97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB3918

 

Introduced 1/10/2012, by Rep. Tom Cross - Dwight Kay - Michael Unes - Dan Brady - Roger L. Eddy, et al.

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201

    Amends the Illinois Income Tax Act. Reduces the corporate income tax rate to (i) 6% for taxable years beginning on or after January 1, 2013 and ending prior to January 1, 2014 and (ii) 4.8% for taxable years beginning on or after January 1, 2014. Requires the Department of Revenue to monitor each month the seasonally-adjusted unemployment rate reported by the United States Department of Labor, Bureau of Labor Statistics, for the previous calendar month. Provides that, if the Department finds that (i) the average unemployment rate for the previous calendar month exceeds the average unemployment rate for any of the 3 calendar months immediately preceding the previous calendar month by more than 0.3% and (ii) the unemployment rate during the previous calendar month was 5.05% or higher, then the Department shall, by rule, decrease the rate of tax imposed on corporations by 0.25% for each 0.3% increase in the unemployment rate. Effective immediately.


LRB097 15531 HLH 60659 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3918LRB097 15531 HLH 60659 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)  (from Ch. 120, par. 2-201)
7    Sec. 201. Tax Imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount equal
20    to 2 1/2% of the taxpayer's net income for the taxable
21    year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending

 

 

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1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate, for
11    taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate, for
18    taxable years beginning on or after January 1, 2011, and
19    ending prior to January 1, 2015, an amount equal to 5% of
20    the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period

 

 

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1    after December 31, 2014, as calculated under Section 202.5.
2        (5.2) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2015,
4    and ending prior to January 1, 2025, an amount equal to
5    3.75% of the taxpayer's net income for the taxable year.
6        (5.3) In the case of an individual, trust, or estate,
7    for taxable years beginning prior to January 1, 2025, and
8    ending after December 31, 2024, an amount equal to the sum
9    of (i) 3.75% of the taxpayer's net income for the period
10    prior to January 1, 2025, as calculated under Section
11    202.5, and (ii) 3.25% of the taxpayer's net income for the
12    period after December 31, 2024, as calculated under Section
13    202.5.
14        (5.4) In the case of an individual, trust, or estate,
15    for taxable years beginning on or after January 1, 2025, an
16    amount equal to 3.25% of the taxpayer's net income for the
17    taxable year.
18        (6) In the case of a corporation, for taxable years
19    ending prior to July 1, 1989, an amount equal to 4% of the
20    taxpayer's net income for the taxable year.
21        (7) In the case of a corporation, for taxable years
22    beginning prior to July 1, 1989 and ending after June 30,
23    1989, an amount equal to the sum of (i) 4% of the
24    taxpayer's net income for the period prior to July 1, 1989,
25    as calculated under Section 202.3, and (ii) 4.8% of the
26    taxpayer's net income for the period after June 30, 1989,

 

 

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1    as calculated under Section 202.3.
2        (8) In the case of a corporation, for taxable years
3    beginning after June 30, 1989, and ending prior to January
4    1, 2011, an amount equal to 4.8% of the taxpayer's net
5    income for the taxable year.
6        (9) In the case of a corporation, for taxable years
7    beginning prior to January 1, 2011, and ending after
8    December 31, 2010, an amount equal to the sum of (i) 4.8%
9    of the taxpayer's net income for the period prior to
10    January 1, 2011, as calculated under Section 202.5, and
11    (ii) 7% of the taxpayer's net income for the period after
12    December 31, 2010, as calculated under Section 202.5.
13        (10) In the case of a corporation, for taxable years
14    beginning on or after January 1, 2011, and ending prior to
15    January 1, 2013 January 1, 2015, an amount equal to 7% of
16    the taxpayer's net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2013 January 1, 2015, and
19    ending after December 31, 2012 December 31, 2014, an amount
20    equal to the sum of (i) 7% of the taxpayer's net income for
21    the period prior to January 1, 2013 January 1, 2015, as
22    calculated under Section 202.5, and (ii) 6% 5.25% of the
23    taxpayer's net income for the period after December 31,
24    2012 December 31, 2014, as calculated under Section 202.5.
25        (12) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2013 January 1, 2015, and

 

 

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1    ending prior to January 1, 2014 January 1, 2025, an amount
2    equal to 6% 5.25% of the taxpayer's net income for the
3    taxable year.
4        (13) In the case of a corporation, for taxable years
5    beginning prior to January 1, 2014 January 1, 2025, and
6    ending after December 31, 2013 December 31, 2024, an amount
7    equal to the sum of (i) 6% 5.25% of the taxpayer's net
8    income for the period prior to January 1, 2014 January 1,
9    2025, as calculated under Section 202.5, and (ii) 4.8% of
10    the taxpayer's net income for the period after December 31,
11    2013 December 31, 2024, as calculated under Section 202.5.
12        (14) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2014 January 1, 2025, an
14    amount equal to 4.8% of the taxpayer's net income for the
15    taxable year.
16    The rates under this subsection (b) are subject to the
17provisions of Section 201.5 and subsection (b-5) of this
18Section.
19    (b-5) In each month beginning with the month in which this
20amendatory Act of the 97th General Assembly takes effect and
21through December 2013, the Department shall monitor the
22seasonally-adjusted unemployment rate reported by the United
23States Department of Labor, Bureau of Labor Statistics, for the
24previous calendar month. Notwithstanding subsection (b) of
25this Section, if the Department finds that (i) the average
26unemployment rate for the previous calendar month exceeds the

