SB2531 EngrossedLRB102 15312 HLH 20668 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)
7    (Text of Section without the changes made by P.A. 101-8,
8which did not take effect (see Section 99 of P.A. 101-8))
9    Sec. 201. Tax imposed.
10    (a) In general. A tax measured by net income is hereby
11imposed on every individual, corporation, trust and estate for
12each taxable year ending after July 31, 1969 on the privilege
13of earning or receiving income in or as a resident of this
14State. Such tax shall be in addition to all other occupation or
15privilege taxes imposed by this State or by any municipal
16corporation or political subdivision thereof.
17    (b) Rates. The tax imposed by subsection (a) of this
18Section shall be determined as follows, except as adjusted by
19subsection (d-1):
20        (1) In the case of an individual, trust or estate, for
21    taxable years ending prior to July 1, 1989, an amount
22    equal to 2 1/2% of the taxpayer's net income for the
23    taxable year.

 

 

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1        (2) In the case of an individual, trust or estate, for
2    taxable years beginning prior to July 1, 1989 and ending
3    after June 30, 1989, an amount equal to the sum of (i) 2
4    1/2% of the taxpayer's net income for the period prior to
5    July 1, 1989, as calculated under Section 202.3, and (ii)
6    3% of the taxpayer's net income for the period after June
7    30, 1989, as calculated under Section 202.3.
8        (3) In the case of an individual, trust or estate, for
9    taxable years beginning after June 30, 1989, and ending
10    prior to January 1, 2011, an amount equal to 3% of the
11    taxpayer's net income for the taxable year.
12        (4) In the case of an individual, trust, or estate,
13    for taxable years beginning prior to January 1, 2011, and
14    ending after December 31, 2010, an amount equal to the sum
15    of (i) 3% of the taxpayer's net income for the period prior
16    to January 1, 2011, as calculated under Section 202.5, and
17    (ii) 5% of the taxpayer's net income for the period after
18    December 31, 2010, as calculated under Section 202.5.
19        (5) In the case of an individual, trust, or estate,
20    for taxable years beginning on or after January 1, 2011,
21    and ending prior to January 1, 2015, an amount equal to 5%
22    of the taxpayer's net income for the taxable year.
23        (5.1) In the case of an individual, trust, or estate,
24    for taxable years beginning prior to January 1, 2015, and
25    ending after December 31, 2014, an amount equal to the sum
26    of (i) 5% of the taxpayer's net income for the period prior

 

 

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1    to January 1, 2015, as calculated under Section 202.5, and
2    (ii) 3.75% of the taxpayer's net income for the period
3    after December 31, 2014, as calculated under Section
4    202.5.
5        (5.2) In the case of an individual, trust, or estate,
6    for taxable years beginning on or after January 1, 2015,
7    and ending prior to July 1, 2017, an amount equal to 3.75%
8    of the taxpayer's net income for the taxable year.
9        (5.3) In the case of an individual, trust, or estate,
10    for taxable years beginning prior to July 1, 2017, and
11    ending after June 30, 2017, an amount equal to the sum of
12    (i) 3.75% of the taxpayer's net income for the period
13    prior to July 1, 2017, as calculated under Section 202.5,
14    and (ii) 4.95% of the taxpayer's net income for the period
15    after June 30, 2017, as calculated under Section 202.5.
16        (5.4) In the case of an individual, trust, or estate,
17    for taxable years beginning on or after July 1, 2017, an
18    amount equal to 4.95% of the taxpayer's net income for the
19    taxable year.
20        (6) In the case of a corporation, for taxable years
21    ending prior to July 1, 1989, an amount equal to 4% of the
22    taxpayer's net income for the taxable year.
23        (7) In the case of a corporation, for taxable years
24    beginning prior to July 1, 1989 and ending after June 30,
25    1989, an amount equal to the sum of (i) 4% of the
26    taxpayer's net income for the period prior to July 1,

 

 

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1    1989, as calculated under Section 202.3, and (ii) 4.8% of
2    the taxpayer's net income for the period after June 30,
3    1989, as calculated under Section 202.3.
4        (8) In the case of a corporation, for taxable years
5    beginning after June 30, 1989, and ending prior to January
6    1, 2011, an amount equal to 4.8% of the taxpayer's net
7    income for the taxable year.
8        (9) In the case of a corporation, for taxable years
9    beginning prior to January 1, 2011, and ending after
10    December 31, 2010, an amount equal to the sum of (i) 4.8%
11    of the taxpayer's net income for the period prior to
12    January 1, 2011, as calculated under Section 202.5, and
13    (ii) 7% of the taxpayer's net income for the period after
14    December 31, 2010, as calculated under Section 202.5.
15        (10) In the case of a corporation, for taxable years
16    beginning on or after January 1, 2011, and ending prior to
17    January 1, 2015, an amount equal to 7% of the taxpayer's
18    net income for the taxable year.
19        (11) In the case of a corporation, for taxable years
20    beginning prior to January 1, 2015, and ending after
21    December 31, 2014, an amount equal to the sum of (i) 7% of
22    the taxpayer's net income for the period prior to January
23    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
24    of the taxpayer's net income for the period after December
25    31, 2014, as calculated under Section 202.5.
26        (12) In the case of a corporation, for taxable years

 

 

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1    beginning on or after January 1, 2015, and ending prior to
2    July 1, 2017, an amount equal to 5.25% of the taxpayer's
3    net income for the taxable year.
4        (13) In the case of a corporation, for taxable years
5    beginning prior to July 1, 2017, and ending after June 30,
6    2017, an amount equal to the sum of (i) 5.25% of the
7    taxpayer's net income for the period prior to July 1,
8    2017, as calculated under Section 202.5, and (ii) 7% of
9    the taxpayer's net income for the period after June 30,
10    2017, as calculated under Section 202.5.
11        (14) In the case of a corporation, for taxable years
12    beginning on or after July 1, 2017, an amount equal to 7%
13    of the taxpayer's net income for the taxable year.
14    The rates under this subsection (b) are subject to the
15provisions of Section 201.5.
16    (b-5) Surcharge; sale or exchange of assets, properties,
17and intangibles of organization gaming licensees. For each of
18taxable years 2019 through 2027, a surcharge is imposed on all
19taxpayers on income arising from the sale or exchange of
20capital assets, depreciable business property, real property
21used in the trade or business, and Section 197 intangibles (i)
22of an organization licensee under the Illinois Horse Racing
23Act of 1975 and (ii) of an organization gaming licensee under
24the Illinois Gambling Act. The amount of the surcharge is
25equal to the amount of federal income tax liability for the
26taxable year attributable to those sales and exchanges. The

 

 

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1surcharge imposed shall not apply if:
2        (1) the organization gaming license, organization
3    license, or racetrack property is transferred as a result
4    of any of the following:
5            (A) bankruptcy, a receivership, or a debt
6        adjustment initiated by or against the initial
7        licensee or the substantial owners of the initial
8        licensee;
9            (B) cancellation, revocation, or termination of
10        any such license by the Illinois Gaming Board or the
11        Illinois Racing Board;
12            (C) a determination by the Illinois Gaming Board
13        that transfer of the license is in the best interests
14        of Illinois gaming;
15            (D) the death of an owner of the equity interest in
16        a licensee;
17            (E) the acquisition of a controlling interest in
18        the stock or substantially all of the assets of a
19        publicly traded company;
20            (F) a transfer by a parent company to a wholly
21        owned subsidiary; or
22            (G) the transfer or sale to or by one person to
23        another person where both persons were initial owners
24        of the license when the license was issued; or
25        (2) the controlling interest in the organization
26    gaming license, organization license, or racetrack

 

 

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1    property is transferred in a transaction to lineal
2    descendants in which no gain or loss is recognized or as a
3    result of a transaction in accordance with Section 351 of
4    the Internal Revenue Code in which no gain or loss is
5    recognized; or
6        (3) live horse racing was not conducted in 2010 at a
7    racetrack located within 3 miles of the Mississippi River
8    under a license issued pursuant to the Illinois Horse
9    Racing Act of 1975.
10    The transfer of an organization gaming license,
11organization license, or racetrack property by a person other
12than the initial licensee to receive the organization gaming
13license is not subject to a surcharge. The Department shall
14adopt rules necessary to implement and administer this
15subsection.
16    (c) Personal Property Tax Replacement Income Tax.
17Beginning on July 1, 1979 and thereafter, in addition to such
18income tax, there is also hereby imposed the Personal Property
19Tax Replacement Income Tax measured by net income on every
20corporation (including Subchapter S corporations), partnership
21and trust, for each taxable year ending after June 30, 1979.
22Such taxes are imposed on the privilege of earning or
23receiving income in or as a resident of this State. The
24Personal Property Tax Replacement Income Tax shall be in
25addition to the income tax imposed by subsections (a) and (b)
26of this Section and in addition to all other occupation or

 

 

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1privilege taxes imposed by this State or by any municipal
2corporation or political subdivision thereof.
3    (d) Additional Personal Property Tax Replacement Income
4Tax Rates. The personal property tax replacement income tax
5imposed by this subsection and subsection (c) of this Section
6in the case of a corporation, other than a Subchapter S
7corporation and except as adjusted by subsection (d-1), shall
8be an additional amount equal to 2.85% of such taxpayer's net
9income for the taxable year, except that beginning on January
101, 1981, and thereafter, the rate of 2.85% specified in this
11subsection shall be reduced to 2.5%, and in the case of a
12partnership, trust or a Subchapter S corporation shall be an
13additional amount equal to 1.5% of such taxpayer's net income
14for the taxable year.
15    (d-1) Rate reduction for certain foreign insurers. In the
16case of a foreign insurer, as defined by Section 35A-5 of the
17Illinois Insurance Code, whose state or country of domicile
18imposes on insurers domiciled in Illinois a retaliatory tax
19(excluding any insurer whose premiums from reinsurance assumed
20are 50% or more of its total insurance premiums as determined
21under paragraph (2) of subsection (b) of Section 304, except
22that for purposes of this determination premiums from
23reinsurance do not include premiums from inter-affiliate
24reinsurance arrangements), beginning with taxable years ending
25on or after December 31, 1999, the sum of the rates of tax
26imposed by subsections (b) and (d) shall be reduced (but not

 

 

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1increased) to the rate at which the total amount of tax imposed
2under this Act, net of all credits allowed under this Act,
3shall equal (i) the total amount of tax that would be imposed
4on the foreign insurer's net income allocable to Illinois for
5the taxable year by such foreign insurer's state or country of
6domicile if that net income were subject to all income taxes
7and taxes measured by net income imposed by such foreign
8insurer's state or country of domicile, net of all credits
9allowed or (ii) a rate of zero if no such tax is imposed on
10such income by the foreign insurer's state of domicile. For
11the purposes of this subsection (d-1), an inter-affiliate
12includes a mutual insurer under common management.
13        (1) For the purposes of subsection (d-1), in no event
14    shall the sum of the rates of tax imposed by subsections
15    (b) and (d) be reduced below the rate at which the sum of:
16            (A) the total amount of tax imposed on such
17        foreign insurer under this Act for a taxable year, net
18        of all credits allowed under this Act, plus
19            (B) the privilege tax imposed by Section 409 of
20        the Illinois Insurance Code, the fire insurance
21        company tax imposed by Section 12 of the Fire
22        Investigation Act, and the fire department taxes
23        imposed under Section 11-10-1 of the Illinois
24        Municipal Code,
25    equals 1.25% for taxable years ending prior to December
26    31, 2003, or 1.75% for taxable years ending on or after

 

 

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1    December 31, 2003, of the net taxable premiums written for
2    the taxable year, as described by subsection (1) of
3    Section 409 of the Illinois Insurance Code. This paragraph
4    will in no event increase the rates imposed under
5    subsections (b) and (d).
6        (2) Any reduction in the rates of tax imposed by this
7    subsection shall be applied first against the rates
8    imposed by subsection (b) and only after the tax imposed
9    by subsection (a) net of all credits allowed under this
10    Section other than the credit allowed under subsection (i)
11    has been reduced to zero, against the rates imposed by
12    subsection (d).
13    This subsection (d-1) is exempt from the provisions of
14Section 250.
15    (e) Investment credit. A taxpayer shall be allowed a
16credit against the Personal Property Tax Replacement Income
17Tax for investment in qualified property.
18        (1) A taxpayer shall be allowed a credit equal to .5%
19    of the basis of qualified property placed in service
20    during the taxable year, provided such property is placed
21    in service on or after July 1, 1984. There shall be allowed
22    an additional credit equal to .5% of the basis of
23    qualified property placed in service during the taxable
24    year, provided such property is placed in service on or
25    after July 1, 1986, and the taxpayer's base employment
26    within Illinois has increased by 1% or more over the

 

 

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1    preceding year as determined by the taxpayer's employment
2    records filed with the Illinois Department of Employment
3    Security. Taxpayers who are new to Illinois shall be
4    deemed to have met the 1% growth in base employment for the
5    first year in which they file employment records with the
6    Illinois Department of Employment Security. The provisions
7    added to this Section by Public Act 85-1200 (and restored
8    by Public Act 87-895) shall be construed as declaratory of
9    existing law and not as a new enactment. If, in any year,
10    the increase in base employment within Illinois over the
11    preceding year is less than 1%, the additional credit
12    shall be limited to that percentage times a fraction, the
13    numerator of which is .5% and the denominator of which is
14    1%, but shall not exceed .5%. The investment credit shall
15    not be allowed to the extent that it would reduce a
16    taxpayer's liability in any tax year below zero, nor may
17    any credit for qualified property be allowed for any year
18    other than the year in which the property was placed in
19    service in Illinois. For tax years ending on or after
20    December 31, 1987, and on or before December 31, 1988, the
21    credit shall be allowed for the tax year in which the
22    property is placed in service, or, if the amount of the
23    credit exceeds the tax liability for that year, whether it
24    exceeds the original liability or the liability as later
25    amended, such excess may be carried forward and applied to
26    the tax liability of the 5 taxable years following the

