97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5801

 

Introduced 2/16/2012, by Rep. Wayne Rosenthal

 

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

    Amends the Illinois Income Tax Act. Reinstates the training expense credit for tax years ending on or after December 31, 2012 and on or before December 30, 2022. Increases the amount of the credit from 1.6% of training expenses to 2% of training expenses. Provides that the training expense credit earned on or after December 31, 2012 may be carried forward. Effective immediately.


LRB097 18205 HLH 63429 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 201. Tax Imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount equal
21    to 2 1/2% of the taxpayer's net income for the taxable
22    year.
23        (2) In the case of an individual, trust or estate, for

 

 

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

 

 

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

 

 

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

 

 

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1    January 1, 2025, an amount equal to 5.25% of the taxpayer's
2    net income for the taxable year.
3        (13) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2025, and ending after
5    December 31, 2024, an amount equal to the sum of (i) 5.25%
6    of the taxpayer's net income for the period prior to
7    January 1, 2025, as calculated under Section 202.5, and
8    (ii) 4.8% of the taxpayer's net income for the period after
9    December 31, 2024, as calculated under Section 202.5.
10        (14) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2025, an amount equal to
12    4.8% of the taxpayer's net income for the taxable year.
13    The rates under this subsection (b) are subject to the
14provisions of Section 201.5.
15    (c) Personal Property Tax Replacement Income Tax.
16Beginning on July 1, 1979 and thereafter, in addition to such
17income tax, there is also hereby imposed the Personal Property
18Tax Replacement Income Tax measured by net income on every
19corporation (including Subchapter S corporations), partnership
20and trust, for each taxable year ending after June 30, 1979.
21Such taxes are imposed on the privilege of earning or receiving
22income in or as a resident of this State. The Personal Property
23Tax Replacement Income Tax shall be in addition to the income
24tax imposed by subsections (a) and (b) of this Section and in
25addition to all other occupation or privilege taxes imposed by
26this State or by any municipal corporation or political

 

 

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1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

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

 

 

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

 

 

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1    Taxpayers who are new to Illinois shall be deemed to have
2    met the 1% growth in base employment for the first year in
3    which they file employment records with the Illinois
4    Department of Employment Security. The provisions added to
5    this Section by Public Act 85-1200 (and restored by Public
6    Act 87-895) shall be construed as declaratory of existing
7    law and not as a new enactment. If, in any year, the
8    increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit shall
10    be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time

 

 

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1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i) and
7    (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability or
15    the liability as later amended, such excess may be carried
16    forward and applied to the tax liability of the 5 taxable
17    years following the excess credit years. The credit shall
18    be 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, earlier credit
21    shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land or

 

 

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

 

 

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

 

 

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1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal Property
4    Tax Replacement Income Tax for such taxable year shall be
5    increased. Such increase shall be determined by (i)
6    recomputing the investment credit which would have been
7    allowed for the year in which credit for such property was
8    originally allowed by eliminating such property from such
9    computation and, (ii) subtracting such recomputed credit
10    from the amount of credit previously allowed. For the
11    purposes of this paragraph (7), a reduction of the basis of
12    qualified property resulting from a redetermination of the
13    purchase price shall be deemed a disposition of qualified
14    property to the extent of such reduction.
15        (8) Unless the investment credit is extended by law,
16    the basis of qualified property shall not include costs
17    incurred after December 31, 2013, except for costs incurred
18    pursuant to a binding contract entered into on or before
19    December 31, 2013.
20        (9) Each taxable year ending before December 31, 2000,
21    a partnership may elect to pass through to its partners the
22    credits to which the partnership is entitled under this
23    subsection (e) for the taxable year. A partner may use the
24    credit allocated to him or her under this paragraph only
25    against the tax imposed in subsections (c) and (d) of this
26    Section. If the partnership makes that election, those

 

 

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

 

 

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

 

 

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

 

 

