101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
SB1328

 

Introduced 2/7/2019, by Sen. Linda Holmes

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/229 new
35 ILCS 735/3-3  from Ch. 120, par. 2603-3

    Amends the Illinois Income Tax Act. Creates an income tax credit in an amount equal to 1% of the expenses claimed by the taxpayer as a federal income tax deduction pursuant to Section 179 of the Internal Revenue Code for the tax year. Provides that the taxpayer may sell, assign, or transfer the credit. Provides that the maximum aggregate amount of credits awarded for those purposes may not exceed $30,000,000 in any calendar year. Amends the Uniform Penalty and Interest Act to provide that, if the amount of the credit is reduced because the claims for credit exceed the maximum aggregate amount of the credit, then no underpayment penalty or interest shall accrue on the additional tax so long as the additional tax is paid within 60 days after the notice of reduction. Effective immediately.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by adding
5Section 229 as follows:
 
6    (35 ILCS 5/229 new)
7    Sec. 229. Small business bonus investment credit.
8    (a) For tax years beginning on or after January 1, 2019,
9subject to the limitations of subsection (e), a taxpayer is
10entitled to a credit against the taxes imposed under
11subsections (a) and (b) of Section 201 of this Act in an amount
12equal to 1% of the expenses claimed by the taxpayer as a
13federal income tax deduction pursuant to Section 179 of the
14Internal Revenue Code for the tax year.
15    (b) If the taxpayer is a partnership or Subchapter S
16corporation, the credit is allowed to the partners or
17shareholders in accordance with the determination of income and
18distributive share of income under Sections 702 and 704 and
19Subchapter S of the Internal Revenue Code.
20    (c) If the amount of the credit exceeds the tax liability
21for the year, then the excess credit may be carried forward and
22applied to the tax liability of the 5 taxable years following
23the excess credit year. The credit shall be applied to the

 

 

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1earliest year for which there is a tax liability. If there are
2credits from more than one tax year that are available to
3offset a liability, the earlier credit shall be applied first.
4In no event shall a credit under this Section reduce the
5taxpayer's liability to less than zero.
6    (d) A sale, assignment, or transfer of this credit may be
7made by the taxpayer in accordance with rules adopted by the
8Department. In the event the Department audits the taxpayer and
9establishes a final liability that reduces the amount of a
10credit that has been sold, assigned, or transferred, the
11taxpayer remains liable to the Department and the Department
12may not attempt to recoup the credit from a purchaser,
13assignee, or transferee.
14    (e) The maximum aggregate amount of credits awarded under
15this Section may not exceed $30,000,000 in any calendar year.
16No credit may be awarded if claimed on a return that is filed
17after the original due date plus any automatic extension. The
18Department shall determine the total amount of credits claimed
19for a calendar year by March 1 of the next calendar year. If
20the timely claims for the credit exceed $30,000,000 in any
21calendar year, the Department shall reduce the amount of the
22credit pro rata and provide written notice of the reduction to
23each taxpayer. The notice of reduction is a Notice and Demand
24under Section 902 of this Act and shall not be a protestable
25notice under Section 903 of this Act. In no event shall any
26purchaser, assignee, or transferee be responsible for such

 

 

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1additional tax. Each taxpayer shall report and repay additional
2taxes required by the reduction of the credit within 60 days
3after the notice of the reduction. No underpayment penalty or
4interest shall accrue pursuant to the Uniform Penalty and
5Interest Act on such additional tax so long as the additional
6tax is paid within 60 days after the notice of reduction.
7Nothing in this subsection shall preclude the Department from
8reducing the amount of credit granted to any taxpayer as a
9result of an audit.
10    (f) The Department shall adopt rules to enforce and
11administer provisions of this Section on or before January 1,
122020.
13    (g) This Section is exempt from the provisions of Section
14250.
 