 

 

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1average unemployment rate for any of the 3 calendar months
2immediately preceding the previous calendar month by more than
30.3% and (ii) the unemployment rate during the previous
4calendar month was 5.05% or higher, then, beginning on the
5first day of the first month to occur not less than 30 days
6after the Department makes the finding, the Department shall,
7by rule, decrease the rate of tax imposed on corporations under
8subsection (b) of this Section by 0.25% for each 0.3% increase
9in the unemployment rate. The reduced rate of tax under this
10subsection (b-5) shall remain in effect until January 1 of the
11next calendar year or until an additional reduction is required
12under this subsection, whichever occurs sooner. If a rate
13reduction occurs under this subsection (b-5) during calendar
14year 2012 as a result of an increase in the unemployment rate,
15then, (i) beginning on January 1, 2013 and ending on December
1631, 2013, the rate of tax imposed on corporations shall be the
17rate of tax in effect on December 31, 2012, reduced by 1%. For
18taxable years beginning on or after January 1, 2014, the rate
19of tax imposed on corporations shall be 4.8%. Notwithstanding
20any other provision of this subsection to the contrary, the
21rate of tax on corporations may not be reduced to less than
224.8% at any time.
23    The taxpayer may elect to determine net income on a
24specific accounting basis, according to the procedures
25established under Section 202.5, so as to attribute income and
26deduction items to a specific portion of the taxable year. The

 

 

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1rates under this subsection (b-5) are subject to the provisions
2of Section 201.5. The Department may adopt rules to implement
3this subsection.
4    (c) Personal Property Tax Replacement Income Tax.
5Beginning on July 1, 1979 and thereafter, in addition to such
6income tax, there is also hereby imposed the Personal Property
7Tax Replacement Income Tax measured by net income on every
8corporation (including Subchapter S corporations), partnership
9and trust, for each taxable year ending after June 30, 1979.
10Such taxes are imposed on the privilege of earning or receiving
11income in or as a resident of this State. The Personal Property
12Tax Replacement Income Tax shall be in addition to the income
13tax imposed by subsections (a) and (b) of this Section and in
14addition to all other occupation or privilege taxes imposed by
15this State or by any municipal corporation or political
16subdivision thereof.
17    (d) Additional Personal Property Tax Replacement Income
18Tax Rates. The personal property tax replacement income tax
19imposed by this subsection and subsection (c) of this Section
20in the case of a corporation, other than a Subchapter S
21corporation and except as adjusted by subsection (d-1), shall
22be an additional amount equal to 2.85% of such taxpayer's net
23income for the taxable year, except that beginning on January
241, 1981, and thereafter, the rate of 2.85% specified in this
25subsection shall be reduced to 2.5%, and in the case of a
26partnership, trust or a Subchapter S corporation shall be an

 

 

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1additional amount equal to 1.5% of such taxpayer's net income
2for the taxable year.
3    (d-1) Rate reduction for certain foreign insurers. In the
4case of a foreign insurer, as defined by Section 35A-5 of the
5Illinois Insurance Code, whose state or country of domicile
6imposes on insurers domiciled in Illinois a retaliatory tax
7(excluding any insurer whose premiums from reinsurance assumed
8are 50% or more of its total insurance premiums as determined
9under paragraph (2) of subsection (b) of Section 304, except
10that for purposes of this determination premiums from
11reinsurance do not include premiums from inter-affiliate
12reinsurance arrangements), beginning with taxable years ending
13on or after December 31, 1999, the sum of the rates of tax
14imposed by subsections (b) and (d) shall be reduced (but not
15increased) to the rate at which the total amount of tax imposed
16under this Act, net of all credits allowed under this Act,
17shall equal (i) the total amount of tax that would be imposed
18on the foreign insurer's net income allocable to Illinois for
19the taxable year by such foreign insurer's state or country of
20domicile if that net income were subject to all income taxes
21and taxes measured by net income imposed by such foreign
22insurer's state or country of domicile, net of all credits
23allowed or (ii) a rate of zero if no such tax is imposed on such
24income by the foreign insurer's state of domicile. For the
25purposes of this subsection (d-1), an inter-affiliate includes
26a mutual insurer under common management.

 

 

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1        (1) For the purposes of subsection (d-1), in no event
2    shall the sum of the rates of tax imposed by subsections
3    (b) and (d) be reduced below the rate at which the sum of:
4            (A) the total amount of tax imposed on such foreign
5        insurer under this Act for a taxable year, net of all
6        credits allowed under this Act, plus
7            (B) the privilege tax imposed by Section 409 of the
8        Illinois Insurance Code, the fire insurance company
9        tax imposed by Section 12 of the Fire Investigation
10        Act, and the fire department taxes imposed under
11        Section 11-10-1 of the Illinois Municipal Code,
12    equals 1.25% for taxable years ending prior to December 31,
13    2003, or 1.75% for taxable years ending on or after
14    December 31, 2003, of the net taxable premiums written for
15    the taxable year, as described by subsection (1) of Section
16    409 of the Illinois Insurance Code. This paragraph will in
17    no event increase the rates imposed under subsections (b)
18    and (d).
19        (2) Any reduction in the rates of tax imposed by this
20    subsection shall be applied first against the rates imposed
21    by subsection (b) and only after the tax imposed by
22    subsection (a) net of all credits allowed under this
23    Section other than the credit allowed under subsection (i)
24    has been reduced to zero, against the rates imposed by
25    subsection (d).
26    This subsection (d-1) is exempt from the provisions of