 

 

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1    excess credit years if the taxpayer (i) makes investments
2    which cause the creation of a minimum of 2,000 full-time
3    equivalent jobs in Illinois, (ii) is located in an
4    enterprise zone established pursuant to the Illinois
5    Enterprise Zone Act and (iii) is certified by the
6    Department of Commerce and Community Affairs (now
7    Department of Commerce and Economic Opportunity) as
8    complying with the requirements specified in clause (i)
9    and (ii) by July 1, 1986. The Department of Commerce and
10    Community Affairs (now Department of Commerce and Economic
11    Opportunity) shall notify the Department of Revenue of all
12    such certifications immediately. For tax years ending
13    after December 31, 1988, the credit shall be allowed for
14    the tax year in which the property is placed in service,
15    or, if the amount of the credit exceeds the tax liability
16    for that year, whether it exceeds the original liability
17    or the liability as later amended, such excess may be
18    carried forward and applied to the tax liability of the 5
19    taxable years following the excess credit years. The
20    credit shall be applied to the earliest year for which
21    there is a liability. If there is credit from more than one
22    tax year that is available to offset a liability, earlier
23    credit shall be applied first.
24        (2) The term "qualified property" means property
25    which:
26            (A) is tangible, whether new or used, including

 

 

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1        buildings and structural components of buildings and
2        signs that are real property, but not including land
3        or improvements to real property that are not a
4        structural component of a building such as
5        landscaping, sewer lines, local access roads, fencing,
6        parking lots, and other appurtenances;
7            (B) is depreciable pursuant to Section 167 of the
8        Internal Revenue Code, except that "3-year property"
9        as defined in Section 168(c)(2)(A) of that Code is not
10        eligible for the credit provided by this subsection
11        (e);
12            (C) is acquired by purchase as defined in Section
13        179(d) of the Internal Revenue Code;
14            (D) is used in Illinois by a taxpayer who is
15        primarily engaged in manufacturing, or in mining coal
16        or fluorite, or in retailing, or was placed in service
17        on or after July 1, 2006 in a River Edge Redevelopment
18        Zone established pursuant to the River Edge
19        Redevelopment Zone Act; and
20            (E) has not previously been used in Illinois in
21        such a manner and by such a person as would qualify for
22        the credit provided by this subsection (e) or
23        subsection (f).
24        (3) For purposes of this subsection (e),
25    "manufacturing" means the material staging and production
26    of tangible personal property by procedures commonly

 

 

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1    regarded as manufacturing, processing, fabrication, or
2    assembling which changes some existing material into new
3    shapes, new qualities, or new combinations. For purposes
4    of this subsection (e) the term "mining" shall have the
5    same meaning as the term "mining" in Section 613(c) of the
6    Internal Revenue Code. For purposes of this subsection
7    (e), the term "retailing" means the sale of tangible
8    personal property for use or consumption and not for
9    resale, or services rendered in conjunction with the sale
10    of tangible personal property for use or consumption and
11    not for resale. For purposes of this subsection (e),
12    "tangible personal property" has the same meaning as when
13    that term is used in the Retailers' Occupation Tax Act,
14    and, for taxable years ending after December 31, 2008,
15    does not include the generation, transmission, or
16    distribution of electricity.
17        (4) The basis of qualified property shall be the basis
18    used to compute the depreciation deduction for federal
19    income tax purposes.
20        (5) If the basis of the property for federal income
21    tax depreciation purposes is increased after it has been
22    placed in service in Illinois by the taxpayer, the amount
23    of such increase shall be deemed property placed in
24    service on the date of such increase in basis.
25        (6) The term "placed in service" shall have the same
26    meaning as under Section 46 of the Internal Revenue Code.

 

 

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1        (7) If during any taxable year, any property ceases to
2    be qualified property in the hands of the taxpayer within
3    48 months after being placed in service, or the situs of
4    any qualified property is moved outside Illinois within 48
5    months after being placed in service, the Personal
6    Property Tax Replacement Income Tax for such taxable year
7    shall be increased. Such increase shall be determined by
8    (i) recomputing the investment credit which would have
9    been allowed for the year in which credit for such
10    property was originally allowed by eliminating such
11    property from such computation and, (ii) subtracting such
12    recomputed credit from the amount of credit previously
13    allowed. For the purposes of this paragraph (7), a
14    reduction of the basis of qualified property resulting
15    from a redetermination of the purchase price shall be
16    deemed a disposition of qualified property to the extent
17    of such reduction.
18        (8) Unless the investment credit is extended by law,
19    the basis of qualified property shall not include costs
20    incurred after December 31, 2018, except for costs
21    incurred pursuant to a binding contract entered into on or
22    before December 31, 2018.
23        (9) Each taxable year ending before December 31, 2000,
24    a partnership may elect to pass through to its partners
25    the credits to which the partnership is entitled under
26    this subsection (e) for the taxable year. A partner may

 

 

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1    use the credit allocated to him or her under this
2    paragraph only against the tax imposed in subsections (c)
3    and (d) of this Section. If the partnership makes that
4    election, those credits shall be allocated among the
5    partners in the partnership in accordance with the rules
6    set forth in Section 704(b) of the Internal Revenue Code,
7    and the rules promulgated under that Section, and the
8    allocated amount of the credits shall be allowed to the
9    partners for that taxable year. The partnership shall make
10    this election on its Personal Property Tax Replacement
11    Income Tax return for that taxable year. The election to
12    pass through the credits shall be irrevocable.
13        For taxable years ending on or after December 31,
14    2000, a partner that qualifies its partnership for a
15    subtraction under subparagraph (I) of paragraph (2) of
16    subsection (d) of Section 203 or a shareholder that
17    qualifies a Subchapter S corporation for a subtraction
18    under subparagraph (S) of paragraph (2) of subsection (b)
19    of Section 203 shall be allowed a credit under this
20    subsection (e) equal to its share of the credit earned
21    under this subsection (e) during the taxable year by the
22    partnership or Subchapter S corporation, determined in
23    accordance with the determination of income and
24    distributive share of income under Sections 702 and 704
25    and Subchapter S of the Internal Revenue Code. This
26    paragraph is exempt from the provisions of Section 250.

 

 

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1    (f) Investment credit; Enterprise Zone; River Edge
2Redevelopment Zone.
3        (1) A taxpayer shall be allowed a credit against the
4    tax imposed by subsections (a) and (b) of this Section for
5    investment in qualified property which is placed in
6    service in an Enterprise Zone created pursuant to the
7    Illinois Enterprise Zone Act or, for property placed in
8    service on or after July 1, 2006, a River Edge
9    Redevelopment Zone established pursuant to the River Edge
10    Redevelopment Zone Act. For partners, shareholders of
11    Subchapter S corporations, and owners of limited liability
12    companies, if the liability company is treated as a
13    partnership for purposes of federal and State income
14    taxation, there shall be allowed a credit under this
15    subsection (f) to be determined in accordance with the
16    determination of income and distributive share of income
17    under Sections 702 and 704 and Subchapter S of the
18    Internal Revenue Code. The credit shall be .5% of the
19    basis for such property. The credit shall be available
20    only in the taxable year in which the property is placed in
21    service in the Enterprise Zone or River Edge Redevelopment
22    Zone and shall not be allowed to the extent that it would
23    reduce a taxpayer's liability for the tax imposed by
24    subsections (a) and (b) of this Section to below zero. For
25    tax years ending on or after December 31, 1985, the credit
26    shall be allowed for the tax year in which the property is

 

 

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1    placed in service, or, if the amount of the credit exceeds
2    the tax liability for that year, whether it exceeds the
3    original liability or the liability as later amended, such
4    excess may be carried forward and applied to the tax
5    liability of the 5 taxable years following the excess
6    credit year. The credit shall be applied to the earliest
7    year for which there is a liability. If there is credit
8    from more than one tax year that is available to offset a
9    liability, the credit accruing first in time shall be
10    applied first.
11        (2) The term qualified property means property which:
12            (A) is tangible, whether new or used, including
13        buildings and structural components of buildings;
14            (B) is depreciable pursuant to Section 167 of the
15        Internal Revenue Code, except that "3-year property"
16        as defined in Section 168(c)(2)(A) of that Code is not
17        eligible for the credit provided by this subsection
18        (f);
19            (C) is acquired by purchase as defined in Section
20        179(d) of the Internal Revenue Code;
21            (D) is used in the Enterprise Zone or River Edge
22        Redevelopment Zone by the taxpayer; and
23            (E) has not been previously used in Illinois in
24        such a manner and by such a person as would qualify for
25        the credit provided by this subsection (f) or
26        subsection (e).

 

 

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1        (3) The basis of qualified property shall be the basis
2    used to compute the depreciation deduction for federal
3    income tax purposes.
4        (4) If the basis of the property for federal income
5    tax depreciation purposes is increased after it has been
6    placed in service in the Enterprise Zone or River Edge
7    Redevelopment Zone by the taxpayer, the amount of such
8    increase shall be deemed property placed in service on the
9    date of such increase in basis.
10        (5) The term "placed in service" shall have the same
11    meaning as under Section 46 of the Internal Revenue Code.
12        (6) If during any taxable year, any property ceases to
13    be qualified property in the hands of the taxpayer within
14    48 months after being placed in service, or the situs of
15    any qualified property is moved outside the Enterprise
16    Zone or River Edge Redevelopment Zone within 48 months
17    after being placed in service, the tax imposed under
18    subsections (a) and (b) of this Section for such taxable
19    year shall be increased. Such increase shall be determined
20    by (i) recomputing the investment credit which would have
21    been allowed for the year in which credit for such
22    property was originally allowed by eliminating such
23    property from such computation, and (ii) subtracting such
24    recomputed credit from the amount of credit previously
25    allowed. For the purposes of this paragraph (6), a
26    reduction of the basis of qualified property resulting

 

 

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1    from a redetermination of the purchase price shall be
2    deemed a disposition of qualified property to the extent
3    of such reduction.
4        (7) There shall be allowed an additional credit equal
5    to 0.5% of the basis of qualified property placed in
6    service during the taxable year in a River Edge
7    Redevelopment Zone, provided such property is placed in
8    service on or after July 1, 2006, and the taxpayer's base
9    employment within Illinois has increased by 1% or more
10    over the preceding year as determined by the taxpayer's
11    employment records filed with the Illinois Department of
12    Employment Security. Taxpayers who are new to Illinois
13    shall be deemed to have met the 1% growth in base
14    employment for the first year in which they file
15    employment records with the Illinois Department of
16    Employment Security. If, in any year, the increase in base
17    employment within Illinois over the preceding year is less
18    than 1%, the additional credit shall be limited to that
19    percentage times a fraction, the numerator of which is
20    0.5% and the denominator of which is 1%, but shall not
21    exceed 0.5%.
22        (8) For taxable years beginning on or after January 1,
23    2021, there shall be allowed an Enterprise Zone
24    construction jobs credit against the taxes imposed under
25    subsections (a) and (b) of this Section as provided in
26    Section 13 of the Illinois Enterprise Zone Act.

 

 

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1        The credit or credits may not reduce the taxpayer's
2    liability to less than zero. If the amount of the credit or
3    credits exceeds the taxpayer's liability, the excess may
4    be carried forward and applied against the taxpayer's
5    liability in succeeding calendar years in the same manner
6    provided under paragraph (4) of Section 211 of this Act.
7    The credit or credits shall be applied to the earliest
8    year for which there is a tax liability. If there are
9    credits from more than one taxable year that are available
10    to offset a liability, the earlier credit shall be applied
11    first.
12        For partners, shareholders of Subchapter S
13    corporations, and owners of limited liability companies,
14    if the liability company is treated as a partnership for
15    the purposes of federal and State income taxation, there
16    shall be allowed a credit under this Section to be
17    determined in accordance with the determination of income
18    and distributive share of income under Sections 702 and
19    704 and Subchapter S of the Internal Revenue Code.
20        The total aggregate amount of credits awarded under
21    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
22    this amendatory Act of the 101st General Assembly) shall
23    not exceed $20,000,000 in any State fiscal year.
24        This paragraph (8) is exempt from the provisions of
25    Section 250.
26    (g) (Blank).

