16into the fund, excluding payments made pursuant to this
17paragraph.
18    Beginning July 1, 2015, of the remainder of the moneys
19received by the Department under the Use Tax Act, the Service
20Use Tax Act, the Service Occupation Tax Act, and this Act, each
21month the Department shall deposit $500,000 into the State
22Crime Laboratory Fund.
23    Of the remainder of the moneys received by the Department
24pursuant to this Act, (a) 1.75% thereof shall be paid into the
25Build Illinois Fund and (b) prior to July 1, 1989, 2.2% and on
26and after July 1, 1989, 3.8% thereof shall be paid into the

 

 

10100SB1199ham002- 183 -LRB101 08044 HLH 74840 a

1Build Illinois Fund; provided, however, that if in any fiscal
2year the sum of (1) the aggregate of 2.2% or 3.8%, as the case
3may be, of the moneys received by the Department and required
4to be paid into the Build Illinois Fund pursuant to this Act,
5Section 9 of the Use Tax Act, Section 9 of the Service Use Tax
6Act, and Section 9 of the Service Occupation Tax Act, such Acts
7being hereinafter called the "Tax Acts" and such aggregate of
82.2% or 3.8%, as the case may be, of moneys being hereinafter
9called the "Tax Act Amount", and (2) the amount transferred to
10the Build Illinois Fund from the State and Local Sales Tax
11Reform Fund shall be less than the Annual Specified Amount (as
12hereinafter defined), an amount equal to the difference shall
13be immediately paid into the Build Illinois Fund from other
14moneys received by the Department pursuant to the Tax Acts; the
15"Annual Specified Amount" means the amounts specified below for
16fiscal years 1986 through 1993:
17Fiscal YearAnnual Specified Amount
181986$54,800,000
191987$76,650,000
201988$80,480,000
211989$88,510,000
221990$115,330,000
231991$145,470,000
241992$182,730,000
251993$206,520,000;
26and means the Certified Annual Debt Service Requirement (as

 

 

10100SB1199ham002- 184 -LRB101 08044 HLH 74840 a

1defined in Section 13 of the Build Illinois Bond Act) or the
2Tax Act Amount, whichever is greater, for fiscal year 1994 and
3each fiscal year thereafter; and further provided, that if on
4the last business day of any month the sum of (1) the Tax Act
5Amount required to be deposited into the Build Illinois Bond
6Account in the Build Illinois Fund during such month and (2)
7the amount transferred to the Build Illinois Fund from the
8State and Local Sales Tax Reform Fund shall have been less than
91/12 of the Annual Specified Amount, an amount equal to the
10difference shall be immediately paid into the Build Illinois
11Fund from other moneys received by the Department pursuant to
12the Tax Acts; and, further provided, that in no event shall the
13payments required under the preceding proviso result in
14aggregate payments into the Build Illinois Fund pursuant to
15this clause (b) for any fiscal year in excess of the greater of
16(i) the Tax Act Amount or (ii) the Annual Specified Amount for
17such fiscal year. The amounts payable into the Build Illinois
18Fund under clause (b) of the first sentence in this paragraph
19shall be payable only until such time as the aggregate amount
20on deposit under each trust indenture securing Bonds issued and
21outstanding pursuant to the Build Illinois Bond Act is
22sufficient, taking into account any future investment income,
23to fully provide, in accordance with such indenture, for the
24defeasance of or the payment of the principal of, premium, if
25any, and interest on the Bonds secured by such indenture and on
26any Bonds expected to be issued thereafter and all fees and

 

 

10100SB1199ham002- 185 -LRB101 08044 HLH 74840 a

1costs payable with respect thereto, all as certified by the
2Director of the Bureau of the Budget (now Governor's Office of
3Management and Budget). If on the last business day of any
4month in which Bonds are outstanding pursuant to the Build
5Illinois Bond Act, the aggregate of moneys deposited in the
6Build Illinois Bond Account in the Build Illinois Fund in such
7month shall be less than the amount required to be transferred
8in such month from the Build Illinois Bond Account to the Build
9Illinois Bond Retirement and Interest Fund pursuant to Section
1013 of the Build Illinois Bond Act, an amount equal to such
11deficiency shall be immediately paid from other moneys received
12by the Department pursuant to the Tax Acts to the Build
13Illinois Fund; provided, however, that any amounts paid to the
14Build Illinois Fund in any fiscal year pursuant to this
15sentence shall be deemed to constitute payments pursuant to
16clause (b) of the first sentence of this paragraph and shall
17reduce the amount otherwise payable for such fiscal year
18pursuant to that clause (b). The moneys received by the
19Department pursuant to this Act and required to be deposited
20into the Build Illinois Fund are subject to the pledge, claim
21and charge set forth in Section 12 of the Build Illinois Bond
22Act.
23    Subject to payment of amounts into the Build Illinois Fund
24as provided in the preceding paragraph or in any amendment
25thereto hereafter enacted, the following specified monthly
26installment of the amount requested in the certificate of the