 

 

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1Section 250.
2    (e) Investment credit. A taxpayer shall be allowed a credit
3against the Personal Property Tax Replacement Income Tax for
4investment in qualified property.
5        (1) A taxpayer shall be allowed a credit equal to .5%
6    of the basis of qualified property placed in service during
7    the taxable year, provided such property is placed in
8    service on or after July 1, 1984. There shall be allowed an
9    additional credit equal to .5% of the basis of qualified
10    property placed in service during the taxable year,
11    provided such property is placed in service on or after
12    July 1, 1986, and the taxpayer's base employment within
13    Illinois has increased by 1% or more over the preceding
14    year as determined by the taxpayer's employment records
15    filed with the Illinois Department of Employment Security.
16    Taxpayers who are new to Illinois shall be deemed to have
17    met the 1% growth in base employment for the first year in
18    which they file employment records with the Illinois
19    Department of Employment Security. The provisions added to
20    this Section by Public Act 85-1200 (and restored by Public
21    Act 87-895) shall be construed as declaratory of existing
22    law and not as a new enactment. If, in any year, the
23    increase in base employment within Illinois over the
24    preceding year is less than 1%, the additional credit shall
25    be limited to that percentage times a fraction, the
26    numerator of which is .5% and the denominator of which is

 

 

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1    1%, but shall not exceed .5%. The investment credit shall
2    not be allowed to the extent that it would reduce a
3    taxpayer's liability in any tax year below zero, nor may
4    any credit for qualified property be allowed for any year
5    other than the year in which the property was placed in
6    service in Illinois. For tax years ending on or after
7    December 31, 1987, and on or before December 31, 1988, the
8    credit shall be allowed for the tax year in which the
9    property is placed in service, or, if the amount of the
10    credit exceeds the tax liability for that year, whether it
11    exceeds the original liability or the liability as later
12    amended, such excess may be carried forward and applied to
13    the tax liability of the 5 taxable years following the
14    excess credit years if the taxpayer (i) makes investments
15    which cause the creation of a minimum of 2,000 full-time
16    equivalent jobs in Illinois, (ii) is located in an
17    enterprise zone established pursuant to the Illinois
18    Enterprise Zone Act and (iii) is certified by the
19    Department of Commerce and Community Affairs (now
20    Department of Commerce and Economic Opportunity) as
21    complying with the requirements specified in clause (i) and
22    (ii) by July 1, 1986. The Department of Commerce and
23    Community Affairs (now Department of Commerce and Economic
24    Opportunity) shall notify the Department of Revenue of all
25    such certifications immediately. For tax years ending
26    after December 31, 1988, the credit shall be allowed for

 

 

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1    the tax year in which the property is placed in service,
2    or, if the amount of the credit exceeds the tax liability
3    for that year, whether it exceeds the original liability or
4    the liability as later amended, such excess may be carried
5    forward and applied to the tax liability of the 5 taxable
6    years following the excess credit years. The credit shall
7    be applied to the earliest year for which there is a
8    liability. If there is credit from more than one tax year
9    that is available to offset a liability, earlier credit
10    shall be applied first.
11        (2) The term "qualified property" means property
12    which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings and
15        signs that are real property, but not including land or
16        improvements to real property that are not a structural
17        component of a building such as landscaping, sewer
18        lines, local access roads, fencing, parking lots, and
19        other appurtenances;
20            (B) is depreciable pursuant to Section 167 of the
21        Internal Revenue Code, except that "3-year property"
22        as defined in Section 168(c)(2)(A) of that Code is not
23        eligible for the credit provided by this subsection
24        (e);
25            (C) is acquired by purchase as defined in Section
26        179(d) of the Internal Revenue Code;

 

 

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1            (D) is used in Illinois by a taxpayer who is
2        primarily engaged in manufacturing, or in mining coal
3        or fluorite, or in retailing, or was placed in service
4        on or after July 1, 2006 in a River Edge Redevelopment
5        Zone established pursuant to the River Edge
6        Redevelopment Zone Act; and
7            (E) has not previously been used in Illinois in
8        such a manner and by such a person as would qualify for
9        the credit provided by this subsection (e) or
10        subsection (f).
11        (3) For purposes of this subsection (e),
12    "manufacturing" means the material staging and production
13    of tangible personal property by procedures commonly
14    regarded as manufacturing, processing, fabrication, or
15    assembling which changes some existing material into new
16    shapes, new qualities, or new combinations. For purposes of
17    this subsection (e) the term "mining" shall have the same
18    meaning as the term "mining" in Section 613(c) of the
19    Internal Revenue Code. For purposes of this subsection (e),
20    the term "retailing" means the sale of tangible personal
21    property for use or consumption and not for resale, or
22    services rendered in conjunction with the sale of tangible
23    personal property for use or consumption and not for
24    resale. For purposes of this subsection (e), "tangible
25    personal property" has the same meaning as when that term
26    is used in the Retailers' Occupation Tax Act, and, for

 

 