 

 

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1    (h) Investment credit; High Impact Business.
2        (1) Subject to subsections (b) and (b-5) of Section
3    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
4    be allowed a credit against the tax imposed by subsections
5    (a) and (b) of this Section for investment in qualified
6    property which is placed in service by a Department of
7    Commerce and Economic Opportunity designated High Impact
8    Business. The credit shall be .5% of the basis for such
9    property. The credit shall not be available (i) until the
10    minimum investments in qualified property set forth in
11    subdivision (a)(3)(A) of Section 5.5 of the Illinois
12    Enterprise Zone Act have been satisfied or (ii) until the
13    time authorized in subsection (b-5) of the Illinois
14    Enterprise Zone Act for entities designated as High Impact
15    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
16    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
17    Act, and shall not be allowed to the extent that it would
18    reduce a taxpayer's liability for the tax imposed by
19    subsections (a) and (b) of this Section to below zero. The
20    credit applicable to such investments shall be taken in
21    the taxable year in which such investments have been
22    completed. The credit for additional investments beyond
23    the minimum investment by a designated high impact
24    business authorized under subdivision (a)(3)(A) of Section
25    5.5 of the Illinois Enterprise Zone Act shall be available
26    only in the taxable year in which the property is placed in

 

 

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1    service and shall not be allowed to the extent that it
2    would reduce a taxpayer's liability for the tax imposed by
3    subsections (a) and (b) of this Section to below zero. For
4    tax years ending on or after December 31, 1987, the credit
5    shall be allowed for the tax year in which the property is
6    placed in service, or, if the amount of the credit exceeds
7    the tax liability for that year, whether it exceeds the
8    original liability or the liability as later amended, such
9    excess may be carried forward and applied to the tax
10    liability of the 5 taxable years following the excess
11    credit year. The credit shall be applied to the earliest
12    year for which there is a liability. If there is credit
13    from more than one tax year that is available to offset a
14    liability, the credit accruing first in time shall be
15    applied first.
16        Changes made in this subdivision (h)(1) by Public Act
17    88-670 restore changes made by Public Act 85-1182 and
18    reflect existing law.
19        (2) The term qualified property means property which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings;
22            (B) is depreciable pursuant to Section 167 of the
23        Internal Revenue Code, except that "3-year property"
24        as defined in Section 168(c)(2)(A) of that Code is not
25        eligible for the credit provided by this subsection
26        (h);

 

 

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1            (C) is acquired by purchase as defined in Section
2        179(d) of the Internal Revenue Code; and
3            (D) is not eligible for the Enterprise Zone
4        Investment Credit provided by subsection (f) of this
5        Section.
6        (3) The basis of qualified property shall be the basis
7    used to compute the depreciation deduction for federal
8    income tax purposes.
9        (4) If the basis of the property for federal income
10    tax depreciation purposes is increased after it has been
11    placed in service in a federally designated Foreign Trade
12    Zone or Sub-Zone located in Illinois by the taxpayer, the
13    amount of such increase shall be deemed property placed in
14    service on the date of such increase in basis.
15        (5) The term "placed in service" shall have the same
16    meaning as under Section 46 of the Internal Revenue Code.
17        (6) If during any taxable year ending on or before
18    December 31, 1996, any property ceases to be qualified
19    property in the hands of the taxpayer within 48 months
20    after being placed in service, or the situs of any
21    qualified property is moved outside Illinois within 48
22    months after being placed in service, the tax imposed
23    under subsections (a) and (b) of this Section for such
24    taxable year shall be increased. Such increase shall be
25    determined by (i) recomputing the investment credit which
26    would have been allowed for the year in which credit for

 

 

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1    such property was originally allowed by eliminating such
2    property from such computation, and (ii) subtracting such
3    recomputed credit from the amount of credit previously
4    allowed. For the purposes of this paragraph (6), a
5    reduction of the basis of qualified property resulting
6    from a redetermination of the purchase price shall be
7    deemed a disposition of qualified property to the extent
8    of such reduction.
9        (7) Beginning with tax years ending after December 31,
10    1996, if a taxpayer qualifies for the credit under this
11    subsection (h) and thereby is granted a tax abatement and
12    the taxpayer relocates its entire facility in violation of
13    the explicit terms and length of the contract under
14    Section 18-183 of the Property Tax Code, the tax imposed
15    under subsections (a) and (b) of this Section shall be
16    increased for the taxable year in which the taxpayer
17    relocated its facility by an amount equal to the amount of
18    credit received by the taxpayer under this subsection (h).
19    (h-5) High Impact Business construction constructions jobs
20credit. For taxable years beginning on or after January 1,
212021, there shall also be allowed a High Impact Business
22construction jobs credit against the tax imposed under
23subsections (a) and (b) of this Section as provided in
24subsections (i) and (j) of Section 5.5 of the Illinois
25Enterprise Zone Act.
26    The credit or credits may not reduce the taxpayer's

 

 

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1liability to less than zero. If the amount of the credit or
2credits exceeds the taxpayer's liability, the excess may be
3carried forward and applied against the taxpayer's liability
4in succeeding calendar years in the manner provided under
5paragraph (4) of Section 211 of this Act. The credit or credits
6shall be applied to the earliest year for which there is a tax
7liability. If there are credits from more than one taxable
8year that are available to offset a liability, the earlier
9credit shall be applied first.
10    For partners, shareholders of Subchapter S corporations,
11and owners of limited liability companies, if the liability
12company is treated as a partnership for the purposes of
13federal and State income taxation, there shall be allowed a
14credit under this Section to be determined in accordance with
15the determination of income and distributive share of income
16under Sections 702 and 704 and Subchapter S of the Internal
17Revenue Code.
18    The total aggregate amount of credits awarded under the
19Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
20amendatory Act of the 101st General Assembly) shall not exceed
21$20,000,000 in any State fiscal year.
22    This subsection (h-5) is exempt from the provisions of
23Section 250.
24    (i) Credit for Personal Property Tax Replacement Income
25Tax. For tax years ending prior to December 31, 2003, a credit
26shall be allowed against the tax imposed by subsections (a)

 

 

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1and (b) of this Section for the tax imposed by subsections (c)
2and (d) of this Section. This credit shall be computed by
3multiplying the tax imposed by subsections (c) and (d) of this
4Section by a fraction, the numerator of which is base income
5allocable to Illinois and the denominator of which is Illinois
6base income, and further multiplying the product by the tax
7rate imposed by subsections (a) and (b) of this Section.
8    Any credit earned on or after December 31, 1986 under this
9subsection which is unused in the year the credit is computed
10because it exceeds the tax liability imposed by subsections
11(a) and (b) for that year (whether it exceeds the original
12liability or the liability as later amended) may be carried
13forward and applied to the tax liability imposed by
14subsections (a) and (b) of the 5 taxable years following the
15excess credit year, provided that no credit may be carried
16forward to any year ending on or after December 31, 2003. This
17credit shall be applied first to the earliest year for which
18there is a liability. If there is a credit under this
19subsection from more than one tax year that is available to
20offset a liability the earliest credit arising under this
21subsection shall be applied first.
22    If, during any taxable year ending on or after December
2331, 1986, the tax imposed by subsections (c) and (d) of this
24Section for which a taxpayer has claimed a credit under this
25subsection (i) is reduced, the amount of credit for such tax
26shall also be reduced. Such reduction shall be determined by

 

 

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1recomputing the credit to take into account the reduced tax
2imposed by subsections (c) and (d). If any portion of the
3reduced amount of credit has been carried to a different
4taxable year, an amended return shall be filed for such
5taxable year to reduce the amount of credit claimed.
6    (j) Training expense credit. Beginning with tax years
7ending on or after December 31, 1986 and prior to December 31,
82003, a taxpayer shall be allowed a credit against the tax
9imposed by subsections (a) and (b) under this Section for all
10amounts paid or accrued, on behalf of all persons employed by
11the taxpayer in Illinois or Illinois residents employed
12outside of Illinois by a taxpayer, for educational or
13vocational training in semi-technical or technical fields or
14semi-skilled or skilled fields, which were deducted from gross
15income in the computation of taxable income. The credit
16against the tax imposed by subsections (a) and (b) shall be
171.6% of such training expenses. For partners, shareholders of
18subchapter S corporations, and owners of limited liability
19companies, if the liability company is treated as a
20partnership for purposes of federal and State income taxation,
21there shall be allowed a credit under this subsection (j) to be
22determined in accordance with the determination of income and
23distributive share of income under Sections 702 and 704 and
24subchapter S of the Internal Revenue Code.
25    Any credit allowed under this subsection which is unused
26in the year the credit is earned may be carried forward to each

 

 

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1of the 5 taxable years following the year for which the credit
2is first computed until it is used. This credit shall be
3applied first to the earliest year for which there is a
4liability. If there is a credit under this subsection from
5more than one tax year that is available to offset a liability,
6the earliest credit arising under this subsection shall be
7applied first. No carryforward credit may be claimed in any
8tax year ending on or after December 31, 2003.
9    (k) Research and development credit. For tax years ending
10after July 1, 1990 and prior to December 31, 2003, and
11beginning again for tax years ending on or after December 31,
122004, and ending prior to January 1, 2027, a taxpayer shall be
13allowed a credit against the tax imposed by subsections (a)
14and (b) of this Section for increasing research activities in
15this State. The credit allowed against the tax imposed by
16subsections (a) and (b) shall be equal to 6 1/2% of the
17qualifying expenditures for increasing research activities in
18this State. For partners, shareholders of subchapter S
19corporations, and owners of limited liability companies, if
20the liability company is treated as a partnership for purposes
21of federal and State income taxation, there shall be allowed a
22credit under this subsection to be determined in accordance
23with the determination of income and distributive share of
24income under Sections 702 and 704 and subchapter S of the
25Internal Revenue Code.
26    For purposes of this subsection, "qualifying expenditures"

 

 

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1means the qualifying expenditures as defined for the federal
2credit for increasing research activities which would be
3allowable under Section 41 of the Internal Revenue Code and
4which are conducted in this State, "qualifying expenditures
5for increasing research activities in this State" means the
6excess of qualifying expenditures for the taxable year in
7which incurred over qualifying expenditures for the base
8period, "qualifying expenditures for the base period" means
9the average of the qualifying expenditures for each year in
10the base period, and "base period" means the 3 taxable years
11immediately preceding the taxable year for which the
12determination is being made.
13    Any credit in excess of the tax liability for the taxable
14year may be carried forward. A taxpayer may elect to have the
15unused credit shown on its final completed return carried over
16as a credit against the tax liability for the following 5
17taxable years or until it has been fully used, whichever
18occurs first; provided that no credit earned in a tax year
19ending prior to December 31, 2003 may be carried forward to any
20year ending on or after December 31, 2003.
21    If an unused credit is carried forward to a given year from
222 or more earlier years, that credit arising in the earliest
23year will be applied first against the tax liability for the
24given year. If a tax liability for the given year still
25remains, the credit from the next earliest year will then be
26applied, and so on, until all credits have been used or no tax

 

 

SB2531 Engrossed- 31 -LRB102 15312 HLH 20668 b

1liability for the given year remains. Any remaining unused
2credit or credits then will be carried forward to the next
3following year in which a tax liability is incurred, except
4that no credit can be carried forward to a year which is more
5than 5 years after the year in which the expense for which the
6credit is given was incurred.
7    No inference shall be drawn from Public Act 91-644 this
8amendatory Act of the 91st General Assembly in construing this
9Section for taxable years beginning before January 1, 1999.
10    It is the intent of the General Assembly that the research
11and development credit under this subsection (k) shall apply
12continuously for all tax years ending on or after December 31,
132004 and ending prior to January 1, 2027, including, but not
14limited to, the period beginning on January 1, 2016 and ending
15on July 6, 2017 (the effective date of Public Act 100-22) this
16amendatory Act of the 100th General Assembly. All actions
17taken in reliance on the continuation of the credit under this
18subsection (k) by any taxpayer are hereby validated.
19    (l) Environmental Remediation Tax Credit.
20        (i) For tax years ending after December 31, 1997 and
21    on or before December 31, 2001, a taxpayer shall be
22    allowed a credit against the tax imposed by subsections
23    (a) and (b) of this Section for certain amounts paid for
24    unreimbursed eligible remediation costs, as specified in
25    this subsection. For purposes of this Section,
26    "unreimbursed eligible remediation costs" means costs

 

 

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1    approved by the Illinois Environmental Protection Agency
2    ("Agency") under Section 58.14 of the Environmental
3    Protection Act that were paid in performing environmental
4    remediation at a site for which a No Further Remediation
5    Letter was issued by the Agency and recorded under Section
6    58.10 of the Environmental Protection Act. The credit must
7    be claimed for the taxable year in which Agency approval
8    of the eligible remediation costs is granted. The credit
9    is not available to any taxpayer if the taxpayer or any
10    related party caused or contributed to, in any material
11    respect, a release of regulated substances on, in, or
12    under the site that was identified and addressed by the
13    remedial action pursuant to the Site Remediation Program
14    of the Environmental Protection Act. After the Pollution
15    Control Board rules are adopted pursuant to the Illinois
16    Administrative Procedure Act for the administration and
17    enforcement of Section 58.9 of the Environmental
18    Protection Act, determinations as to credit availability
19    for purposes of this Section shall be made consistent with
20    those rules. For purposes of this Section, "taxpayer"
21    includes a person whose tax attributes the taxpayer has
22    succeeded to under Section 381 of the Internal Revenue
23    Code and "related party" includes the persons disallowed a
24    deduction for losses by paragraphs (b), (c), and (f)(1) of
25    Section 267 of the Internal Revenue Code by virtue of
26    being a related taxpayer, as well as any of its partners.