15    Section 10. The Uniform Penalty and Interest Act is amended
16by changing Section 3-3 as follows:
 
17    (35 ILCS 735/3-3)  (from Ch. 120, par. 2603-3)
18    Sec. 3-3. Penalty for failure to file or pay.
19    (a) This subsection (a) is applicable before January 1,
201996. A penalty of 5% of the tax required to be shown due on a
21return shall be imposed for failure to file the tax return on
22or before the due date prescribed for filing determined with
23regard for any extension of time for filing (penalty for late
24filing or nonfiling). If any unprocessable return is corrected

 

 

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1and filed within 21 days after notice by the Department, the
2late filing or nonfiling penalty shall not apply. If a penalty
3for late filing or nonfiling is imposed in addition to a
4penalty for late payment, the total penalty due shall be the
5sum of the late filing penalty and the applicable late payment
6penalty. Beginning on the effective date of this amendatory Act
7of 1995, in the case of any type of tax return required to be
8filed more frequently than annually, when the failure to file
9the tax return on or before the date prescribed for filing
10(including any extensions) is shown to be nonfraudulent and has
11not occurred in the 2 years immediately preceding the failure
12to file on the prescribed due date, the penalty imposed by
13Section 3-3(a) shall be abated.
14    (a-5) This subsection (a-5) is applicable to returns due on
15and after January 1, 1996 and on or before December 31, 2000. A
16penalty equal to 2% of the tax required to be shown due on a
17return, up to a maximum amount of $250, determined without
18regard to any part of the tax that is paid on time or by any
19credit that was properly allowable on the date the return was
20required to be filed, shall be imposed for failure to file the
21tax return on or before the due date prescribed for filing
22determined with regard for any extension of time for filing.
23However, if any return is not filed within 30 days after notice
24of nonfiling mailed by the Department to the last known address
25of the taxpayer contained in Department records, an additional
26penalty amount shall be imposed equal to the greater of $250 or

 

 

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12% of the tax shown on the return. However, the additional
2penalty amount may not exceed $5,000 and is determined without
3regard to any part of the tax that is paid on time or by any
4credit that was properly allowable on the date the return was
5required to be filed (penalty for late filing or nonfiling). If
6any unprocessable return is corrected and filed within 30 days
7after notice by the Department, the late filing or nonfiling
8penalty shall not apply. If a penalty for late filing or
9nonfiling is imposed in addition to a penalty for late payment,
10the total penalty due shall be the sum of the late filing
11penalty and the applicable late payment penalty. In the case of
12any type of tax return required to be filed more frequently
13than annually, when the failure to file the tax return on or
14before the date prescribed for filing (including any
15extensions) is shown to be nonfraudulent and has not occurred
16in the 2 years immediately preceding the failure to file on the
17prescribed due date, the penalty imposed by Section 3-3(a-5)
18shall be abated.
19    (a-10) This subsection (a-10) is applicable to returns due
20on and after January 1, 2001. A penalty equal to 2% of the tax
21required to be shown due on a return, up to a maximum amount of
22$250, reduced by any tax that is paid on time or by any credit
23that was properly allowable on the date the return was required
24to be filed, shall be imposed for failure to file the tax
25return on or before the due date prescribed for filing
26determined with regard for any extension of time for filing.

 

 

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1However, if any return is not filed within 30 days after notice
2of nonfiling mailed by the Department to the last known address
3of the taxpayer contained in Department records, an additional
4penalty amount shall be imposed equal to the greater of $250 or
52% of the tax shown on the return. However, the additional
6penalty amount may not exceed $5,000 and is determined without
7regard to any part of the tax that is paid on time or by any
8credit that was properly allowable on the date the return was
9required to be filed (penalty for late filing or nonfiling). If
10any unprocessable return is corrected and filed within 30 days
11after notice by the Department, the late filing or nonfiling
12penalty shall not apply. If a penalty for late filing or
13nonfiling is imposed in addition to a penalty for late payment,
14the total penalty due shall be the sum of the late filing
15penalty and the applicable late payment penalty. In the case of
16any type of tax return required to be filed more frequently
17than annually, when the failure to file the tax return on or
18before the date prescribed for filing (including any
19extensions) is shown to be nonfraudulent and has not occurred
20in the 2 years immediately preceding the failure to file on the
21prescribed due date, the penalty imposed by this subsection
22(a-10) shall be abated. This subsection (a-10) does not apply
23to transaction reporting returns required by Section 3 of the
24Retailers' Occupation Tax Act and Section 9 of the Use Tax Act
25that would not, when properly prepared and filed, result in the
26imposition of a tax; however, those returns are subject to the