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1    taxable years ending after December 31, 2008, does not
2    include the generation, transmission, or distribution of
3    electricity.
4        (4) The basis of qualified property shall be the basis
5    used to compute the depreciation deduction for federal
6    income tax purposes.
7        (5) If the basis of the property for federal income tax
8    depreciation purposes is increased after it has been placed
9    in service in Illinois by the taxpayer, the amount of such
10    increase shall be deemed property placed in service on the
11    date of such increase in basis.
12        (6) The term "placed in service" shall have the same
13    meaning as under Section 46 of the Internal Revenue Code.
14        (7) If during any taxable year, any property ceases to
15    be qualified property in the hands of the taxpayer within
16    48 months after being placed in service, or the situs of
17    any qualified property is moved outside Illinois within 48
18    months after being placed in service, the Personal Property
19    Tax Replacement Income Tax for such taxable year shall be
20    increased. Such increase shall be determined by (i)
21    recomputing the investment credit which would have been
22    allowed for the year in which credit for such property was
23    originally allowed by eliminating such property from such
24    computation and, (ii) subtracting such recomputed credit
25    from the amount of credit previously allowed. For the
26    purposes of this paragraph (7), a reduction of the basis of

 

 

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1    qualified property resulting from a redetermination of the
2    purchase price shall be deemed a disposition of qualified
3    property to the extent of such reduction.
4        (8) Unless the investment credit is extended by law,
5    the basis of qualified property shall not include costs
6    incurred after December 31, 2013, except for costs incurred
7    pursuant to a binding contract entered into on or before
8    December 31, 2013.
9        (9) Each taxable year ending before December 31, 2000,
10    a partnership may elect to pass through to its partners the
11    credits to which the partnership is entitled under this
12    subsection (e) for the taxable year. A partner may use the
13    credit allocated to him or her under this paragraph only
14    against the tax imposed in subsections (c) and (d) of this
15    Section. If the partnership makes that election, those
16    credits shall be allocated among the partners in the
17    partnership in accordance with the rules set forth in
18    Section 704(b) of the Internal Revenue Code, and the rules
19    promulgated under that Section, and the allocated amount of
20    the credits shall be allowed to the partners for that
21    taxable year. The partnership shall make this election on
22    its Personal Property Tax Replacement Income Tax return for
23    that taxable year. The election to pass through the credits
24    shall be irrevocable.
25        For taxable years ending on or after December 31, 2000,
26    a partner that qualifies its partnership for a subtraction

 

 

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1    under subparagraph (I) of paragraph (2) of subsection (d)
2    of Section 203 or a shareholder that qualifies a Subchapter
3    S corporation for a subtraction under subparagraph (S) of
4    paragraph (2) of subsection (b) of Section 203 shall be
5    allowed a credit under this subsection (e) equal to its
6    share of the credit earned under this subsection (e) during
7    the taxable year by the partnership or Subchapter S
8    corporation, determined in accordance with the
9    determination of income and distributive share of income
10    under Sections 702 and 704 and Subchapter S of the Internal
11    Revenue Code. This paragraph is exempt from the provisions
12    of Section 250.
13    (f) Investment credit; Enterprise Zone; River Edge
14Redevelopment Zone.
15        (1) A taxpayer shall be allowed a credit against the
16    tax imposed by subsections (a) and (b) of this Section for
17    investment in qualified property which is placed in service
18    in an Enterprise Zone created pursuant to the Illinois
19    Enterprise Zone Act or, for property placed in service on
20    or after July 1, 2006, a River Edge Redevelopment Zone
21    established pursuant to the River Edge Redevelopment Zone
22    Act. For partners, shareholders of Subchapter S
23    corporations, and owners of limited liability companies,
24    if the liability company is treated as a partnership for
25    purposes of federal and State income taxation, there shall
26    be allowed a credit under this subsection (f) to be

 

 

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1    determined in accordance with the determination of income
2    and distributive share of income under Sections 702 and 704
3    and Subchapter S of the Internal Revenue Code. The credit
4    shall be .5% of the basis for such property. The credit
5    shall be available only in the taxable year in which the
6    property is placed in service in the Enterprise Zone or
7    River Edge Redevelopment Zone and shall not be allowed to
8    the extent that it would reduce a taxpayer's liability for
9    the tax imposed by subsections (a) and (b) of this Section
10    to below zero. For tax years ending on or after December
11    31, 1985, the credit shall be allowed for the tax year in
12    which the property is placed in service, or, if the amount
13    of the credit exceeds the tax liability for that year,
14    whether it exceeds the original liability or the liability
15    as later amended, such excess may be carried forward and
16    applied to the tax liability of the 5 taxable years
17    following the excess credit year. The credit shall be
18    applied to the earliest year for which there is a
19    liability. If there is credit from more than one tax year
20    that is available to offset a liability, the credit
21    accruing first in time shall be applied first.
22        (2) The term qualified property means property which:
23            (A) is tangible, whether new or used, including
24        buildings and structural components of buildings;
25            (B) is depreciable pursuant to Section 167 of the
26        Internal Revenue Code, except that "3-year property"

 

 

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1        as defined in Section 168(c)(2)(A) of that Code is not
2        eligible for the credit provided by this subsection
3        (f);
4            (C) is acquired by purchase as defined in Section
5        179(d) of the Internal Revenue Code;
6            (D) is used in the Enterprise Zone or River Edge
7        Redevelopment Zone by the taxpayer; and
8            (E) has not been previously used in Illinois in
9        such a manner and by such a person as would qualify for
10        the credit provided by this subsection (f) or
11        subsection (e).
12        (3) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (4) If the basis of the property for federal income tax
16    depreciation purposes is increased after it has been placed
17    in service in the Enterprise Zone or River Edge
18    Redevelopment Zone by the taxpayer, the amount of such
19    increase shall be deemed property placed in service on the
20    date of such increase in basis.
21        (5) The term "placed in service" shall have the same
22    meaning as under Section 46 of the Internal Revenue Code.
23        (6) If during any taxable year, any property ceases to
24    be qualified property in the hands of the taxpayer within
25    48 months after being placed in service, or the situs of
26    any qualified property is moved outside the Enterprise Zone