 

 

SB2531 Engrossed- 33 -LRB102 15312 HLH 20668 b

1    The credit allowed against the tax imposed by subsections
2    (a) and (b) shall be equal to 25% of the unreimbursed
3    eligible remediation costs in excess of $100,000 per site,
4    except that the $100,000 threshold shall not apply to any
5    site contained in an enterprise zone as determined by the
6    Department of Commerce and Community Affairs (now
7    Department of Commerce and Economic Opportunity). The
8    total credit allowed shall not exceed $40,000 per year
9    with a maximum total of $150,000 per site. For partners
10    and shareholders of subchapter S corporations, there shall
11    be allowed a credit under this subsection to be determined
12    in accordance with the determination of income and
13    distributive share of income under Sections 702 and 704
14    and subchapter S of the Internal Revenue Code.
15        (ii) A credit allowed under this subsection that is
16    unused in the year the credit is earned may be carried
17    forward to each of the 5 taxable years following the year
18    for which the credit is first earned until it is used. The
19    term "unused credit" does not include any amounts of
20    unreimbursed eligible remediation costs in excess of the
21    maximum credit per site authorized under paragraph (i).
22    This credit shall be applied first to the earliest year
23    for which there is a liability. If there is a credit under
24    this subsection from more than one tax year that is
25    available to offset a liability, the earliest credit
26    arising under this subsection shall be applied first. A

 

 

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1    credit allowed under this subsection may be sold to a
2    buyer as part of a sale of all or part of the remediation
3    site for which the credit was granted. The purchaser of a
4    remediation site and the tax credit shall succeed to the
5    unused credit and remaining carry-forward period of the
6    seller. To perfect the transfer, the assignor shall record
7    the transfer in the chain of title for the site and provide
8    written notice to the Director of the Illinois Department
9    of Revenue of the assignor's intent to sell the
10    remediation site and the amount of the tax credit to be
11    transferred as a portion of the sale. In no event may a
12    credit be transferred to any taxpayer if the taxpayer or a
13    related party would not be eligible under the provisions
14    of subsection (i).
15        (iii) For purposes of this Section, the term "site"
16    shall have the same meaning as under Section 58.2 of the
17    Environmental Protection Act.
18    (m) Education expense credit. Beginning with tax years
19ending after December 31, 1999, a taxpayer who is the
20custodian of one or more qualifying pupils shall be allowed a
21credit against the tax imposed by subsections (a) and (b) of
22this Section for qualified education expenses incurred on
23behalf of the qualifying pupils. The credit shall be equal to
2425% of qualified education expenses, but in no event may the
25total credit under this subsection claimed by a family that is
26the custodian of qualifying pupils exceed (i) $500 for tax

 

 

SB2531 Engrossed- 35 -LRB102 15312 HLH 20668 b

1years ending prior to December 31, 2017, and (ii) $750 for tax
2years ending on or after December 31, 2017. In no event shall a
3credit under this subsection reduce the taxpayer's liability
4under this Act to less than zero. Notwithstanding any other
5provision of law, for taxable years beginning on or after
6January 1, 2017, no taxpayer may claim a credit under this
7subsection (m) if the taxpayer's adjusted gross income for the
8taxable year exceeds (i) $500,000, in the case of spouses
9filing a joint federal tax return or (ii) $250,000, in the case
10of all other taxpayers. This subsection is exempt from the
11provisions of Section 250 of this Act.
12    For purposes of this subsection:
13    "Qualifying pupils" means individuals who (i) are
14residents of the State of Illinois, (ii) are under the age of
1521 at the close of the school year for which a credit is
16sought, and (iii) during the school year for which a credit is
17sought were full-time pupils enrolled in a kindergarten
18through twelfth grade education program at any school, as
19defined in this subsection.
20    "Qualified education expense" means the amount incurred on
21behalf of a qualifying pupil in excess of $250 for tuition,
22book fees, and lab fees at the school in which the pupil is
23enrolled during the regular school year.
24    "School" means any public or nonpublic elementary or
25secondary school in Illinois that is in compliance with Title
26VI of the Civil Rights Act of 1964 and attendance at which

 

 

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1satisfies the requirements of Section 26-1 of the School Code,
2except that nothing shall be construed to require a child to
3attend any particular public or nonpublic school to qualify
4for the credit under this Section.
5    "Custodian" means, with respect to qualifying pupils, an
6Illinois resident who is a parent, the parents, a legal
7guardian, or the legal guardians of the qualifying pupils.
8    (n) River Edge Redevelopment Zone site remediation tax
9credit.
10        (i) For tax years ending on or after December 31,
11    2006, a taxpayer shall be allowed a credit against the tax
12    imposed by subsections (a) and (b) of this Section for
13    certain amounts paid for unreimbursed eligible remediation
14    costs, as specified in this subsection. For purposes of
15    this Section, "unreimbursed eligible remediation costs"
16    means costs approved by the Illinois Environmental
17    Protection Agency ("Agency") under Section 58.14a of the
18    Environmental Protection Act that were paid in performing
19    environmental remediation at a site within a River Edge
20    Redevelopment Zone for which a No Further Remediation
21    Letter was issued by the Agency and recorded under Section
22    58.10 of the Environmental Protection Act. The credit must
23    be claimed for the taxable year in which Agency approval
24    of the eligible remediation costs is granted. The credit
25    is not available to any taxpayer if the taxpayer or any
26    related party caused or contributed to, in any material

 

 

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1    respect, a release of regulated substances on, in, or
2    under the site that was identified and addressed by the
3    remedial action pursuant to the Site Remediation Program
4    of the Environmental Protection Act. Determinations as to
5    credit availability for purposes of this Section shall be
6    made consistent with rules adopted by the Pollution
7    Control Board pursuant to the Illinois Administrative
8    Procedure Act for the administration and enforcement of
9    Section 58.9 of the Environmental Protection Act. For
10    purposes of this Section, "taxpayer" includes a person
11    whose tax attributes the taxpayer has succeeded to under
12    Section 381 of the Internal Revenue Code and "related
13    party" includes the persons disallowed a deduction for
14    losses by paragraphs (b), (c), and (f)(1) of Section 267
15    of the Internal Revenue Code by virtue of being a related
16    taxpayer, as well as any of its partners. The credit
17    allowed against the tax imposed by subsections (a) and (b)
18    shall be equal to 25% of the unreimbursed eligible
19    remediation costs in excess of $100,000 per site.
20        (ii) A credit allowed under this subsection that is
21    unused in the year the credit is earned may be carried
22    forward to each of the 5 taxable years following the year
23    for which the credit is first earned until it is used. This
24    credit shall be applied first to the earliest year for
25    which there is a liability. If there is a credit under this
26    subsection from more than one tax year that is available

 

 

SB2531 Engrossed- 38 -LRB102 15312 HLH 20668 b

1    to offset a liability, the earliest credit arising under
2    this subsection shall be applied first. A credit allowed
3    under this subsection may be sold to a buyer as part of a
4    sale of all or part of the remediation site for which the
5    credit was granted. The purchaser of a remediation site
6    and the tax credit shall succeed to the unused credit and
7    remaining carry-forward period of the seller. To perfect
8    the transfer, the assignor shall record the transfer in
9    the chain of title for the site and provide written notice
10    to the Director of the Illinois Department of Revenue of
11    the assignor's intent to sell the remediation site and the
12    amount of the tax credit to be transferred as a portion of
13    the sale. In no event may a credit be transferred to any
14    taxpayer if the taxpayer or a related party would not be
15    eligible under the provisions of subsection (i).
16        (iii) For purposes of this Section, the term "site"
17    shall have the same meaning as under Section 58.2 of the
18    Environmental Protection Act.
19    (o) For each of taxable years during the Compassionate Use
20of Medical Cannabis Program, a surcharge is imposed on all
21taxpayers on income arising from the sale or exchange of
22capital assets, depreciable business property, real property
23used in the trade or business, and Section 197 intangibles of
24an organization registrant under the Compassionate Use of
25Medical Cannabis Program Act. The amount of the surcharge is
26equal to the amount of federal income tax liability for the

 

 

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1taxable year attributable to those sales and exchanges. The
2surcharge imposed does not apply if:
3        (1) the medical cannabis cultivation center
4    registration, medical cannabis dispensary registration, or
5    the property of a registration is transferred as a result
6    of any of the following:
7            (A) bankruptcy, a receivership, or a debt
8        adjustment initiated by or against the initial
9        registration or the substantial owners of the initial
10        registration;
11            (B) cancellation, revocation, or termination of
12        any registration by the Illinois Department of Public
13        Health;
14            (C) a determination by the Illinois Department of
15        Public Health that transfer of the registration is in
16        the best interests of Illinois qualifying patients as
17        defined by the Compassionate Use of Medical Cannabis
18        Program Act;
19            (D) the death of an owner of the equity interest in
20        a registrant;
21            (E) the acquisition of a controlling interest in
22        the stock or substantially all of the assets of a
23        publicly traded company;
24            (F) a transfer by a parent company to a wholly
25        owned subsidiary; or
26            (G) the transfer or sale to or by one person to

 

 

SB2531 Engrossed- 40 -LRB102 15312 HLH 20668 b

1        another person where both persons were initial owners
2        of the registration when the registration was issued;
3        or
4        (2) the cannabis cultivation center registration,
5    medical cannabis dispensary registration, or the
6    controlling interest in a registrant's property is
7    transferred in a transaction to lineal descendants in
8    which no gain or loss is recognized or as a result of a
9    transaction in accordance with Section 351 of the Internal
10    Revenue Code in which no gain or loss is recognized.
11    (p) Pass-through entity tax.
12        (1) For taxable years ending on or after December 31,
13    2021 and beginning prior to January 1, 2026, a partnership
14    (other than a publicly traded partnership under Section
15    7704 of the Internal Revenue Code) or Subchapter S
16    corporation may elect to apply the provisions of this
17    subsection. A separate election shall be made for each
18    taxable year. Such election shall be made at such time,
19    and in such form and manner as prescribed by the
20    Department, and, once made, is irrevocable.
21        (2) Entity-level tax. A partnership or Subchapter S
22    corporation electing to apply the provisions of this
23    subsection shall be subject to a tax for the privilege of
24    earning or receiving income in this State in an amount
25    equal to 4.95% of the taxpayer's net income for the
26    taxable year.

 

 

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1        (3) Net income defined.
2            (A) In general. For purposes of paragraph (2), the
3        term net income has the same meaning as defined in
4        Section 202 of this Act, except that the following
5        provisions shall not apply:
6                (i) the standard exemption allowed under
7            Section 204;
8                (ii) the deduction for net losses allowed
9            under Section 207;
10                (iii) in the case of an S corporation, the
11            modification under Section 203(b)(2)(S); and
12                (iv) in the case of a partnership, the
13            modifications under Section 203(d)(2)(H) and
14            Section 203(d)(2)(I).
15            (B) Special rule for tiered partnerships. If a
16        taxpayer making the election under paragraph (1) is a
17        partner of another taxpayer making the election under
18        paragraph (1), net income shall be computed as
19        provided in subparagraph (A), except that the taxpayer
20        shall subtract its distributive share of the net
21        income of the electing partnership (including its
22        distributive share of the net income of the electing
23        partnership derived as a distributive share from
24        electing partnerships in which it is a partner).
25        (4) Credit for entity level tax. Each partner or
26    shareholder of a taxpayer making the election under this

 

 

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1    Section shall be allowed a credit against the tax imposed
2    under subsections (a) and (b) of Section 201 of this Act
3    for the taxable year of the partnership or Subchapter S
4    corporation for which an election is in effect ending
5    within or with the taxable year of the partner or
6    shareholder in an amount equal to 4.95% times the partner
7    or shareholder's distributive share of the net income of
8    the electing partnership or Subchapter S corporation, but
9    not to exceed the partner's or shareholder's share of the
10    tax imposed under paragraph (1) which is actually paid by
11    the partnership or Subchapter S corporation. If the
12    taxpayer is a partnership or Subchapter S corporation that
13    is itself a partner of a partnership making the election
14    under paragraph (1), the credit under this paragraph shall
15    be allowed to the taxpayer's partners or shareholders (or
16    if the partner is a partnership or Subchapter S
17    corporation then its partners or shareholders) in
18    accordance with the determination of income and
19    distributive share of income under Sections 702 and 704
20    and Subchapter S of the Internal Revenue Code. If the
21    amount of the credit allowed under this paragraph exceeds
22    the partner's or shareholder's liability for tax imposed
23    under subsections (a) and (b) of Section 201 of this Act
24    for the taxable year, such excess shall be treated as an
25    overpayment for purposes of Section 909 of this Act.
26        (5) Nonresidents. A nonresident individual who is a

 

 

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1    partner or shareholder of a partnership or Subchapter S
2    corporation for a taxable year for which an election is in
3    effect under paragraph (1) shall not be required to file
4    an income tax return under this Act for such taxable year
5    if the only source of net income of the individual (or the
6    individual and the individual's spouse in the case of a
7    joint return) is from an entity making the election under
8    paragraph (1) and the credit allowed to the partner or
9    shareholder under paragraph (4) equals or exceeds the
10    individual's liability for the tax imposed under
11    subsections (a) and (b) of Section 201 of this Act for the
12    taxable year.
13        (6) Liability for tax. Except as provided in this
14    paragraph, a partnership or Subchapter S making the
15    election under paragraph (1) is liable for the
16    entity-level tax imposed under paragraph (2). If the
17    electing partnership or corporation fails to pay the full
18    amount of tax deemed assessed under paragraph (2), the
19    partners or shareholders shall be liable to pay the tax
20    assessed (including penalties and interest). Each partner
21    or shareholder shall be liable for the unpaid assessment
22    based on the ratio of the partner's or shareholder's share
23    of the net income of the partnership over the total net
24    income of the partnership. If the partnership or
25    Subchapter S corporation fails to pay the tax assessed
26    (including penalties and interest) and thereafter an

 

 

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1    amount of such tax is paid by the partners or
2    shareholders, such amount shall not be collected from the
3    partnership or corporation.
4        (7) Foreign tax. For purposes of the credit allowed
5    under Section 601(b)(3) of this Act, tax paid by a
6    partnership or Subchapter S corporation to another state
7    which, as determined by the Department, is substantially
8    similar to the tax imposed under this subsection, shall be
9    considered tax paid by the partner or shareholder to the
10    extent that the partner's or shareholder's share of the
11    income of the partnership or Subchapter S corporation
12    allocated and apportioned to such other state bears to the
13    total income of the partnership or Subchapter S
14    corporation allocated or apportioned to such other state.
15        (8) Suspension of withholding. The provisions of
16    Section 709.5 of this Act shall not apply to a partnership
17    or Subchapter S corporation for the taxable year for which
18    an election under paragraph (1) is in effect.
19        (9) Requirement to pay estimated tax. For each taxable
20    year for which an election under paragraph (1) is in
21    effect, a partnership or Subchapter S corporation is
22    required to pay estimated tax for such taxable year under
23    Sections 803 and 804 of this Act if the amount payable as
24    estimated tax can reasonably be expected to exceed $500.
25(Source: P.A. 100-22, eff. 7-6-17; 101-9, eff. 6-5-19; 101-31,
26eff. 6-28-19; 101-207, eff. 8-2-19; 101-363, eff. 8-9-19;

 

 

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1revised 11-18-20.)
 