 

 

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1penalty set forth in subsection (a-15).
2    (a-15) A penalty of $100 shall be imposed for failure to
3file a transaction reporting return required by Section 3 of
4the Retailers' Occupation Tax Act and Section 9 of the Use Tax
5Act on or before the date a return is required to be filed;
6provided, however, that this penalty shall be imposed only if
7the return when properly prepared and filed would not result in
8the imposition of a tax. If such a transaction reporting return
9would result in the imposition of a tax when properly prepared
10and filed, then that return is subject to the provisions of
11subsection (a-10).
12    (b) This subsection is applicable before January 1, 1998. A
13penalty of 15% of the tax shown on the return or the tax
14required to be shown due on the return shall be imposed for
15failure to pay:
16        (1) the tax shown due on the return on or before the
17    due date prescribed for payment of that tax, an amount of
18    underpayment of estimated tax, or an amount that is
19    reported in an amended return other than an amended return
20    timely filed as required by subsection (b) of Section 506
21    of the Illinois Income Tax Act (penalty for late payment or
22    nonpayment of admitted liability); or
23        (2) the full amount of any tax required to be shown due
24    on a return and which is not shown (penalty for late
25    payment or nonpayment of additional liability), within 30
26    days after a notice of arithmetic error, notice and demand,

 

 

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1    or a final assessment is issued by the Department. In the
2    case of a final assessment arising following a protest and
3    hearing, the 30-day period shall not begin until all
4    proceedings in court for review of the final assessment
5    have terminated or the period for obtaining a review has
6    expired without proceedings for a review having been
7    instituted. In the case of a notice of tax liability that
8    becomes a final assessment without a protest and hearing,
9    the penalty provided in this paragraph (2) shall be imposed
10    at the expiration of the period provided for the filing of
11    a protest.
12    (b-5) This subsection is applicable to returns due on and
13after January 1, 1998 and on or before December 31, 2000. A
14penalty of 20% of the tax shown on the return or the tax
15required to be shown due on the return shall be imposed for
16failure to pay:
17        (1) the tax shown due on the return on or before the
18    due date prescribed for payment of that tax, an amount of
19    underpayment of estimated tax, or an amount that is
20    reported in an amended return other than an amended return
21    timely filed as required by subsection (b) of Section 506
22    of the Illinois Income Tax Act (penalty for late payment or
23    nonpayment of admitted liability); or
24        (2) the full amount of any tax required to be shown due
25    on a return and which is not shown (penalty for late
26    payment or nonpayment of additional liability), within 30

 

 

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1    days after a notice of arithmetic error, notice and demand,
2    or a final assessment is issued by the Department. In the
3    case of a final assessment arising following a protest and
4    hearing, the 30-day period shall not begin until all
5    proceedings in court for review of the final assessment
6    have terminated or the period for obtaining a review has
7    expired without proceedings for a review having been
8    instituted. In the case of a notice of tax liability that
9    becomes a final assessment without a protest and hearing,
10    the penalty provided in this paragraph (2) shall be imposed
11    at the expiration of the period provided for the filing of
12    a protest.
13    (b-10) This subsection (b-10) is applicable to returns due
14on and after January 1, 2001 and on or before December 31,
152003. A penalty shall be imposed for failure to pay:
16        (1) the tax shown due on a return on or before the due
17    date prescribed for payment of that tax, an amount of
18    underpayment of estimated tax, or an amount that is
19    reported in an amended return other than an amended return
20    timely filed as required by subsection (b) of Section 506
21    of the Illinois Income Tax Act (penalty for late payment or
22    nonpayment of admitted liability). The amount of penalty
23    imposed under this subsection (b-10)(1) shall be 2% of any
24    amount that is paid no later than 30 days after the due
25    date, 5% of any amount that is paid later than 30 days
26    after the due date and not later than 90 days after the due

 

 