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1    depreciation purposes is increased after it has been placed
2    in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise Zone
12    or River Edge Redevelopment Zone within 48 months after
13    being placed in service, the tax imposed under subsections
14    (a) and (b) of this Section for such taxable year shall be
15    increased. Such increase shall be determined by (i)
16    recomputing the investment credit which would have been
17    allowed for the year in which credit for such property was
18    originally allowed by eliminating such property from such
19    computation, and (ii) subtracting such recomputed credit
20    from the amount of credit previously allowed. For the
21    purposes of this paragraph (6), a reduction of the basis of
22    qualified property resulting from a redetermination of the
23    purchase price shall be deemed a disposition of qualified
24    property to the extent of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more over
5    the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file employment
10    records with the Illinois Department of Employment
11    Security. If, in any year, the increase in base employment
12    within Illinois over the preceding year is less than 1%,
13    the additional credit shall be limited to that percentage
14    times a fraction, the numerator of which is 0.5% and the
15    denominator of which is 1%, but shall not exceed 0.5%.
16    (g) Jobs Tax Credit; Enterprise Zone, River Edge
17Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
18        (1) A taxpayer conducting a trade or business in an
19    enterprise zone or a High Impact Business designated by the
20    Department of Commerce and Economic Opportunity or for
21    taxable years ending on or after December 31, 2006, in a
22    River Edge Redevelopment Zone conducting a trade or
23    business in a federally designated Foreign Trade Zone or
24    Sub-Zone shall be allowed a credit against the tax imposed
25    by subsections (a) and (b) of this Section in the amount of
26    $500 per eligible employee hired to work in the zone during

 

 

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1    the taxable year.
2        (2) To qualify for the credit:
3            (A) the taxpayer must hire 5 or more eligible
4        employees to work in an enterprise zone, River Edge
5        Redevelopment Zone, or federally designated Foreign
6        Trade Zone or Sub-Zone during the taxable year;
7            (B) the taxpayer's total employment within the
8        enterprise zone, River Edge Redevelopment Zone, or
9        federally designated Foreign Trade Zone or Sub-Zone
10        must increase by 5 or more full-time employees beyond
11        the total employed in that zone at the end of the
12        previous tax year for which a jobs tax credit under
13        this Section was taken, or beyond the total employed by
14        the taxpayer as of December 31, 1985, whichever is
15        later; and
16            (C) the eligible employees must be employed 180
17        consecutive days in order to be deemed hired for
18        purposes of this subsection.
19        (3) An "eligible employee" means an employee who is:
20            (A) Certified by the Department of Commerce and
21        Economic Opportunity as "eligible for services"
22        pursuant to regulations promulgated in accordance with
23        Title II of the Job Training Partnership Act, Training
24        Services for the Disadvantaged or Title III of the Job
25        Training Partnership Act, Employment and Training
26        Assistance for Dislocated Workers Program.

 

 

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1            (B) Hired after the enterprise zone, River Edge
2        Redevelopment Zone, or federally designated Foreign
3        Trade Zone or Sub-Zone was designated or the trade or
4        business was located in that zone, whichever is later.
5            (C) Employed in the enterprise zone, River Edge
6        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
7        An employee is employed in an enterprise zone or
8        federally designated Foreign Trade Zone or Sub-Zone if
9        his services are rendered there or it is the base of
10        operations for the services performed.
11            (D) A full-time employee working 30 or more hours
12        per week.
13        (4) For tax years ending on or after December 31, 1985
14    and prior to December 31, 1988, the credit shall be allowed
15    for the tax year in which the eligible employees are hired.
16    For tax years ending on or after December 31, 1988, the
17    credit shall be allowed for the tax year immediately
18    following the tax year in which the eligible employees are
19    hired. If the amount of the credit exceeds the tax
20    liability for that year, whether it exceeds the original
21    liability or the liability as later amended, such excess
22    may be carried forward and applied to the tax liability of
23    the 5 taxable years following the excess credit year. The
24    credit shall be applied to the earliest year for which
25    there is a liability. If there is credit from more than one
26    tax year that is available to offset a liability, earlier

 

 

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1    credit shall be applied first.
2        (5) The Department of Revenue shall promulgate such
3    rules and regulations as may be deemed necessary to carry
4    out the purposes of this subsection (g).
5        (6) The credit shall be available for eligible
6    employees hired on or after January 1, 1986.
7    (h) Investment credit; High Impact Business.
8        (1) Subject to subsections (b) and (b-5) of Section 5.5
9    of the Illinois Enterprise Zone Act, a taxpayer shall be
10    allowed a credit against the tax imposed by subsections (a)
11    and (b) of this Section for investment in qualified
12    property which is placed in service by a Department of
13    Commerce and Economic Opportunity designated High Impact
14    Business. The credit shall be .5% of the basis for such
15    property. The credit shall not be available (i) until the
16    minimum investments in qualified property set forth in
17    subdivision (a)(3)(A) of Section 5.5 of the Illinois
18    Enterprise Zone Act have been satisfied or (ii) until the
19    time authorized in subsection (b-5) of the Illinois
20    Enterprise Zone Act for entities designated as High Impact
21    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
22    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
23    Act, 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. The
26    credit applicable to such investments shall be taken in the