2    (Text of Section with the changes made by P.A. 101-8,
3which did not take effect (see Section 99 of P.A. 101-8))
4    Sec. 201. Tax imposed.
5    (a) In general. A tax measured by net income is hereby
6imposed on every individual, corporation, trust and estate for
7each taxable year ending after July 31, 1969 on the privilege
8of earning or receiving income in or as a resident of this
9State. Such tax shall be in addition to all other occupation or
10privilege taxes imposed by this State or by any municipal
11corporation or political subdivision thereof.
12    (b) Rates. The tax imposed by subsection (a) of this
13Section shall be determined as follows, except as adjusted by
14subsection (d-1):
15        (1) In the case of an individual, trust or estate, for
16    taxable years ending prior to July 1, 1989, an amount
17    equal to 2 1/2% of the taxpayer's net income for the
18    taxable year.
19        (2) In the case of an individual, trust or estate, for
20    taxable years beginning prior to July 1, 1989 and ending
21    after June 30, 1989, an amount equal to the sum of (i) 2
22    1/2% of the taxpayer's net income for the period prior to
23    July 1, 1989, as calculated under Section 202.3, and (ii)
24    3% of the taxpayer's net income for the period after June
25    30, 1989, as calculated under Section 202.3.

 

 

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1        (3) In the case of an individual, trust or estate, for
2    taxable years beginning after June 30, 1989, and ending
3    prior to January 1, 2011, an amount equal to 3% of the
4    taxpayer's net income for the taxable year.
5        (4) In the case of an individual, trust, or estate,
6    for taxable years beginning prior to January 1, 2011, and
7    ending after December 31, 2010, an amount equal to the sum
8    of (i) 3% of the taxpayer's net income for the period prior
9    to January 1, 2011, as calculated under Section 202.5, and
10    (ii) 5% of the taxpayer's net income for the period after
11    December 31, 2010, as calculated under Section 202.5.
12        (5) In the case of an individual, trust, or estate,
13    for taxable years beginning on or after January 1, 2011,
14    and ending prior to January 1, 2015, an amount equal to 5%
15    of the taxpayer's net income for the taxable year.
16        (5.1) In the case of an individual, trust, or estate,
17    for taxable years beginning prior to January 1, 2015, and
18    ending after December 31, 2014, an amount equal to the sum
19    of (i) 5% of the taxpayer's net income for the period prior
20    to January 1, 2015, as calculated under Section 202.5, and
21    (ii) 3.75% of the taxpayer's net income for the period
22    after December 31, 2014, as calculated under Section
23    202.5.
24        (5.2) In the case of an individual, trust, or estate,
25    for taxable years beginning on or after January 1, 2015,
26    and ending prior to July 1, 2017, an amount equal to 3.75%

 

 

SB2531 Engrossed- 47 -LRB102 15312 HLH 20668 b

1    of the taxpayer's net income for the taxable year.
2        (5.3) In the case of an individual, trust, or estate,
3    for taxable years beginning prior to July 1, 2017, and
4    ending after June 30, 2017, an amount equal to the sum of
5    (i) 3.75% of the taxpayer's net income for the period
6    prior to July 1, 2017, as calculated under Section 202.5,
7    and (ii) 4.95% of the taxpayer's net income for the period
8    after June 30, 2017, as calculated under Section 202.5.
9        (5.4) In the case of an individual, trust, or estate,
10    for taxable years beginning on or after July 1, 2017 and
11    beginning prior to January 1, 2021, an amount equal to
12    4.95% of the taxpayer's net income for the taxable year.
13        (5.5) In the case of an individual, trust, or estate,
14    for taxable years beginning on or after January 1, 2021,
15    an amount calculated under the rate structure set forth in
16    Section 201.1.
17        (6) In the case of a corporation, for taxable years
18    ending prior to July 1, 1989, an amount equal to 4% of the
19    taxpayer's net income for the taxable year.
20        (7) In the case of a corporation, for taxable years
21    beginning prior to July 1, 1989 and ending after June 30,
22    1989, an amount equal to the sum of (i) 4% of the
23    taxpayer's net income for the period prior to July 1,
24    1989, as calculated under Section 202.3, and (ii) 4.8% of
25    the taxpayer's net income for the period after June 30,
26    1989, as calculated under Section 202.3.

 

 

SB2531 Engrossed- 48 -LRB102 15312 HLH 20668 b

1        (8) In the case of a corporation, for taxable years
2    beginning after June 30, 1989, and ending prior to January
3    1, 2011, an amount equal to 4.8% of the taxpayer's net
4    income for the taxable year.
5        (9) In the case of a corporation, for taxable years
6    beginning prior to January 1, 2011, and ending after
7    December 31, 2010, an amount equal to the sum of (i) 4.8%
8    of the taxpayer's net income for the period prior to
9    January 1, 2011, as calculated under Section 202.5, and
10    (ii) 7% of the taxpayer's net income for the period after
11    December 31, 2010, as calculated under Section 202.5.
12        (10) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2011, and ending prior to
14    January 1, 2015, an amount equal to 7% of the taxpayer's
15    net income for the taxable year.
16        (11) In the case of a corporation, for taxable years
17    beginning prior to January 1, 2015, and ending after
18    December 31, 2014, an amount equal to the sum of (i) 7% of
19    the taxpayer's net income for the period prior to January
20    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
21    of the taxpayer's net income for the period after December
22    31, 2014, as calculated under Section 202.5.
23        (12) In the case of a corporation, for taxable years
24    beginning on or after January 1, 2015, and ending prior to
25    July 1, 2017, an amount equal to 5.25% of the taxpayer's
26    net income for the taxable year.

 

 

SB2531 Engrossed- 49 -LRB102 15312 HLH 20668 b

1        (13) In the case of a corporation, for taxable years
2    beginning prior to July 1, 2017, and ending after June 30,
3    2017, an amount equal to the sum of (i) 5.25% of the
4    taxpayer's net income for the period prior to July 1,
5    2017, as calculated under Section 202.5, and (ii) 7% of
6    the taxpayer's net income for the period after June 30,
7    2017, as calculated under Section 202.5.
8        (14) In the case of a corporation, for taxable years
9    beginning on or after July 1, 2017 and beginning prior to
10    January 1, 2021, an amount equal to 7% of the taxpayer's
11    net income for the taxable year.
12        (15) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2021, an amount equal to
14    7.99% of the taxpayer's net income for the taxable year.
15    The rates under this subsection (b) are subject to the
16provisions of Section 201.5.
17    (b-5) Surcharge; sale or exchange of assets, properties,
18and intangibles of organization gaming licensees. For each of
19taxable years 2019 through 2027, a surcharge is imposed on all
20taxpayers on income arising from the sale or exchange of
21capital assets, depreciable business property, real property
22used in the trade or business, and Section 197 intangibles (i)
23of an organization licensee under the Illinois Horse Racing
24Act of 1975 and (ii) of an organization gaming licensee under
25the Illinois Gambling Act. The amount of the surcharge is
26equal to the amount of federal income tax liability for the

 

 

SB2531 Engrossed- 50 -LRB102 15312 HLH 20668 b

1taxable year attributable to those sales and exchanges. The
2surcharge imposed shall not apply if:
3        (1) the organization gaming license, organization
4    license, or racetrack property is transferred as a result
5    of any of the following:
6            (A) bankruptcy, a receivership, or a debt
7        adjustment initiated by or against the initial
8        licensee or the substantial owners of the initial
9        licensee;
10            (B) cancellation, revocation, or termination of
11        any such license by the Illinois Gaming Board or the
12        Illinois Racing Board;
13            (C) a determination by the Illinois Gaming Board
14        that transfer of the license is in the best interests
15        of Illinois gaming;
16            (D) the death of an owner of the equity interest in
17        a licensee;
18            (E) the acquisition of a controlling interest in
19        the stock or substantially all of the assets of a
20        publicly traded company;
21            (F) a transfer by a parent company to a wholly
22        owned subsidiary; or
23            (G) the transfer or sale to or by one person to
24        another person where both persons were initial owners
25        of the license when the license was issued; or
26        (2) the controlling interest in the organization

 

 

SB2531 Engrossed- 51 -LRB102 15312 HLH 20668 b

1    gaming license, organization license, or racetrack
2    property is transferred in a transaction to lineal
3    descendants in which no gain or loss is recognized or as a
4    result of a transaction in accordance with Section 351 of
5    the Internal Revenue Code in which no gain or loss is
6    recognized; or
7        (3) live horse racing was not conducted in 2010 at a
8    racetrack located within 3 miles of the Mississippi River
9    under a license issued pursuant to the Illinois Horse
10    Racing Act of 1975.
11    The transfer of an organization gaming license,
12organization license, or racetrack property by a person other
13than the initial licensee to receive the organization gaming
14license is not subject to a surcharge. The Department shall
15adopt rules necessary to implement and administer this
16subsection.
17    (c) Personal Property Tax Replacement Income Tax.
18Beginning on July 1, 1979 and thereafter, in addition to such
19income tax, there is also hereby imposed the Personal Property
20Tax Replacement Income Tax measured by net income on every
21corporation (including Subchapter S corporations), partnership
22and trust, for each taxable year ending after June 30, 1979.
23Such taxes are imposed on the privilege of earning or
24receiving income in or as a resident of this State. The
25Personal Property Tax Replacement Income Tax shall be in
26addition to the income tax imposed by subsections (a) and (b)

 

 

SB2531 Engrossed- 52 -LRB102 15312 HLH 20668 b

1of this Section and in addition to all other occupation or
2privilege taxes imposed by this State or by any municipal
3corporation or political subdivision thereof.
4    (d) Additional Personal Property Tax Replacement Income
5Tax Rates. The personal property tax replacement income tax
6imposed by this subsection and subsection (c) of this Section
7in the case of a corporation, other than a Subchapter S
8corporation and except as adjusted by subsection (d-1), shall
9be an additional amount equal to 2.85% of such taxpayer's net
10income for the taxable year, except that beginning on January
111, 1981, and thereafter, the rate of 2.85% specified in this
12subsection shall be reduced to 2.5%, and in the case of a
13partnership, trust or a Subchapter S corporation shall be an
14additional amount equal to 1.5% of such taxpayer's net income
15for the taxable year.
16    (d-1) Rate reduction for certain foreign insurers. In the
17case of a foreign insurer, as defined by Section 35A-5 of the
18Illinois Insurance Code, whose state or country of domicile
19imposes on insurers domiciled in Illinois a retaliatory tax
20(excluding any insurer whose premiums from reinsurance assumed
21are 50% or more of its total insurance premiums as determined
22under paragraph (2) of subsection (b) of Section 304, except
23that for purposes of this determination premiums from
24reinsurance do not include premiums from inter-affiliate
25reinsurance arrangements), beginning with taxable years ending
26on or after December 31, 1999, the sum of the rates of tax

 

 

SB2531 Engrossed- 53 -LRB102 15312 HLH 20668 b

1imposed by subsections (b) and (d) shall be reduced (but not
2increased) to the rate at which the total amount of tax imposed
3under this Act, net of all credits allowed under this Act,
4shall equal (i) the total amount of tax that would be imposed
5on the foreign insurer's net income allocable to Illinois for
6the taxable year by such foreign insurer's state or country of
7domicile if that net income were subject to all income taxes
8and taxes measured by net income imposed by such foreign
9insurer's state or country of domicile, net of all credits
10allowed or (ii) a rate of zero if no such tax is imposed on
11such income by the foreign insurer's state of domicile. For
12the purposes of this subsection (d-1), an inter-affiliate
13includes a mutual insurer under common management.
14        (1) For the purposes of subsection (d-1), in no event
15    shall the sum of the rates of tax imposed by subsections
16    (b) and (d) be reduced below the rate at which the sum of:
17            (A) the total amount of tax imposed on such
18        foreign insurer under this Act for a taxable year, net
19        of all credits allowed under this Act, plus
20            (B) the privilege tax imposed by Section 409 of
21        the Illinois Insurance Code, the fire insurance
22        company tax imposed by Section 12 of the Fire
23        Investigation Act, and the fire department taxes
24        imposed under Section 11-10-1 of the Illinois
25        Municipal Code,
26    equals 1.25% for taxable years ending prior to December

 

 

SB2531 Engrossed- 54 -LRB102 15312 HLH 20668 b

1    31, 2003, or 1.75% for taxable years ending on or after
2    December 31, 2003, of the net taxable premiums written for
3    the taxable year, as described by subsection (1) of
4    Section 409 of the Illinois Insurance Code. This paragraph
5    will in no event increase the rates imposed under
6    subsections (b) and (d).
7        (2) Any reduction in the rates of tax imposed by this
8    subsection shall be applied first against the rates
9    imposed by subsection (b) and only after the tax imposed
10    by subsection (a) net of all credits allowed under this
11    Section other than the credit allowed under subsection (i)
12    has been reduced to zero, against the rates imposed by
13    subsection (d).
14    This subsection (d-1) is exempt from the provisions of
15Section 250.
16    (e) Investment credit. A taxpayer shall be allowed a
17credit against the Personal Property Tax Replacement Income
18Tax for investment in qualified property.
19        (1) A taxpayer shall be allowed a credit equal to .5%
20    of the basis of qualified property placed in service
21    during the taxable year, provided such property is placed
22    in service on or after July 1, 1984. There shall be allowed
23    an additional credit equal to .5% of the basis of
24    qualified property placed in service during the taxable
25    year, provided such property is placed in service on or
26    after July 1, 1986, and the taxpayer's base employment

 

 

SB2531 Engrossed- 55 -LRB102 15312 HLH 20668 b

1    within Illinois has increased by 1% or more over the
2    preceding year as determined by the taxpayer's employment
3    records filed with the Illinois Department of Employment
4    Security. Taxpayers who are new to Illinois shall be
5    deemed to have met the 1% growth in base employment for the
6    first year in which they file employment records with the
7    Illinois Department of Employment Security. The provisions
8    added to this Section by Public Act 85-1200 (and restored
9    by Public Act 87-895) shall be construed as declaratory of
10    existing law and not as a new enactment. If, in any year,
11    the increase in base employment within Illinois over the
12    preceding year is less than 1%, the additional credit
13    shall be limited to that percentage times a fraction, the
14    numerator of which is .5% and the denominator of which is
15    1%, but shall not exceed .5%. The investment credit shall
16    not be allowed to the extent that it would reduce a
17    taxpayer's liability in any tax year below zero, nor may
18    any credit for qualified property be allowed for any year
19    other than the year in which the property was placed in
20    service in Illinois. For tax years ending on or after
21    December 31, 1987, and on or before December 31, 1988, the
22    credit shall be allowed for the tax year in which the
23    property is placed in service, or, if the amount of the
24    credit exceeds the tax liability for that year, whether it
25    exceeds the original liability or the liability as later
26    amended, such excess may be carried forward and applied to