 

 

10100SB1199ham002- 186 -LRB101 08044 HLH 74840 a

1Chairman of the Metropolitan Pier and Exposition Authority
2provided under Section 8.25f of the State Finance Act, but not
3in excess of sums designated as "Total Deposit", shall be
4deposited in the aggregate from collections under Section 9 of
5the Use Tax Act, Section 9 of the Service Use Tax Act, Section
69 of the Service Occupation Tax Act, and Section 3 of the
7Retailers' Occupation Tax Act into the McCormick Place
8Expansion Project Fund in the specified fiscal years.
9Fiscal YearTotal Deposit
101993         $0
111994 53,000,000
121995 58,000,000
131996 61,000,000
141997 64,000,000
151998 68,000,000
161999 71,000,000
172000 75,000,000
182001 80,000,000
192002 93,000,000
202003 99,000,000
212004103,000,000
222005108,000,000
232006113,000,000
242007119,000,000
252008126,000,000
262009132,000,000

 

 

10100SB1199ham002- 187 -LRB101 08044 HLH 74840 a

12010139,000,000
22011146,000,000
32012153,000,000
42013161,000,000
52014170,000,000
62015179,000,000
72016189,000,000
82017199,000,000
92018210,000,000
102019221,000,000
112020233,000,000
122021300,000,000
132022300,000,000
142023300,000,000
152024 300,000,000
162025 300,000,000
172026 300,000,000
182027 375,000,000
192028 375,000,000
202029 375,000,000
212030 375,000,000
222031 375,000,000
232032 375,000,000
242033375,000,000
252034375,000,000
262035375,000,000

 

 

10100SB1199ham002- 188 -LRB101 08044 HLH 74840 a

12036450,000,000
2and
3each fiscal year
4thereafter that bonds
5are outstanding under
6Section 13.2 of the
7Metropolitan Pier and
8Exposition Authority Act,
9but not after fiscal year 2060.
10    Beginning July 20, 1993 and in each month of each fiscal
11year thereafter, one-eighth of the amount requested in the
12certificate of the Chairman of the Metropolitan Pier and
13Exposition Authority for that fiscal year, less the amount
14deposited into the McCormick Place Expansion Project Fund by
15the State Treasurer in the respective month under subsection
16(g) of Section 13 of the Metropolitan Pier and Exposition
17Authority Act, plus cumulative deficiencies in the deposits
18required under this Section for previous months and years,
19shall be deposited into the McCormick Place Expansion Project
20Fund, until the full amount requested for the fiscal year, but
21not in excess of the amount specified above as "Total Deposit",
22has been deposited.
23    Subject to payment of amounts into the Capital Projects
24Fund, the Clean Air Act Permit Fund, the Build Illinois Fund,
25and the McCormick Place Expansion Project Fund pursuant to the
26preceding paragraphs or in any amendments thereto hereafter

 

 

10100SB1199ham002- 189 -LRB101 08044 HLH 74840 a

1enacted, for aviation fuel sold on or after December 1, 2019,
2the Department shall each month deposit into the Aviation Fuel
3Sales Tax Refund Fund an amount estimated by the Department to
4be required for refunds of the 80% portion of the tax on
5aviation fuel under this Act. The Department shall only deposit
6moneys into the Aviation Fuel Sales Tax Refund Fund under this
7paragraph for so long as the revenue use requirements of 49
8U.S.C. 47107(b) and 49 U.S.C. 47133 are binding on the State.
9    Subject to payment of amounts into the Build Illinois Fund
10and the McCormick Place Expansion Project Fund pursuant to the
11preceding paragraphs or in any amendments thereto hereafter
12enacted, beginning July 1, 1993 and ending on September 30,
132013, the Department shall each month pay into the Illinois Tax
14Increment Fund 0.27% of 80% of the net revenue realized for the
15preceding month from the 6.25% general rate on the selling
16price of tangible personal property.
17    Subject to payment of amounts into the Build Illinois Fund
18and the McCormick Place Expansion Project Fund pursuant to the
19preceding paragraphs or in any amendments thereto hereafter
20enacted, beginning with the receipt of the first report of
21taxes paid by an eligible business and continuing for a 25-year
22period, the Department shall each month pay into the Energy
23Infrastructure Fund 80% of the net revenue realized from the
246.25% general rate on the selling price of Illinois-mined coal
25that was sold to an eligible business. For purposes of this
26paragraph, the term "eligible business" means a new electric

 

 