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1    date, 10% of any amount that is paid later than 90 days
2    after the due date and not later than 180 days after the
3    due date, and 15% of any amount that is paid later than 180
4    days after the due date. If notice and demand is made for
5    the payment of any amount of tax due and if the amount due
6    is paid within 30 days after the date of the notice and
7    demand, then the penalty for late payment or nonpayment of
8    admitted liability under this subsection (b-10)(1) on the
9    amount so paid shall not accrue for the period after the
10    date of the notice and demand.
11        (2) the full amount of any tax required to be shown due
12    on a return and that is not shown (penalty for late payment
13    or nonpayment of additional liability), within 30 days
14    after a notice of arithmetic error, notice and demand, or a
15    final assessment is issued by the Department. In the case
16    of a final assessment arising following a protest and
17    hearing, the 30-day period shall not begin until all
18    proceedings in court for review of the final assessment
19    have terminated or the period for obtaining a review has
20    expired without proceedings for a review having been
21    instituted. The amount of penalty imposed under this
22    subsection (b-10)(2) shall be 20% of any amount that is not
23    paid within the 30-day period. In the case of a notice of
24    tax liability that becomes a final assessment without a
25    protest and hearing, the penalty provided in this
26    subsection (b-10)(2) shall be imposed at the expiration of

 

 

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1    the period provided for the filing of a protest.
2    (b-15) This subsection (b-15) is applicable to returns due
3on and after January 1, 2004 and on or before December 31,
42004. A penalty shall be imposed for failure to pay the tax
5shown due or required to be shown due on a return on or before
6the due date prescribed for payment of that tax, an amount of
7underpayment of estimated tax, or an amount that is reported in
8an amended return other than an amended return timely filed as
9required by subsection (b) of Section 506 of the Illinois
10Income Tax Act (penalty for late payment or nonpayment of
11admitted liability). The amount of penalty imposed under this
12subsection (b-15)(1) shall be 2% of any amount that is paid no
13later than 30 days after the due date, 10% of any amount that
14is paid later than 30 days after the due date and not later
15than 90 days after the due date, 15% of any amount that is paid
16later than 90 days after the due date and not later than 180
17days after the due date, and 20% of any amount that is paid
18later than 180 days after the due date. If notice and demand is
19made for the payment of any amount of tax due and if the amount
20due is paid within 30 days after the date of this notice and
21demand, then the penalty for late payment or nonpayment of
22admitted liability under this subsection (b-15)(1) on the
23amount so paid shall not accrue for the period after the date
24of the notice and demand.
25    (b-20) This subsection (b-20) is applicable to returns due
26on and after January 1, 2005.

 

 

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1        (1) A penalty shall be imposed for failure to pay,
2    prior to the due date for payment, any amount of tax the
3    payment of which is required to be made prior to the filing
4    of a return or without a return (penalty for late payment
5    or nonpayment of estimated or accelerated tax). The amount
6    of penalty imposed under this paragraph (1) shall be 2% of
7    any amount that is paid no later than 30 days after the due
8    date and 10% of any amount that is paid later than 30 days
9    after the due date.
10        (2) A penalty shall be imposed for failure to pay the
11    tax shown due or required to be shown due on a return on or
12    before the due date prescribed for payment of that tax or
13    an amount that is reported in an amended return other than
14    an amended return timely filed as required by subsection
15    (b) of Section 506 of the Illinois Income Tax Act (penalty
16    for late payment or nonpayment of tax). The amount of
17    penalty imposed under this paragraph (2) shall be 2% of any
18    amount that is paid no later than 30 days after the due
19    date, 10% of any amount that is paid later than 30 days
20    after the due date and prior to the date the Department has
21    initiated an audit or investigation of the taxpayer, and
22    20% of any amount that is paid after the date the
23    Department has initiated an audit or investigation of the
24    taxpayer; provided that the penalty shall be reduced to 15%
25    if the entire amount due is paid not later than 30 days
26    after the Department has provided the taxpayer with an

 

 