 

 

SB2531 Engrossed- 56 -LRB102 15312 HLH 20668 b

1    the tax liability of the 5 taxable years following the
2    excess credit years if the taxpayer (i) makes investments
3    which cause the creation of a minimum of 2,000 full-time
4    equivalent jobs in Illinois, (ii) is located in an
5    enterprise zone established pursuant to the Illinois
6    Enterprise Zone Act and (iii) is certified by the
7    Department of Commerce and Community Affairs (now
8    Department of Commerce and Economic Opportunity) as
9    complying with the requirements specified in clause (i)
10    and (ii) by July 1, 1986. The Department of Commerce and
11    Community Affairs (now Department of Commerce and Economic
12    Opportunity) shall notify the Department of Revenue of all
13    such certifications immediately. For tax years ending
14    after December 31, 1988, the credit shall be allowed for
15    the tax year in which the property is placed in service,
16    or, if the amount of the credit exceeds the tax liability
17    for that year, whether it exceeds the original liability
18    or the liability as later amended, such excess may be
19    carried forward and applied to the tax liability of the 5
20    taxable years following the excess credit years. The
21    credit shall be applied to the earliest year for which
22    there is a liability. If there is credit from more than one
23    tax year that is available to offset a liability, earlier
24    credit shall be applied first.
25        (2) The term "qualified property" means property
26    which:

 

 

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1            (A) is tangible, whether new or used, including
2        buildings and structural components of buildings and
3        signs that are real property, but not including land
4        or improvements to real property that are not a
5        structural component of a building such as
6        landscaping, sewer lines, local access roads, fencing,
7        parking lots, and other appurtenances;
8            (B) is depreciable pursuant to Section 167 of the
9        Internal Revenue Code, except that "3-year property"
10        as defined in Section 168(c)(2)(A) of that Code is not
11        eligible for the credit provided by this subsection
12        (e);
13            (C) is acquired by purchase as defined in Section
14        179(d) of the Internal Revenue Code;
15            (D) is used in Illinois by a taxpayer who is
16        primarily engaged in manufacturing, or in mining coal
17        or fluorite, or in retailing, or was placed in service
18        on or after July 1, 2006 in a River Edge Redevelopment
19        Zone established pursuant to the River Edge
20        Redevelopment Zone Act; and
21            (E) has not previously been used in Illinois in
22        such a manner and by such a person as would qualify for
23        the credit provided by this subsection (e) or
24        subsection (f).
25        (3) For purposes of this subsection (e),
26    "manufacturing" means the material staging and production

 

 

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1    of tangible personal property by procedures commonly
2    regarded as manufacturing, processing, fabrication, or
3    assembling which changes some existing material into new
4    shapes, new qualities, or new combinations. For purposes
5    of this subsection (e) the term "mining" shall have the
6    same meaning as the term "mining" in Section 613(c) of the
7    Internal Revenue Code. For purposes of this subsection
8    (e), the term "retailing" means the sale of tangible
9    personal property for use or consumption and not for
10    resale, or services rendered in conjunction with the sale
11    of tangible personal property for use or consumption and
12    not for resale. For purposes of this subsection (e),
13    "tangible personal property" has the same meaning as when
14    that term is used in the Retailers' Occupation Tax Act,
15    and, for taxable years ending after December 31, 2008,
16    does not include the generation, transmission, or
17    distribution of electricity.
18        (4) The basis of qualified property shall be the basis
19    used to compute the depreciation deduction for federal
20    income tax purposes.
21        (5) If the basis of the property for federal income
22    tax depreciation purposes is increased after it has been
23    placed in service in Illinois by the taxpayer, the amount
24    of such increase shall be deemed property placed in
25    service on the date of such increase in basis.
26        (6) The term "placed in service" shall have the same

 

 

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1    meaning as under Section 46 of the Internal Revenue Code.
2        (7) If during any taxable year, any property ceases to
3    be qualified property in the hands of the taxpayer within
4    48 months after being placed in service, or the situs of
5    any qualified property is moved outside Illinois within 48
6    months after being placed in service, the Personal
7    Property Tax Replacement Income Tax for such taxable year
8    shall be increased. Such increase shall be determined by
9    (i) recomputing the investment credit which would have
10    been allowed for the year in which credit for such
11    property was originally allowed by eliminating such
12    property from such computation and, (ii) subtracting such
13    recomputed credit from the amount of credit previously
14    allowed. For the purposes of this paragraph (7), a
15    reduction of the basis of qualified property resulting
16    from a redetermination of the purchase price shall be
17    deemed a disposition of qualified property to the extent
18    of such reduction.
19        (8) Unless the investment credit is extended by law,
20    the basis of qualified property shall not include costs
21    incurred after December 31, 2018, except for costs
22    incurred pursuant to a binding contract entered into on or
23    before December 31, 2018.
24        (9) Each taxable year ending before December 31, 2000,
25    a partnership may elect to pass through to its partners
26    the credits to which the partnership is entitled under

 

 

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1    this subsection (e) for the taxable year. A partner may
2    use the credit allocated to him or her under this
3    paragraph only against the tax imposed in subsections (c)
4    and (d) of this Section. If the partnership makes that
5    election, those credits shall be allocated among the
6    partners in the partnership in accordance with the rules
7    set forth in Section 704(b) of the Internal Revenue Code,
8    and the rules promulgated under that Section, and the
9    allocated amount of the credits shall be allowed to the
10    partners for that taxable year. The partnership shall make
11    this election on its Personal Property Tax Replacement
12    Income Tax return for that taxable year. The election to
13    pass through the credits shall be irrevocable.
14        For taxable years ending on or after December 31,
15    2000, a partner that qualifies its partnership for a
16    subtraction under subparagraph (I) of paragraph (2) of
17    subsection (d) of Section 203 or a shareholder that
18    qualifies a Subchapter S corporation for a subtraction
19    under subparagraph (S) of paragraph (2) of subsection (b)
20    of Section 203 shall be allowed a credit under this
21    subsection (e) equal to its share of the credit earned
22    under this subsection (e) during the taxable year by the
23    partnership or Subchapter S corporation, determined in
24    accordance with the determination of income and
25    distributive share of income under Sections 702 and 704
26    and Subchapter S of the Internal Revenue Code. This

 

 

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1    paragraph is exempt from the provisions of Section 250.
2    (f) Investment credit; Enterprise Zone; River Edge
3Redevelopment Zone.
4        (1) A taxpayer shall be allowed a credit against the
5    tax imposed by subsections (a) and (b) of this Section for
6    investment in qualified property which is placed in
7    service in an Enterprise Zone created pursuant to the
8    Illinois Enterprise Zone Act or, for property placed in
9    service on or after July 1, 2006, a River Edge
10    Redevelopment Zone established pursuant to the River Edge
11    Redevelopment Zone Act. For partners, shareholders of
12    Subchapter S corporations, and owners of limited liability
13    companies, if the liability company is treated as a
14    partnership for purposes of federal and State income
15    taxation, there shall be allowed a credit under this
16    subsection (f) to be determined in accordance with the
17    determination of income and distributive share of income
18    under Sections 702 and 704 and Subchapter S of the
19    Internal Revenue Code. The credit shall be .5% of the
20    basis for such property. The credit shall be available
21    only in the taxable year in which the property is placed in
22    service in the Enterprise Zone or River Edge Redevelopment
23    Zone and shall not be allowed to the extent that it would
24    reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. For
26    tax years ending on or after December 31, 1985, the credit

 

 

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1    shall be allowed for the tax year in which the property is
2    placed in service, or, if the amount of the credit exceeds
3    the tax liability for that year, whether it exceeds the
4    original liability or the liability as later amended, such
5    excess may be carried forward and applied to the tax
6    liability of the 5 taxable years following the excess
7    credit year. The credit shall be applied to the earliest
8    year for which there is a liability. If there is credit
9    from more than one tax year that is available to offset a
10    liability, the credit accruing first in time shall be
11    applied first.
12        (2) The term qualified property means property which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings;
15            (B) is depreciable pursuant to Section 167 of the
16        Internal Revenue Code, except that "3-year property"
17        as defined in Section 168(c)(2)(A) of that Code is not
18        eligible for the credit provided by this subsection
19        (f);
20            (C) is acquired by purchase as defined in Section
21        179(d) of the Internal Revenue Code;
22            (D) is used in the Enterprise Zone or River Edge
23        Redevelopment Zone by the taxpayer; and
24            (E) has not been previously used in Illinois in
25        such a manner and by such a person as would qualify for
26        the credit provided by this subsection (f) or

 

 

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1        subsection (e).
2        (3) The basis of qualified property shall be the basis
3    used to compute the depreciation deduction for federal
4    income tax purposes.
5        (4) If the basis of the property for federal income
6    tax depreciation purposes is increased after it has been
7    placed in service in the Enterprise Zone or River Edge
8    Redevelopment Zone by the taxpayer, the amount of such
9    increase shall be deemed property placed in service on the
10    date of such increase in basis.
11        (5) The term "placed in service" shall have the same
12    meaning as under Section 46 of the Internal Revenue Code.
13        (6) If during any taxable year, any property ceases to
14    be qualified property in the hands of the taxpayer within
15    48 months after being placed in service, or the situs of
16    any qualified property is moved outside the Enterprise
17    Zone or River Edge Redevelopment Zone within 48 months
18    after being placed in service, the tax imposed under
19    subsections (a) and (b) of this Section for such taxable
20    year shall be increased. Such increase shall be determined
21    by (i) recomputing the investment credit which would have
22    been allowed for the year in which credit for such
23    property was originally allowed by eliminating such
24    property from such computation, and (ii) subtracting such
25    recomputed credit from the amount of credit previously
26    allowed. For the purposes of this paragraph (6), a

 

 

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1    reduction of the basis of qualified property resulting
2    from a redetermination of the purchase price shall be
3    deemed a disposition of qualified property to the extent
4    of such reduction.
5        (7) There shall be allowed an additional credit equal
6    to 0.5% of the basis of qualified property placed in
7    service during the taxable year in a River Edge
8    Redevelopment Zone, provided such property is placed in
9    service on or after July 1, 2006, and the taxpayer's base
10    employment within Illinois has increased by 1% or more
11    over the preceding year as determined by the taxpayer's
12    employment records filed with the Illinois Department of
13    Employment Security. Taxpayers who are new to Illinois
14    shall be deemed to have met the 1% growth in base
15    employment for the first year in which they file
16    employment records with the Illinois Department of
17    Employment Security. If, in any year, the increase in base
18    employment within Illinois over the preceding year is less
19    than 1%, the additional credit shall be limited to that
20    percentage times a fraction, the numerator of which is
21    0.5% and the denominator of which is 1%, but shall not
22    exceed 0.5%.
23        (8) For taxable years beginning on or after January 1,
24    2021, there shall be allowed an Enterprise Zone
25    construction jobs credit against the taxes imposed under
26    subsections (a) and (b) of this Section as provided in

 

 

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1    Section 13 of the Illinois Enterprise Zone Act.
2        The credit or credits may not reduce the taxpayer's
3    liability to less than zero. If the amount of the credit or
4    credits exceeds the taxpayer's liability, the excess may
5    be carried forward and applied against the taxpayer's
6    liability in succeeding calendar years in the same manner
7    provided under paragraph (4) of Section 211 of this Act.
8    The credit or credits shall be applied to the earliest
9    year for which there is a tax liability. If there are
10    credits from more than one taxable year that are available
11    to offset a liability, the earlier credit shall be applied
12    first.
13        For partners, shareholders of Subchapter S
14    corporations, and owners of limited liability companies,
15    if the liability company is treated as a partnership for
16    the purposes of federal and State income taxation, there
17    shall be allowed a credit under this Section to be
18    determined in accordance with the determination of income
19    and distributive share of income under Sections 702 and
20    704 and Subchapter S of the Internal Revenue Code.
21        The total aggregate amount of credits awarded under
22    the Blue Collar Jobs Act (Article 20 of Public Act 101-9
23    this amendatory Act of the 101st General Assembly) shall
24    not exceed $20,000,000 in any State fiscal year.
25        This paragraph (8) is exempt from the provisions of
26    Section 250.