10100SB1199ham002- 190 -LRB101 08044 HLH 74840 a

1generating facility certified pursuant to Section 605-332 of
2the Department of Commerce and Economic Opportunity Law of the
3Civil Administrative Code of Illinois.
4    Subject to payment of amounts into the Build Illinois Fund,
5the McCormick Place Expansion Project Fund, the Illinois Tax
6Increment Fund, and the Energy Infrastructure Fund pursuant to
7the preceding paragraphs or in any amendments to this Section
8hereafter enacted, beginning on the first day of the first
9calendar month to occur on or after August 26, 2014 (the
10effective date of Public Act 98-1098), each month, from the
11collections made under Section 9 of the Use Tax Act, Section 9
12of the Service Use Tax Act, Section 9 of the Service Occupation
13Tax Act, and Section 3 of the Retailers' Occupation Tax Act,
14the Department shall pay into the Tax Compliance and
15Administration Fund, to be used, subject to appropriation, to
16fund additional auditors and compliance personnel at the
17Department of Revenue, an amount equal to 1/12 of 5% of 80% of
18the cash receipts collected during the preceding fiscal year by
19the Audit Bureau of the Department under the Use Tax Act, the
20Service Use Tax Act, the Service Occupation Tax Act, the
21Retailers' Occupation Tax Act, and associated local occupation
22and use taxes administered by the Department.
23    Subject to payments of amounts into the Build Illinois
24Fund, the McCormick Place Expansion Project Fund, the Illinois
25Tax Increment Fund, the Energy Infrastructure Fund, and the Tax
26Compliance and Administration Fund as provided in this Section,

 

 

10100SB1199ham002- 191 -LRB101 08044 HLH 74840 a

1beginning on July 1, 2018 the Department shall pay each month
2into the Downstate Public Transportation Fund the moneys
3required to be so paid under Section 2-3 of the Downstate
4Public Transportation Act.
5    Subject to successful execution and delivery of a
6public-private agreement between the public agency and private
7entity and completion of the civic build, beginning on July 1,
82023, of the remainder of the moneys received by the Department
9under the Use Tax Act, the Service Use Tax Act, the Service
10Occupation Tax Act, and this Act, the Department shall deposit
11the following specified deposits in the aggregate from
12collections under the Use Tax Act, the Service Use Tax Act, the
13Service Occupation Tax Act, and the Retailers' Occupation Tax
14Act, as required under Section 8.25g of the State Finance Act
15for distribution consistent with the Public-Private
16Partnership for Civic and Transit Infrastructure Project Act.
17The moneys received by the Department pursuant to this Act and
18required to be deposited into the Civic and Transit
19Infrastructure Fund are subject to the pledge, claim and charge
20set forth in Section 25-55 of the Public-Private Partnership
21for Civic and Transit Infrastructure Project Act. As used in
22this paragraph, "civic build", "private entity",
23"public-private agreement", and "public agency" have the
24meanings provided in Section 25-10 of the Public-Private
25Partnership for Civic and Transit Infrastructure Project Act.
26        Fiscal Year.............................Total Deposit

 

 

10100SB1199ham002- 192 -LRB101 08044 HLH 74840 a

1        2024.....................................$200,000,000
2        2025....................................$206,000,000
3        2026....................................$212,200,000
4        2027....................................$218,500,000
5        2028....................................$225,100,000
6        2029....................................$288,700,000
7        2030....................................$298,900,000
8        2031....................................$309,300,000
9        2032....................................$320,100,000
10        2033....................................$331,200,000
11        2034....................................$341,200,000
12        2035....................................$351,400,000
13        2036....................................$361,900,000
14        2037....................................$372,800,000
15        2038....................................$384,000,000
16        2039....................................$395,500,000
17        2040....................................$407,400,000
18        2041....................................$419,600,000
19        2042....................................$432,200,000
20        2043....................................$445,100,000
21    Beginning July 1, 2021 and until July 1, 2022, subject to
22the payment of amounts into the County and Mass Transit
23District Fund, the Local Government Tax Fund, the Build
24Illinois Fund, the McCormick Place Expansion Project Fund, the
25Illinois Tax Increment Fund, the Energy Infrastructure Fund,
26and the Tax Compliance and Administration Fund as provided in

 

 