 

 

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1    or River Edge Redevelopment Zone within 48 months after
2    being placed in service, the tax imposed under subsections
3    (a) and (b) of this Section for such taxable year shall be
4    increased. Such increase shall be determined by (i)
5    recomputing the investment credit which would have been
6    allowed for the year in which credit for such property was
7    originally allowed by eliminating such property from such
8    computation, and (ii) subtracting such recomputed credit
9    from the amount of credit previously allowed. For the
10    purposes of this paragraph (6), a reduction of the basis of
11    qualified property resulting from a redetermination of the
12    purchase price shall be deemed a disposition of qualified
13    property to the extent of such reduction.
14        (7) There shall be allowed an additional credit equal
15    to 0.5% of the basis of qualified property placed in
16    service during the taxable year in a River Edge
17    Redevelopment Zone, provided such property is placed in
18    service on or after July 1, 2006, and the taxpayer's base
19    employment within Illinois has increased by 1% or more over
20    the preceding year as determined by the taxpayer's
21    employment records filed with the Illinois Department of
22    Employment Security. Taxpayers who are new to Illinois
23    shall be deemed to have met the 1% growth in base
24    employment for the first year in which they file employment
25    records with the Illinois Department of Employment
26    Security. If, in any year, the increase in base employment

 

 

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1    within Illinois over the preceding year is less than 1%,
2    the additional credit shall be limited to that percentage
3    times a fraction, the numerator of which is 0.5% and the
4    denominator of which is 1%, but shall not exceed 0.5%.
5    (g) Jobs Tax Credit; Enterprise Zone, River Edge
6Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
7        (1) A taxpayer conducting a trade or business in an
8    enterprise zone or a High Impact Business designated by the
9    Department of Commerce and Economic Opportunity or for
10    taxable years ending on or after December 31, 2006, in a
11    River Edge Redevelopment Zone conducting a trade or
12    business in a federally designated Foreign Trade Zone or
13    Sub-Zone shall be allowed a credit against the tax imposed
14    by subsections (a) and (b) of this Section in the amount of
15    $500 per eligible employee hired to work in the zone during
16    the taxable year.
17        (2) To qualify for the credit:
18            (A) the taxpayer must hire 5 or more eligible
19        employees to work in an enterprise zone, River Edge
20        Redevelopment Zone, or federally designated Foreign
21        Trade Zone or Sub-Zone during the taxable year;
22            (B) the taxpayer's total employment within the
23        enterprise zone, River Edge Redevelopment Zone, or
24        federally designated Foreign Trade Zone or Sub-Zone
25        must increase by 5 or more full-time employees beyond
26        the total employed in that zone at the end of the

 

 

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1        previous tax year for which a jobs tax credit under
2        this Section was taken, or beyond the total employed by
3        the taxpayer as of December 31, 1985, whichever is
4        later; and
5            (C) the eligible employees must be employed 180
6        consecutive days in order to be deemed hired for
7        purposes of this subsection.
8        (3) An "eligible employee" means an employee who is:
9            (A) Certified by the Department of Commerce and
10        Economic Opportunity as "eligible for services"
11        pursuant to regulations promulgated in accordance with
12        Title II of the Job Training Partnership Act, Training
13        Services for the Disadvantaged or Title III of the Job
14        Training Partnership Act, Employment and Training
15        Assistance for Dislocated Workers Program.
16            (B) Hired after the enterprise zone, River Edge
17        Redevelopment Zone, or federally designated Foreign
18        Trade Zone or Sub-Zone was designated or the trade or
19        business was located in that zone, whichever is later.
20            (C) Employed in the enterprise zone, River Edge
21        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
22        An employee is employed in an enterprise zone or
23        federally designated Foreign Trade Zone or Sub-Zone if
24        his services are rendered there or it is the base of
25        operations for the services performed.
26            (D) A full-time employee working 30 or more hours

 

 

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1        per week.
2        (4) For tax years ending on or after December 31, 1985
3    and prior to December 31, 1988, the credit shall be allowed
4    for the tax year in which the eligible employees are hired.
5    For tax years ending on or after December 31, 1988, the
6    credit shall be allowed for the tax year immediately
7    following the tax year in which the eligible employees are
8    hired. If the amount of the credit exceeds the tax
9    liability for that year, whether it exceeds the original
10    liability or the liability as later amended, such excess
11    may be carried forward and applied to the tax liability of
12    the 5 taxable years following the excess credit year. The
13    credit shall be applied to the earliest year for which
14    there is a liability. If there is credit from more than one
15    tax year that is available to offset a liability, earlier
16    credit shall be applied first.
17        (5) The Department of Revenue shall promulgate such
18    rules and regulations as may be deemed necessary to carry
19    out the purposes of this subsection (g).
20        (6) The credit shall be available for eligible
21    employees hired on or after January 1, 1986.
22    (h) Investment credit; High Impact Business.
23        (1) Subject to subsections (b) and (b-5) of Section 5.5
24    of the Illinois Enterprise Zone Act, a taxpayer shall be
25    allowed a credit against the tax imposed by subsections (a)
26    and (b) of this Section for investment in qualified

 

 