 

 

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1    (g) (Blank).
2    (h) Investment credit; High Impact Business.
3        (1) Subject to subsections (b) and (b-5) of Section
4    5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
5    be allowed a credit against the tax imposed by subsections
6    (a) and (b) of this Section for investment in qualified
7    property which is placed in service by a Department of
8    Commerce and Economic Opportunity designated High Impact
9    Business. The credit shall be .5% of the basis for such
10    property. The credit shall not be available (i) until the
11    minimum investments in qualified property set forth in
12    subdivision (a)(3)(A) of Section 5.5 of the Illinois
13    Enterprise Zone Act have been satisfied or (ii) until the
14    time authorized in subsection (b-5) of the Illinois
15    Enterprise Zone Act for entities designated as High Impact
16    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
17    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
18    Act, and shall not be allowed to the extent that it would
19    reduce a taxpayer's liability for the tax imposed by
20    subsections (a) and (b) of this Section to below zero. The
21    credit applicable to such investments shall be taken in
22    the taxable year in which such investments have been
23    completed. The credit for additional investments beyond
24    the minimum investment by a designated high impact
25    business authorized under subdivision (a)(3)(A) of Section
26    5.5 of the Illinois Enterprise Zone Act shall be available

 

 

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1    only in the taxable year in which the property is placed in
2    service and shall not be allowed to the extent that it
3    would reduce a taxpayer's liability for the tax imposed by
4    subsections (a) and (b) of this Section to below zero. For
5    tax years ending on or after December 31, 1987, the credit
6    shall be allowed for the tax year in which the property is
7    placed in service, or, if the amount of the credit exceeds
8    the tax liability for that year, whether it exceeds the
9    original liability or the liability as later amended, such
10    excess may be carried forward and applied to the tax
11    liability of the 5 taxable years following the excess
12    credit year. The credit shall be applied to the earliest
13    year for which there is a liability. If there is credit
14    from more than one tax year that is available to offset a
15    liability, the credit accruing first in time shall be
16    applied first.
17        Changes made in this subdivision (h)(1) by Public Act
18    88-670 restore changes made by Public Act 85-1182 and
19    reflect existing law.
20        (2) The term qualified property means property which:
21            (A) is tangible, whether new or used, including
22        buildings and structural components of buildings;
23            (B) is depreciable pursuant to Section 167 of the
24        Internal Revenue Code, except that "3-year property"
25        as defined in Section 168(c)(2)(A) of that Code is not
26        eligible for the credit provided by this subsection

 

 

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1        (h);
2            (C) is acquired by purchase as defined in Section
3        179(d) of the Internal Revenue Code; and
4            (D) is not eligible for the Enterprise Zone
5        Investment Credit provided by subsection (f) of this
6        Section.
7        (3) The basis of qualified property shall be the basis
8    used to compute the depreciation deduction for federal
9    income tax purposes.
10        (4) If the basis of the property for federal income
11    tax depreciation purposes is increased after it has been
12    placed in service in a federally designated Foreign Trade
13    Zone or Sub-Zone located in Illinois by the taxpayer, the
14    amount of such increase shall be deemed property placed in
15    service on the date of such increase in basis.
16        (5) The term "placed in service" shall have the same
17    meaning as under Section 46 of the Internal Revenue Code.
18        (6) If during any taxable year ending on or before
19    December 31, 1996, any property ceases to be qualified
20    property in the hands of the taxpayer within 48 months
21    after being placed in service, or the situs of any
22    qualified property is moved outside Illinois within 48
23    months after being placed in service, the tax imposed
24    under subsections (a) and (b) of this Section for such
25    taxable year shall be increased. Such increase shall be
26    determined by (i) recomputing the investment credit which

 

 

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1    would have been allowed for the year in which credit for
2    such property was originally allowed by eliminating such
3    property from such computation, and (ii) subtracting such
4    recomputed credit from the amount of credit previously
5    allowed. For the purposes of this paragraph (6), a
6    reduction of the basis of qualified property resulting
7    from a redetermination of the purchase price shall be
8    deemed a disposition of qualified property to the extent
9    of such reduction.
10        (7) Beginning with tax years ending after December 31,
11    1996, if a taxpayer qualifies for the credit under this
12    subsection (h) and thereby is granted a tax abatement and
13    the taxpayer relocates its entire facility in violation of
14    the explicit terms and length of the contract under
15    Section 18-183 of the Property Tax Code, the tax imposed
16    under subsections (a) and (b) of this Section shall be
17    increased for the taxable year in which the taxpayer
18    relocated its facility by an amount equal to the amount of
19    credit received by the taxpayer under this subsection (h).
20    (h-5) High Impact Business construction constructions jobs
21credit. For taxable years beginning on or after January 1,
222021, there shall also be allowed a High Impact Business
23construction jobs credit against the tax imposed under
24subsections (a) and (b) of this Section as provided in
25subsections (i) and (j) of Section 5.5 of the Illinois
26Enterprise Zone Act.

 

 

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1    The credit or credits may not reduce the taxpayer's
2liability to less than zero. If the amount of the credit or
3credits exceeds the taxpayer's liability, the excess may be
4carried forward and applied against the taxpayer's liability
5in succeeding calendar years in the manner provided under
6paragraph (4) of Section 211 of this Act. The credit or credits
7shall be applied to the earliest year for which there is a tax
8liability. If there are credits from more than one taxable
9year that are available to offset a liability, the earlier
10credit shall be applied first.
11    For partners, shareholders of Subchapter S corporations,
12and owners of limited liability companies, if the liability
13company is treated as a partnership for the purposes of
14federal and State income taxation, there shall be allowed a
15credit under this Section to be determined in accordance with
16the determination of income and distributive share of income
17under Sections 702 and 704 and Subchapter S of the Internal
18Revenue Code.
19    The total aggregate amount of credits awarded under the
20Blue Collar Jobs Act (Article 20 of Public Act 101-9 this
21amendatory Act of the 101st General Assembly) shall not exceed
22$20,000,000 in any State fiscal year.
23    This subsection (h-5) is exempt from the provisions of
24Section 250.
25    (i) Credit for Personal Property Tax Replacement Income
26Tax. For tax years ending prior to December 31, 2003, a credit

 

 

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1shall be allowed against the tax imposed by subsections (a)
2and (b) of this Section for the tax imposed by subsections (c)
3and (d) of this Section. This credit shall be computed by
4multiplying the tax imposed by subsections (c) and (d) of this
5Section by a fraction, the numerator of which is base income
6allocable to Illinois and the denominator of which is Illinois
7base income, and further multiplying the product by the tax
8rate imposed by subsections (a) and (b) of this Section.
9    Any credit earned on or after December 31, 1986 under this
10subsection which is unused in the year the credit is computed
11because it exceeds the tax liability imposed by subsections
12(a) and (b) for that year (whether it exceeds the original
13liability or the liability as later amended) may be carried
14forward and applied to the tax liability imposed by
15subsections (a) and (b) of the 5 taxable years following the
16excess credit year, provided that no credit may be carried
17forward to any year ending on or after December 31, 2003. This
18credit shall be applied first to the earliest year for which
19there is a liability. If there is a credit under this
20subsection from more than one tax year that is available to
21offset a liability the earliest credit arising under this
22subsection shall be applied first.
23    If, during any taxable year ending on or after December
2431, 1986, the tax imposed by subsections (c) and (d) of this
25Section for which a taxpayer has claimed a credit under this
26subsection (i) is reduced, the amount of credit for such tax

 

 

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1shall also be reduced. Such reduction shall be determined by
2recomputing the credit to take into account the reduced tax
3imposed by subsections (c) and (d). If any portion of the
4reduced amount of credit has been carried to a different
5taxable year, an amended return shall be filed for such
6taxable year to reduce the amount of credit claimed.
7    (j) Training expense credit. Beginning with tax years
8ending on or after December 31, 1986 and prior to December 31,
92003, a taxpayer shall be allowed a credit against the tax
10imposed by subsections (a) and (b) under this Section for all
11amounts paid or accrued, on behalf of all persons employed by
12the taxpayer in Illinois or Illinois residents employed
13outside of Illinois by a taxpayer, for educational or
14vocational training in semi-technical or technical fields or
15semi-skilled or skilled fields, which were deducted from gross
16income in the computation of taxable income. The credit
17against the tax imposed by subsections (a) and (b) shall be
181.6% of such training expenses. For partners, shareholders of
19subchapter S corporations, and owners of limited liability
20companies, if the liability company is treated as a
21partnership for purposes of federal and State income taxation,
22there shall be allowed a credit under this subsection (j) to be
23determined in accordance with the determination of income and
24distributive share of income under Sections 702 and 704 and
25subchapter S of the Internal Revenue Code.
26    Any credit allowed under this subsection which is unused

 

 

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1in the year the credit is earned may be carried forward to each
2of the 5 taxable years following the year for which the credit
3is first computed until it is used. This credit shall be
4applied first to the earliest year for which there is a
5liability. If there is a credit under this subsection from
6more than one tax year that is available to offset a liability,
7the earliest credit arising under this subsection shall be
8applied first. No carryforward credit may be claimed in any
9tax year ending on or after December 31, 2003.
10    (k) Research and development credit. For tax years ending
11after July 1, 1990 and prior to December 31, 2003, and
12beginning again for tax years ending on or after December 31,
132004, and ending prior to January 1, 2027, a taxpayer shall be
14allowed a credit against the tax imposed by subsections (a)
15and (b) of this Section for increasing research activities in
16this State. The credit allowed against the tax imposed by
17subsections (a) and (b) shall be equal to 6 1/2% of the
18qualifying expenditures for increasing research activities in
19this State. For partners, shareholders of subchapter S
20corporations, and owners of limited liability companies, if
21the liability company is treated as a partnership for purposes
22of federal and State income taxation, there shall be allowed a
23credit under this subsection to be determined in accordance
24with the determination of income and distributive share of
25income under Sections 702 and 704 and subchapter S of the
26Internal Revenue Code.

 

 

SB2531 Engrossed- 74 -LRB102 15312 HLH 20668 b

1    For purposes of this subsection, "qualifying expenditures"
2means the qualifying expenditures as defined for the federal
3credit for increasing research activities which would be
4allowable under Section 41 of the Internal Revenue Code and
5which are conducted in this State, "qualifying expenditures
6for increasing research activities in this State" means the
7excess of qualifying expenditures for the taxable year in
8which incurred over qualifying expenditures for the base
9period, "qualifying expenditures for the base period" means
10the average of the qualifying expenditures for each year in
11the base period, and "base period" means the 3 taxable years
12immediately preceding the taxable year for which the
13determination is being made.
14    Any credit in excess of the tax liability for the taxable
15year may be carried forward. A taxpayer may elect to have the
16unused credit shown on its final completed return carried over
17as a credit against the tax liability for the following 5
18taxable years or until it has been fully used, whichever
19occurs first; provided that no credit earned in a tax year
20ending prior to December 31, 2003 may be carried forward to any
21year ending on or after December 31, 2003.
22    If an unused credit is carried forward to a given year from
232 or more earlier years, that credit arising in the earliest
24year will be applied first against the tax liability for the
25given year. If a tax liability for the given year still
26remains, the credit from the next earliest year will then be

 

 

SB2531 Engrossed- 75 -LRB102 15312 HLH 20668 b

1applied, and so on, until all credits have been used or no tax
2liability for the given year remains. Any remaining unused
3credit or credits then will be carried forward to the next
4following year in which a tax liability is incurred, except
5that no credit can be carried forward to a year which is more
6than 5 years after the year in which the expense for which the
7credit is given was incurred.
8    No inference shall be drawn from Public Act 91-644 this
9amendatory Act of the 91st General Assembly in construing this
10Section for taxable years beginning before January 1, 1999.
11    It is the intent of the General Assembly that the research
12and development credit under this subsection (k) shall apply
13continuously for all tax years ending on or after December 31,
142004 and ending prior to January 1, 2027, including, but not
15limited to, the period beginning on January 1, 2016 and ending
16on July 6, 2017 (the effective date of Public Act 100-22) this
17amendatory Act of the 100th General Assembly. All actions
18taken in reliance on the continuation of the credit under this
19subsection (k) by any taxpayer are hereby validated.
20    (l) Environmental Remediation Tax Credit.
21        (i) For tax years ending after December 31, 1997 and
22    on or before December 31, 2001, a taxpayer shall be
23    allowed a credit against the tax imposed by subsections
24    (a) and (b) of this Section for certain amounts paid for
25    unreimbursed eligible remediation costs, as specified in
26    this subsection. For purposes of this Section,

 

 

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1    "unreimbursed eligible remediation costs" means costs
2    approved by the Illinois Environmental Protection Agency
3    ("Agency") under Section 58.14 of the Environmental
4    Protection Act that were paid in performing environmental
5    remediation at a site for which a No Further Remediation
6    Letter was issued by the Agency and recorded under Section
7    58.10 of the Environmental Protection Act. The credit must
8    be claimed for the taxable year in which Agency approval
9    of the eligible remediation costs is granted. The credit
10    is not available to any taxpayer if the taxpayer or any
11    related party caused or contributed to, in any material
12    respect, a release of regulated substances on, in, or
13    under the site that was identified and addressed by the
14    remedial action pursuant to the Site Remediation Program
15    of the Environmental Protection Act. After the Pollution
16    Control Board rules are adopted pursuant to the Illinois
17    Administrative Procedure Act for the administration and
18    enforcement of Section 58.9 of the Environmental
19    Protection Act, determinations as to credit availability
20    for purposes of this Section shall be made consistent with
21    those rules. For purposes of this Section, "taxpayer"
22    includes a person whose tax attributes the taxpayer has
23    succeeded to under Section 381 of the Internal Revenue
24    Code and "related party" includes the persons disallowed a
25    deduction for losses by paragraphs (b), (c), and (f)(1) of
26    Section 267 of the Internal Revenue Code by virtue of

 

 

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1    being a related taxpayer, as well as any of its partners.
2    The credit allowed against the tax imposed by subsections
3    (a) and (b) shall be equal to 25% of the unreimbursed
4    eligible remediation costs in excess of $100,000 per site,
5    except that the $100,000 threshold shall not apply to any
6    site contained in an enterprise zone as determined by the
7    Department of Commerce and Community Affairs (now
8    Department of Commerce and Economic Opportunity). The
9    total credit allowed shall not exceed $40,000 per year
10    with a maximum total of $150,000 per site. For partners
11    and shareholders of subchapter S corporations, there shall
12    be allowed a credit under this subsection to be determined
13    in accordance with the determination of income and
14    distributive share of income under Sections 702 and 704
15    and subchapter S of the Internal Revenue Code.
16        (ii) A credit allowed under this subsection that is
17    unused in the year the credit is earned may be carried
18    forward to each of the 5 taxable years following the year
19    for which the credit is first earned until it is used. The
20    term "unused credit" does not include any amounts of
21    unreimbursed eligible remediation costs in excess of the
22    maximum credit per site authorized under paragraph (i).
23    This credit shall be applied first to the earliest year
24    for which there is a liability. If there is a credit under
25    this subsection from more than one tax year that is
26    available to offset a liability, the earliest credit