10100SB1199ham002- 193 -LRB101 08044 HLH 74840 a

1this Section, the Department shall pay each month into the Road
2Fund the amount estimated to represent 16% of the net revenue
3realized from the taxes imposed on motor fuel and gasohol.
4Beginning July 1, 2022 and until July 1, 2023, subject to the
5payment of amounts into the County and Mass Transit District
6Fund, the Local Government Tax Fund, the Build Illinois Fund,
7the McCormick Place Expansion Project Fund, the Illinois Tax
8Increment Fund, the Energy Infrastructure Fund, and the Tax
9Compliance and Administration Fund as provided in this Section,
10the Department shall pay each month into the Road Fund the
11amount estimated to represent 32% of the net revenue realized
12from the taxes imposed on motor fuel and gasohol. Beginning
13July 1, 2023 and until July 1, 2024, subject to the payment of
14amounts into the County and Mass Transit District Fund, the
15Local Government Tax Fund, the Build Illinois Fund, the
16McCormick Place Expansion Project Fund, the Illinois Tax
17Increment Fund, the Energy Infrastructure Fund, and the Tax
18Compliance and Administration Fund as provided in this Section,
19the Department shall pay each month into the Road Fund the
20amount estimated to represent 48% of the net revenue realized
21from the taxes imposed on motor fuel and gasohol. Beginning
22July 1, 2024 and until July 1, 2025, subject to the payment of
23amounts into the County and Mass Transit District Fund, the
24Local Government Tax Fund, the Build Illinois Fund, the
25McCormick Place Expansion Project Fund, the Illinois Tax
26Increment Fund, the Energy Infrastructure Fund, and the Tax

 

 

10100SB1199ham002- 194 -LRB101 08044 HLH 74840 a

1Compliance and Administration Fund as provided in this Section,
2the Department shall pay each month into the Road Fund the
3amount estimated to represent 64% of the net revenue realized
4from the taxes imposed on motor fuel and gasohol. Beginning on
5July 1, 2025, subject to the payment of amounts into the County
6and Mass Transit District Fund, the Local Government Tax Fund,
7the Build Illinois Fund, the McCormick Place Expansion Project
8Fund, the Illinois Tax Increment Fund, the Energy
9Infrastructure Fund, and the Tax Compliance and Administration
10Fund as provided in this Section, the Department shall pay each
11month into the Road Fund the amount estimated to represent 80%
12of the net revenue realized from the taxes imposed on motor
13fuel and gasohol. As used in this paragraph "motor fuel" has
14the meaning given to that term in Section 1.1 of the Motor Fuel
15Tax Act, and "gasohol" has the meaning given to that term in
16Section 3-40 of the Use Tax Act.
17    Of the remainder of the moneys received by the Department
18pursuant to this Act, 75% thereof shall be paid into the State
19Treasury and 25% shall be reserved in a special account and
20used only for the transfer to the Common School Fund as part of
21the monthly transfer from the General Revenue Fund in
22accordance with Section 8a of the State Finance Act.
23    The Department may, upon separate written notice to a
24taxpayer, require the taxpayer to prepare and file with the
25Department on a form prescribed by the Department within not
26less than 60 days after receipt of the notice an annual

 

 

10100SB1199ham002- 195 -LRB101 08044 HLH 74840 a

1information return for the tax year specified in the notice.
2Such annual return to the Department shall include a statement
3of gross receipts as shown by the retailer's last Federal
4income tax return. If the total receipts of the business as
5reported in the Federal income tax return do not agree with the
6gross receipts reported to the Department of Revenue for the
7same period, the retailer shall attach to his annual return a
8schedule showing a reconciliation of the 2 amounts and the
9reasons for the difference. The retailer's annual return to the
10Department shall also disclose the cost of goods sold by the
11retailer during the year covered by such return, opening and
12closing inventories of such goods for such year, costs of goods
13used from stock or taken from stock and given away by the
14retailer during such year, payroll information of the
15retailer's business during such year and any additional
16reasonable information which the Department deems would be
17helpful in determining the accuracy of the monthly, quarterly
18or annual returns filed by such retailer as provided for in
19this Section.
20    If the annual information return required by this Section
21is not filed when and as required, the taxpayer shall be liable
22as follows:
23        (i) Until January 1, 1994, the taxpayer shall be liable
24    for a penalty equal to 1/6 of 1% of the tax due from such
25    taxpayer under this Act during the period to be covered by
26    the annual return for each month or fraction of a month

 

 

10100SB1199ham002- 196 -LRB101 08044 HLH 74840 a

1    until such return is filed as required, the penalty to be
2    assessed and collected in the same manner as any other
3    penalty provided for in this Act.
4        (ii) On and after January 1, 1994, the taxpayer shall
5    be liable for a penalty as described in Section 3-4 of the
6    Uniform Penalty and Interest Act.
7    The chief executive officer, proprietor, owner or highest
8ranking manager shall sign the annual return to certify the
9accuracy of the information contained therein. Any person who
10willfully signs the annual return containing false or
11inaccurate information shall be guilty of perjury and punished
12accordingly. The annual return form prescribed by the
13Department shall include a warning that the person signing the
14return may be liable for perjury.
15    The provisions of this Section concerning the filing of an
16annual information return do not apply to a retailer who is not
17required to file an income tax return with the United States
18Government.
19    As soon as possible after the first day of each month, upon
20certification of the Department of Revenue, the Comptroller
21shall order transferred and the Treasurer shall transfer from