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1    property which is placed in service by a Department of
2    Commerce and Economic Opportunity designated High Impact
3    Business. The credit shall be .5% of the basis for such
4    property. The credit shall not be available (i) until the
5    minimum investments in qualified property set forth in
6    subdivision (a)(3)(A) of Section 5.5 of the Illinois
7    Enterprise Zone Act have been satisfied or (ii) until the
8    time authorized in subsection (b-5) of the Illinois
9    Enterprise Zone Act for entities designated as High Impact
10    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
11    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
12    Act, and shall not be allowed to the extent that it would
13    reduce a taxpayer's liability for the tax imposed by
14    subsections (a) and (b) of this Section to below zero. The
15    credit applicable to such investments shall be taken in the
16    taxable year in which such investments have been completed.
17    The credit for additional investments beyond the minimum
18    investment by a designated high impact business authorized
19    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
20    Enterprise Zone Act shall be available only in the taxable
21    year in which the property is placed in service and shall
22    not be allowed to the extent that it would reduce a
23    taxpayer's liability for the tax imposed by subsections (a)
24    and (b) of this Section to below zero. For tax years ending
25    on or after December 31, 1987, the credit shall be allowed
26    for the tax year in which the property is placed in

 

 

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1    service, or, if the amount of the credit exceeds the tax
2    liability for that year, whether it exceeds the original
3    liability or the liability as later amended, such excess
4    may be carried forward and applied to the tax liability of
5    the 5 taxable years following the excess credit year. The
6    credit shall be applied to the earliest year for which
7    there is a liability. If there is credit from more than one
8    tax year that is available to offset a liability, the
9    credit accruing first in time shall be applied first.
10        Changes made in this subdivision (h)(1) by Public Act
11    88-670 restore changes made by Public Act 85-1182 and
12    reflect existing law.
13        (2) The term qualified property means property which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings;
16            (B) is depreciable pursuant to Section 167 of the
17        Internal Revenue Code, except that "3-year property"
18        as defined in Section 168(c)(2)(A) of that Code is not
19        eligible for the credit provided by this subsection
20        (h);
21            (C) is acquired by purchase as defined in Section
22        179(d) of the Internal Revenue Code; and
23            (D) is not eligible for the Enterprise Zone
24        Investment Credit provided by subsection (f) of this
25        Section.
26        (3) The basis of qualified property shall be the basis

 

 

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1    used to compute the depreciation deduction for federal
2    income tax purposes.
3        (4) If the basis of the property for federal income tax
4    depreciation purposes is increased after it has been placed
5    in service in a federally designated Foreign Trade Zone or
6    Sub-Zone located in Illinois by the taxpayer, the amount of
7    such increase shall be deemed property placed in service on
8    the date of such increase in basis.
9        (5) The term "placed in service" shall have the same
10    meaning as under Section 46 of the Internal Revenue Code.
11        (6) If during any taxable year ending on or before
12    December 31, 1996, any property ceases to be qualified
13    property in the hands of the taxpayer within 48 months
14    after being placed in service, or the situs of any
15    qualified property is moved outside Illinois within 48
16    months after being placed in service, the tax imposed under
17    subsections (a) and (b) of this Section for such taxable
18    year shall be increased. Such increase shall be determined
19    by (i) recomputing the investment credit which would have
20    been allowed for the year in which credit for such property
21    was originally allowed by eliminating such property from
22    such computation, and (ii) subtracting such recomputed
23    credit from the amount of credit previously allowed. For
24    the purposes of this paragraph (6), a reduction of the
25    basis of qualified property resulting from a
26    redetermination of the purchase price shall be deemed a

 

 

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1    disposition of qualified property to the extent of such
2    reduction.
3        (7) Beginning with tax years ending after December 31,
4    1996, if a taxpayer qualifies for the credit under this
5    subsection (h) and thereby is granted a tax abatement and
6    the taxpayer relocates its entire facility in violation of
7    the explicit terms and length of the contract under Section
8    18-183 of the Property Tax Code, the tax imposed under
9    subsections (a) and (b) of this Section shall be increased
10    for the taxable year in which the taxpayer relocated its
11    facility by an amount equal to the amount of credit
12    received by the taxpayer under this subsection (h).
13    (i) Credit for Personal Property Tax Replacement Income
14Tax. For tax years ending prior to December 31, 2003, a credit
15shall be allowed against the tax imposed by subsections (a) and
16(b) of this Section for the tax imposed by subsections (c) and
17(d) of this Section. This credit shall be computed by
18multiplying the tax imposed by subsections (c) and (d) of this
19Section by a fraction, the numerator of which is base income
20allocable to Illinois and the denominator of which is Illinois
21base income, and further multiplying the product by the tax
22rate imposed by subsections (a) and (b) of this Section.
23    Any credit earned on or after December 31, 1986 under this
24subsection which is unused in the year the credit is computed
25because it exceeds the tax liability imposed by subsections (a)
26and (b) for that year (whether it exceeds the original

 

 

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1liability or the liability as later amended) may be carried
2forward and applied to the tax liability imposed by subsections
3(a) and (b) of the 5 taxable years following the excess credit
4year, provided that no credit may be carried forward to any
5year ending on or after December 31, 2003. This credit shall be
6applied first to the earliest year for which there is a
7liability. If there is a credit under this subsection from more
8than one tax year that is available to offset a liability the
9earliest credit arising under this subsection shall be applied
10first.
11    If, during any taxable year ending on or after December 31,
121986, the tax imposed by subsections (c) and (d) of this
13Section for which a taxpayer has claimed a credit under this
14subsection (i) is reduced, the amount of credit for such tax
15shall also be reduced. Such reduction shall be determined by
16recomputing the credit to take into account the reduced tax
17imposed by subsections (c) and (d). If any portion of the
18reduced amount of credit has been carried to a different
19taxable year, an amended return shall be filed for such taxable
20year to reduce the amount of credit claimed.
21    (j) Training expense credit. Beginning with tax years
22ending on or after December 31, 1986 and prior to December 31,
232003, a taxpayer shall be allowed a credit against the tax
24imposed by subsections (a) and (b) under this Section for all
25amounts paid or accrued, on behalf of all persons employed by
26the taxpayer in Illinois or Illinois residents employed outside