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1    amended return (following completion of an occupation,
2    use, or excise tax audit) or a form for waiver of
3    restrictions on assessment (following completion of an
4    income tax audit); provided further that the reduction to
5    15% shall be rescinded if the taxpayer makes any claim for
6    refund or credit of the tax, penalties, or interest
7    determined to be due upon audit, except in the case of a
8    claim filed pursuant to subsection (b) of Section 506 of
9    the Illinois Income Tax Act or to claim a carryover of a
10    loss or credit, the availability of which was not
11    determined in the audit. For purposes of this paragraph
12    (2), any overpayment reported on an original return that
13    has been allowed as a refund or credit to the taxpayer
14    shall be deemed to have not been paid on or before the due
15    date for payment and any amount paid under protest pursuant
16    to the provisions of the State Officers and Employees Money
17    Disposition Act shall be deemed to have been paid after the
18    Department has initiated an audit and more than 30 days
19    after the Department has provided the taxpayer with an
20    amended return (following completion of an occupation,
21    use, or excise tax audit) or a form for waiver of
22    restrictions on assessment (following completion of an
23    income tax audit).
24        (3) The penalty imposed under this subsection (b-20)
25    shall be deemed assessed at the time the tax upon which the
26    penalty is computed is assessed, except that, if the

 

 

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1    reduction of the penalty imposed under paragraph (2) of
2    this subsection (b-20) to 15% is rescinded because a claim
3    for refund or credit has been filed, the increase in
4    penalty shall be deemed assessed at the time the claim for
5    refund or credit is filed.
6    (b-25) If the amount of the credit awarded to a taxpayer
7under Section 229 of the Illinois Income Tax Act is reduced
8because the claims for credit exceed the maximum aggregate
9amount of the credit set forth in that Section, then no
10underpayment penalty or interest shall accrue pursuant to this
11Act on the additional tax so long as the additional tax is paid
12within 60 days after the notice of reduction.
13    (c) For purposes of the late payment penalties, the basis
14of the penalty shall be the tax shown or required to be shown
15on a return, whichever is applicable, reduced by any part of
16the tax which is paid on time and by any credit which was
17properly allowable on the date the return was required to be
18filed.
19    (d) A penalty shall be applied to the tax required to be
20shown even if that amount is less than the tax shown on the
21return.
22    (e) This subsection (e) is applicable to returns due before
23January 1, 2001. If both a subsection (b)(1) or (b-5)(1)
24penalty and a subsection (b)(2) or (b-5)(2) penalty are
25assessed against the same return, the subsection (b)(2) or
26(b-5)(2) penalty shall be assessed against only the additional

 

 

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1tax found to be due.
2    (e-5) This subsection (e-5) is applicable to returns due on
3and after January 1, 2001. If both a subsection (b-10)(1)
4penalty and a subsection (b-10)(2) penalty are assessed against
5the same return, the subsection (b-10)(2) penalty shall be
6assessed against only the additional tax found to be due.
7    (f) If the taxpayer has failed to file the return, the
8Department shall determine the correct tax according to its
9best judgment and information, which amount shall be prima
10facie evidence of the correctness of the tax due.
11    (g) The time within which to file a return or pay an amount
12of tax due without imposition of a penalty does not extend the
13time within which to file a protest to a notice of tax
14liability or a notice of deficiency.
15    (h) No return shall be determined to be unprocessable
16because of the omission of any information requested on the
17return pursuant to Section 2505-575 of the Department of
18Revenue Law (20 ILCS 2505/2505-575).
19    (i) If a taxpayer has a tax liability for the taxable
20period ending after June 30, 1983 and prior to July 1, 2002
21that is eligible for amnesty under the Tax Delinquency Amnesty
22Act and the taxpayer fails to satisfy the tax liability during
23the amnesty period provided for in that Act for that taxable
24period, then the penalty imposed by the Department under this
25Section shall be imposed in an amount that is 200% of the
26amount that would otherwise be imposed under this Section.

 

 

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1    (j) If a taxpayer has a tax liability for the taxable
2period ending after June 30, 2002 and prior to July 1, 2009
3that is eligible for amnesty under the Tax Delinquency Amnesty
4Act, except for any tax liability reported pursuant to Section
5506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)) that
6is not final, and the taxpayer fails to satisfy the tax
7liability during the amnesty period provided for in that Act
8for that taxable period, then the penalty imposed by the
9Department under this Section shall be imposed in an amount
10that is 200% of the amount that would otherwise be imposed
11under this Section.
12(Source: P.A. 98-425, eff. 8-16-13; 99-335, eff. 8-10-15.)
 
13    Section 99. Effective date. This Act takes effect upon
14becoming law.