 

 

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1    arising under this subsection shall be applied first. A
2    credit allowed under this subsection may be sold to a
3    buyer as part of a sale of all or part of the remediation
4    site for which the credit was granted. The purchaser of a
5    remediation site and the tax credit shall succeed to the
6    unused credit and remaining carry-forward period of the
7    seller. To perfect the transfer, the assignor shall record
8    the transfer in the chain of title for the site and provide
9    written notice to the Director of the Illinois Department
10    of Revenue of the assignor's intent to sell the
11    remediation site and the amount of the tax credit to be
12    transferred as a portion of the sale. In no event may a
13    credit be transferred to any taxpayer if the taxpayer or a
14    related party would not be eligible under the provisions
15    of subsection (i).
16        (iii) For purposes of this Section, the term "site"
17    shall have the same meaning as under Section 58.2 of the
18    Environmental Protection Act.
19    (m) Education expense credit. Beginning with tax years
20ending after December 31, 1999, a taxpayer who is the
21custodian of one or more qualifying pupils shall be allowed a
22credit against the tax imposed by subsections (a) and (b) of
23this Section for qualified education expenses incurred on
24behalf of the qualifying pupils. The credit shall be equal to
2525% of qualified education expenses, but in no event may the
26total credit under this subsection claimed by a family that is

 

 

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1the custodian of qualifying pupils exceed (i) $500 for tax
2years ending prior to December 31, 2017, and (ii) $750 for tax
3years ending on or after December 31, 2017. In no event shall a
4credit under this subsection reduce the taxpayer's liability
5under this Act to less than zero. Notwithstanding any other
6provision of law, for taxable years beginning on or after
7January 1, 2017, no taxpayer may claim a credit under this
8subsection (m) if the taxpayer's adjusted gross income for the
9taxable year exceeds (i) $500,000, in the case of spouses
10filing a joint federal tax return or (ii) $250,000, in the case
11of all other taxpayers. This subsection is exempt from the
12provisions of Section 250 of this Act.
13    For purposes of this subsection:
14    "Qualifying pupils" means individuals who (i) are
15residents of the State of Illinois, (ii) are under the age of
1621 at the close of the school year for which a credit is
17sought, and (iii) during the school year for which a credit is
18sought were full-time pupils enrolled in a kindergarten
19through twelfth grade education program at any school, as
20defined in this subsection.
21    "Qualified education expense" means the amount incurred on
22behalf of a qualifying pupil in excess of $250 for tuition,
23book fees, and lab fees at the school in which the pupil is
24enrolled during the regular school year.
25    "School" means any public or nonpublic elementary or
26secondary school in Illinois that is in compliance with Title

 

 

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1VI of the Civil Rights Act of 1964 and attendance at which
2satisfies the requirements of Section 26-1 of the School Code,
3except that nothing shall be construed to require a child to
4attend any particular public or nonpublic school to qualify
5for the credit under this Section.
6    "Custodian" means, with respect to qualifying pupils, an
7Illinois resident who is a parent, the parents, a legal
8guardian, or the legal guardians of the qualifying pupils.
9    (n) River Edge Redevelopment Zone site remediation tax
10credit.
11        (i) For tax years ending on or after December 31,
12    2006, a taxpayer shall be allowed a credit against the tax
13    imposed by subsections (a) and (b) of this Section for
14    certain amounts paid for unreimbursed eligible remediation
15    costs, as specified in this subsection. For purposes of
16    this Section, "unreimbursed eligible remediation costs"
17    means costs approved by the Illinois Environmental
18    Protection Agency ("Agency") under Section 58.14a of the
19    Environmental Protection Act that were paid in performing
20    environmental remediation at a site within a River Edge
21    Redevelopment Zone for which a No Further Remediation
22    Letter was issued by the Agency and recorded under Section
23    58.10 of the Environmental Protection Act. The credit must
24    be claimed for the taxable year in which Agency approval
25    of the eligible remediation costs is granted. The credit
26    is not available to any taxpayer if the taxpayer or any

 

 

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1    related party caused or contributed to, in any material
2    respect, a release of regulated substances on, in, or
3    under the site that was identified and addressed by the
4    remedial action pursuant to the Site Remediation Program
5    of the Environmental Protection Act. Determinations as to
6    credit availability for purposes of this Section shall be
7    made consistent with rules adopted by the Pollution
8    Control Board pursuant to the Illinois Administrative
9    Procedure Act for the administration and enforcement of
10    Section 58.9 of the Environmental Protection Act. For
11    purposes of this Section, "taxpayer" includes a person
12    whose tax attributes the taxpayer has succeeded to under
13    Section 381 of the Internal Revenue Code and "related
14    party" includes the persons disallowed a deduction for
15    losses by paragraphs (b), (c), and (f)(1) of Section 267
16    of the Internal Revenue Code by virtue of being a related
17    taxpayer, as well as any of its partners. The credit
18    allowed against the tax imposed by subsections (a) and (b)
19    shall be equal to 25% of the unreimbursed eligible
20    remediation costs in excess of $100,000 per site.
21        (ii) A credit allowed under this subsection that is
22    unused in the year the credit is earned may be carried
23    forward to each of the 5 taxable years following the year
24    for which the credit is first earned until it is used. This
25    credit shall be applied first to the earliest year for
26    which there is a liability. If there is a credit under this

 

 

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1    subsection from more than one tax year that is available
2    to offset a liability, the earliest credit arising under
3    this subsection shall be applied first. A credit allowed
4    under this subsection may be sold to a buyer as part of a
5    sale of all or part of the remediation site for which the
6    credit was granted. The purchaser of a remediation site
7    and the tax credit shall succeed to the unused credit and
8    remaining carry-forward period of the seller. To perfect
9    the transfer, the assignor shall record the transfer in
10    the chain of title for the site and provide written notice
11    to the Director of the Illinois Department of Revenue of
12    the assignor's intent to sell the remediation site and the
13    amount of the tax credit to be transferred as a portion of
14    the sale. In no event may a credit be transferred to any
15    taxpayer if the taxpayer or a related party would not be
16    eligible under the provisions of subsection (i).
17        (iii) For purposes of this Section, the term "site"
18    shall have the same meaning as under Section 58.2 of the
19    Environmental Protection Act.
20    (o) For each of taxable years during the Compassionate Use
21of Medical Cannabis Program, a surcharge is imposed on all
22taxpayers on income arising from the sale or exchange of
23capital assets, depreciable business property, real property
24used in the trade or business, and Section 197 intangibles of
25an organization registrant under the Compassionate Use of
26Medical Cannabis Program Act. The amount of the surcharge is

 

 

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1equal to the amount of federal income tax liability for the
2taxable year attributable to those sales and exchanges. The
3surcharge imposed does not apply if:
4        (1) the medical cannabis cultivation center
5    registration, medical cannabis dispensary registration, or
6    the property of a registration is transferred as a result
7    of any of the following:
8            (A) bankruptcy, a receivership, or a debt
9        adjustment initiated by or against the initial
10        registration or the substantial owners of the initial
11        registration;
12            (B) cancellation, revocation, or termination of
13        any registration by the Illinois Department of Public
14        Health;
15            (C) a determination by the Illinois Department of
16        Public Health that transfer of the registration is in
17        the best interests of Illinois qualifying patients as
18        defined by the Compassionate Use of Medical Cannabis
19        Program Act;
20            (D) the death of an owner of the equity interest in
21        a registrant;
22            (E) the acquisition of a controlling interest in
23        the stock or substantially all of the assets of a
24        publicly traded company;
25            (F) a transfer by a parent company to a wholly
26        owned subsidiary; or

 

 

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1            (G) the transfer or sale to or by one person to
2        another person where both persons were initial owners
3        of the registration when the registration was issued;
4        or
5        (2) the cannabis cultivation center registration,
6    medical cannabis dispensary registration, or the
7    controlling interest in a registrant's property is
8    transferred in a transaction to lineal descendants in
9    which no gain or loss is recognized or as a result of a
10    transaction in accordance with Section 351 of the Internal
11    Revenue Code in which no gain or loss is recognized.
12    (p) Pass-through entity tax.
13        (1) For taxable years ending on or after December 31,
14    2021 and beginning prior to January 1, 2026, a partnership
15    (other than a publicly traded partnership under Section
16    7704 of the Internal Revenue Code) or Subchapter S
17    corporation may elect to apply the provisions of this
18    subsection. A separate election shall be made for each
19    taxable year. Such election shall be made at such time,
20    and in such form and manner as prescribed by the
21    Department, and, once made, is irrevocable.
22        (2) Entity-level tax. A partnership or Subchapter S
23    corporation electing to apply the provisions of this
24    subsection shall be subject to a tax for the privilege of
25    earning or receiving income in this State in an amount
26    equal to 4.95% of the taxpayer's net income for the

 

 

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1    taxable year.
2        (3) Net income defined.
3            (A) In general. For purposes of paragraph (2), the
4        term net income has the same meaning as defined in
5        Section 202 of this Act, except that the following
6        provisions shall not apply:
7                (i) the standard exemption allowed under
8            Section 204;
9                (ii) the deduction for net losses allowed
10            under Section 207;
11                (iii) in the case of an S corporation, the
12            modification under Section 203(b)(2)(S); and
13                (iv) in the case of a partnership, the
14            modifications under Section 203(d)(2)(H) and
15            Section 203(d)(2)(I).
16            (B) Special rule for tiered partnerships. If a
17        taxpayer making the election under paragraph (1) is a
18        partner of another taxpayer making the election under
19        paragraph (1), net income shall be computed as
20        provided in subparagraph (A), except that the taxpayer
21        shall subtract its distributive share of the net
22        income of the electing partnership (including its
23        distributive share of the net income of the electing
24        partnership derived as a distributive share from
25        electing partnerships in which it is a partner).
26        (4) Credit for entity level tax. Each partner or

 

 

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1    shareholder of a taxpayer making the election under this
2    Section shall be allowed a credit against the tax imposed
3    under subsections (a) and (b) of Section 201 of this Act
4    for the taxable year of the partnership or Subchapter S
5    corporation for which an election is in effect ending
6    within or with the taxable year of the partner or
7    shareholder in an amount equal to 4.95% times the partner
8    or shareholder's distributive share of the net income of
9    the electing partnership or Subchapter S corporation, but
10    not to exceed the partner's or shareholder's share of the
11    tax imposed under paragraph (1) which is actually paid by
12    the partnership or Subchapter S corporation. If the
13    taxpayer is a partnership or Subchapter S corporation that
14    is itself a partner of a partnership making the election
15    under paragraph (1), the credit under this paragraph shall
16    be allowed to the taxpayer's partners or shareholders (or
17    if the partner is a partnership or Subchapter S
18    corporation then its partners or shareholders) in
19    accordance with the determination of income and
20    distributive share of income under Sections 702 and 704
21    and Subchapter S of the Internal Revenue Code. If the
22    amount of the credit allowed under this paragraph exceeds
23    the partner's or shareholder's liability for tax imposed
24    under subsections (a) and (b) of Section 201 of this Act
25    for the taxable year, such excess shall be treated as an
26    overpayment for purposes of Section 909 of this Act.

 

 

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1        (5) Nonresidents. A nonresident individual who is a
2    partner or shareholder of a partnership or Subchapter S
3    corporation for a taxable year for which an election is in
4    effect under paragraph (1) shall not be required to file
5    an income tax return under this Act for such taxable year
6    if the only source of net income of the individual (or the
7    individual and the individual's spouse in the case of a
8    joint return) is from an entity making the election under
9    paragraph (1) and the credit allowed to the partner or
10    shareholder under paragraph (4) equals or exceeds the
11    individual's liability for the tax imposed under
12    subsections (a) and (b) of Section 201 of this Act for the
13    taxable year.
14        (6) Liability for tax. Except as provided in this
15    paragraph, a partnership or Subchapter S making the
16    election under paragraph (1) is liable for the
17    entity-level tax imposed under paragraph (2). If the
18    electing partnership or corporation fails to pay the full
19    amount of tax deemed assessed under paragraph (2), the
20    partners or shareholders shall be liable to pay the tax
21    assessed (including penalties and interest). Each partner
22    or shareholder shall be liable for the unpaid assessment
23    based on the ratio of the partner's or shareholder's share
24    of the net income of the partnership over the total net
25    income of the partnership. If the partnership or
26    Subchapter S corporation fails to pay the tax assessed

 

 

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1    (including penalties and interest) and thereafter an
2    amount of such tax is paid by the partners or
3    shareholders, such amount shall not be collected from the
4    partnership or corporation.
5        (7) Foreign tax. For purposes of the credit allowed
6    under Section 601(b)(3) of this Act, tax paid by a
7    partnership or Subchapter S corporation to another state
8    which, as determined by the Department, is substantially
9    similar to the tax imposed under this subsection, shall be
10    considered tax paid by the partner or shareholder to the
11    extent that the partner's or shareholder's share of the
12    income of the partnership or Subchapter S corporation
13    allocated and apportioned to such other state bears to the
14    total income of the partnership or Subchapter S
15    corporation allocated or apportioned to such other state.
16        (8) Suspension of withholding. The provisions of
17    Section 709.5 of this Act shall not apply to a partnership
18    or Subchapter S corporation for the taxable year for which
19    an election under paragraph (1) is in effect.
20        (9) Requirement to pay estimated tax. For each taxable
21    year for which an election under paragraph (1) is in
22    effect, a partnership or Subchapter S corporation is
23    required to pay estimated tax for such taxable year under
24    Sections 803 and 804 of this Act if the amount payable as
25    estimated tax can reasonably be expected to exceed $500.
26(Source: P.A. 100-22, eff. 7-6-17; 101-8, see Section 99 for

 

 

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1effective date; 101-9, eff. 6-5-19; 101-31, eff. 6-28-19;
2101-207, eff. 8-2-19; 101-363, eff. 8-9-19; revised 11-18-20.)
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.