 

 

HB3918- 28 -LRB097 15531 HLH 60659 b

1of Illinois by a taxpayer, for educational or vocational
2training in semi-technical or technical fields or semi-skilled
3or skilled fields, which were deducted from gross income in the
4computation of taxable income. The credit against the tax
5imposed by subsections (a) and (b) shall be 1.6% of such
6training expenses. For partners, shareholders of subchapter S
7corporations, and owners of limited liability companies, if the
8liability company is treated as a partnership for purposes of
9federal and State income taxation, there shall be allowed a
10credit under this subsection (j) to be determined in accordance
11with the determination of income and distributive share of
12income under Sections 702 and 704 and subchapter S of the
13Internal Revenue Code.
14    Any credit allowed under this subsection which is unused in
15the year the credit is earned may be carried forward to each of
16the 5 taxable years following the year for which the credit is
17first computed until it is used. This credit shall be applied
18first to the earliest year for which there is a liability. If
19there is a credit under this subsection from more than one tax
20year that is available to offset a liability the earliest
21credit arising under this subsection shall be applied first. No
22carryforward credit may be claimed in any tax year ending on or
23after December 31, 2003.
24    (k) Research and development credit.
25    For tax years ending after July 1, 1990 and prior to
26December 31, 2003, and beginning again for tax years ending on

 

 

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1or after December 31, 2004, and ending prior to January 1,
22011, a taxpayer shall be allowed a credit against the tax
3imposed by subsections (a) and (b) of this Section for
4increasing research activities in this State. The credit
5allowed against the tax imposed by subsections (a) and (b)
6shall be equal to 6 1/2% of the qualifying expenditures for
7increasing research activities in this State. For partners,
8shareholders of subchapter S corporations, and owners of
9limited liability companies, if the liability company is
10treated as a partnership for purposes of federal and State
11income taxation, there shall be allowed a credit under this
12subsection to be determined in accordance with the
13determination of income and distributive share of income under
14Sections 702 and 704 and subchapter S of the Internal Revenue
15Code.
16    For purposes of this subsection, "qualifying expenditures"
17means the qualifying expenditures as defined for the federal
18credit for increasing research activities which would be
19allowable under Section 41 of the Internal Revenue Code and
20which are conducted in this State, "qualifying expenditures for
21increasing research activities in this State" means the excess
22of qualifying expenditures for the taxable year in which
23incurred over qualifying expenditures for the base period,
24"qualifying expenditures for the base period" means the average
25of the qualifying expenditures for each year in the base
26period, and "base period" means the 3 taxable years immediately

 

 

HB3918- 30 -LRB097 15531 HLH 60659 b

1preceding the taxable year for which the determination is being
2made.
3    Any credit in excess of the tax liability for the taxable
4year may be carried forward. A taxpayer may elect to have the
5unused credit shown on its final completed return carried over
6as a credit against the tax liability for the following 5
7taxable years or until it has been fully used, whichever occurs
8first; provided that no credit earned in a tax year ending
9prior to December 31, 2003 may be carried forward to any year
10ending on or after December 31, 2003, and no credit may be
11carried forward to any taxable year ending on or after January
121, 2011.
13    If an unused credit is carried forward to a given year from
142 or more earlier years, that credit arising in the earliest
15year will be applied first against the tax liability for the
16given year. If a tax liability for the given year still
17remains, the credit from the next earliest year will then be
18applied, and so on, until all credits have been used or no tax
19liability for the given year remains. Any remaining unused
20credit or credits then will be carried forward to the next
21following year in which a tax liability is incurred, except
22that no credit can be carried forward to a year which is more
23than 5 years after the year in which the expense for which the
24credit is given was incurred.
25    No inference shall be drawn from this amendatory Act of the
2691st General Assembly in construing this Section for taxable

 

 

HB3918- 31 -LRB097 15531 HLH 60659 b

1years beginning before January 1, 1999.
2    (l) Environmental Remediation Tax Credit.
3        (i) For tax years ending after December 31, 1997 and on
4    or before December 31, 2001, a taxpayer shall be allowed a
5    credit against the tax imposed by subsections (a) and (b)
6    of this Section for certain amounts paid for unreimbursed
7    eligible remediation costs, as specified in this
8    subsection. For purposes of this Section, "unreimbursed
9    eligible remediation costs" means costs approved by the
10    Illinois Environmental Protection Agency ("Agency") under
11    Section 58.14 of the Environmental Protection Act that were
12    paid in performing environmental remediation at a site for
13    which a No Further Remediation Letter was issued by the
14    Agency and recorded under Section 58.10 of the
15    Environmental Protection Act. The credit must be claimed
16    for the taxable year in which Agency approval of the
17    eligible remediation costs is granted. The credit is not
18    available to any taxpayer if the taxpayer or any related
19    party caused or contributed to, in any material respect, a
20    release of regulated substances on, in, or under the site
21    that was identified and addressed by the remedial action
22    pursuant to the Site Remediation Program of the
23    Environmental Protection Act. After the Pollution Control
24    Board rules are adopted pursuant to the Illinois
25    Administrative Procedure Act for the administration and
26    enforcement of Section 58.9 of the Environmental

 

 

HB3918- 32 -LRB097 15531 HLH 60659 b

1    Protection Act, determinations as to credit availability
2    for purposes of this Section shall be made consistent with
3    those rules. For purposes of this Section, "taxpayer"
4    includes a person whose tax attributes the taxpayer has
5    succeeded to under Section 381 of the Internal Revenue Code
6    and "related party" includes the persons disallowed a
7    deduction for losses by paragraphs (b), (c), and (f)(1) of
8    Section 267 of the Internal Revenue Code by virtue of being
9    a related taxpayer, as well as any of its partners. The
10    credit allowed against the tax imposed by subsections (a)
11    and (b) shall be equal to 25% of the unreimbursed eligible
12    remediation costs in excess of $100,000 per site, except
13    that the $100,000 threshold shall not apply to any site
14    contained in an enterprise zone as determined by the
15    Department of Commerce and Community Affairs (now
16    Department of Commerce and Economic Opportunity). The
17    total credit allowed shall not exceed $40,000 per year with
18    a maximum total of $150,000 per site. For partners and
19    shareholders of subchapter S corporations, there shall be
20    allowed a credit under this subsection to be determined in
21    accordance with the determination of income and
22    distributive share of income under Sections 702 and 704 and
23    subchapter S of the Internal Revenue Code.
24        (ii) A credit allowed under this subsection that is
25    unused in the year the credit is earned may be carried
26    forward to each of the 5 taxable years following the year

 

 

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1    for which the credit is first earned until it is used. The
2    term "unused credit" does not include any amounts of
3    unreimbursed eligible remediation costs in excess of the
4    maximum credit per site authorized under paragraph (i).
5    This credit shall be applied first to the earliest year for
6    which there is a liability. If there is a credit under this
7    subsection from more than one tax year that is available to
8    offset a liability, the earliest credit arising under this
9    subsection shall be applied first. A credit allowed under
10    this subsection may be sold to a buyer as part of a sale of
11    all or part of the remediation site for which the credit
12    was granted. The purchaser of a remediation site and the
13    tax credit shall succeed to the unused credit and remaining
14    carry-forward period of the seller. To perfect the
15    transfer, the assignor shall record the transfer in the
16    chain of title for the site and provide written notice to
17    the Director of the Illinois Department of Revenue of the
18    assignor's intent to sell the remediation site and the
19    amount of the tax credit to be transferred as a portion of
20    the sale. In no event may a credit be transferred to any
21    taxpayer if the taxpayer or a related party would not be
22    eligible under the provisions of subsection (i).
23        (iii) For purposes of this Section, the term "site"
24    shall have the same meaning as under Section 58.2 of the
25    Environmental Protection Act.
26    (m) Education expense credit. Beginning with tax years

 

 

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1ending after December 31, 1999, a taxpayer who is the custodian
2of one or more qualifying pupils shall be allowed a credit
3against the tax imposed by subsections (a) and (b) of this
4Section for qualified education expenses incurred on behalf of
5the qualifying pupils. The credit shall be equal to 25% of
6qualified education expenses, but in no event may the total
7credit under this subsection claimed by a family that is the
8custodian of qualifying pupils exceed $500. In no event shall a
9credit under this subsection reduce the taxpayer's liability
10under this Act to less than zero. This subsection is exempt
11from the provisions 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 through
18twelfth grade education program at any school, as defined in
19this 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

 

 

HB3918- 35 -LRB097 15531 HLH 60659 b

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 for
4the 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, 2006,
11    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 of
24    the eligible remediation costs is granted. The credit is
25    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 under
2    the site that was identified and addressed by the remedial
3    action pursuant to the Site Remediation Program of the
4    Environmental Protection Act. Determinations as to credit
5    availability for purposes of this Section shall be made
6    consistent with rules adopted by the Pollution Control
7    Board pursuant to the Illinois Administrative Procedure
8    Act for the administration and enforcement of Section 58.9
9    of the Environmental Protection Act. For purposes of this
10    Section, "taxpayer" includes a person whose tax attributes
11    the taxpayer has succeeded to under Section 381 of the
12    Internal Revenue Code and "related party" includes the
13    persons disallowed a deduction for losses by paragraphs
14    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
15    Code by virtue of being a related taxpayer, as well as any
16    of its partners. The credit allowed against the tax imposed
17    by subsections (a) and (b) shall be equal to 25% of the
18    unreimbursed eligible remediation costs in excess of
19    $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 to

 

 

HB3918- 37 -LRB097 15531 HLH 60659 b

1    offset a liability, the earliest credit arising under this
2    subsection shall be applied first. A credit allowed under
3    this subsection may be sold to a buyer as part of a sale of
4    all or part of the remediation site for which the credit
5    was granted. The purchaser of a remediation site and the
6    tax credit shall succeed to the unused credit and remaining
7    carry-forward period of the seller. To perfect the
8    transfer, the assignor shall record the transfer in the
9    chain of title for the site and provide written notice to
10    the Director of the Illinois Department of Revenue of the
11    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(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
2096-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
211-13-11; 97-2, eff. 5-6-11.)
 
22    Section 99. Effective date. This Act takes effect upon
23becoming law.