 

 

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1    taxable year in which such investments have been completed.
2    The credit for additional investments beyond the minimum
3    investment by a designated high impact business authorized
4    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
5    Enterprise Zone Act shall be available only in the taxable
6    year in which the property is placed in service and shall
7    not be allowed to the extent that it would reduce a
8    taxpayer's liability for the tax imposed by subsections (a)
9    and (b) of this Section to below zero. For tax years ending
10    on or after December 31, 1987, the credit shall be allowed
11    for the tax year in which the property is placed in
12    service, or, if the amount of the credit exceeds the tax
13    liability for that year, whether it exceeds the original
14    liability or the liability as later amended, such excess
15    may be carried forward and applied to the tax liability of
16    the 5 taxable years following the excess credit year. The
17    credit shall be applied to the earliest year for which
18    there is a liability. If there is credit from more than one
19    tax year that is available to offset a liability, the
20    credit accruing first in time shall be applied first.
21        Changes made in this subdivision (h)(1) by Public Act
22    88-670 restore changes made by Public Act 85-1182 and
23    reflect existing law.
24        (2) The term qualified property means property which:
25            (A) is tangible, whether new or used, including
26        buildings and structural components of buildings;

 

 

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1            (B) is depreciable pursuant to Section 167 of the
2        Internal Revenue Code, except that "3-year property"
3        as defined in Section 168(c)(2)(A) of that Code is not
4        eligible for the credit provided by this subsection
5        (h);
6            (C) is acquired by purchase as defined in Section
7        179(d) of the Internal Revenue Code; and
8            (D) is not eligible for the Enterprise Zone
9        Investment Credit provided by subsection (f) of this
10        Section.
11        (3) The basis of qualified property shall be the basis
12    used to compute the depreciation deduction for federal
13    income tax purposes.
14        (4) If the basis of the property for federal income tax
15    depreciation purposes is increased after it has been placed
16    in service in a federally designated Foreign Trade Zone or
17    Sub-Zone located in Illinois by the taxpayer, the amount of
18    such increase shall be deemed property placed in service on
19    the date of such increase in basis.
20        (5) The term "placed in service" shall have the same
21    meaning as under Section 46 of the Internal Revenue Code.
22        (6) If during any taxable year ending on or before
23    December 31, 1996, any property ceases to be qualified
24    property in the hands of the taxpayer within 48 months
25    after being placed in service, or the situs of any
26    qualified property is moved outside Illinois within 48

 

 

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1    months after being placed in service, the tax imposed under
2    subsections (a) and (b) of this Section for such taxable
3    year shall be increased. Such increase shall be determined
4    by (i) recomputing the investment credit which would have
5    been allowed for the year in which credit for such property
6    was originally allowed by eliminating such property from
7    such computation, and (ii) subtracting such recomputed
8    credit from the amount of credit previously allowed. For
9    the purposes of this paragraph (6), a reduction of the
10    basis of qualified property resulting from a
11    redetermination of the purchase price shall be deemed a
12    disposition of qualified property to the extent of such
13    reduction.
14        (7) Beginning with tax years ending after December 31,
15    1996, if a taxpayer qualifies for the credit under this
16    subsection (h) and thereby is granted a tax abatement and
17    the taxpayer relocates its entire facility in violation of
18    the explicit terms and length of the contract under Section
19    18-183 of the Property Tax Code, the tax imposed under
20    subsections (a) and (b) of this Section shall be increased
21    for the taxable year in which the taxpayer relocated its
22    facility by an amount equal to the amount of credit
23    received by the taxpayer under this subsection (h).
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) and

 

 

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1(b) of this Section for the tax imposed by subsections (c) and
2(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 (a)
11and (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 subsections
14(a) and (b) of the 5 taxable years following the excess credit
15year, provided that no credit may be carried forward to any
16year ending on or after December 31, 2003. This credit shall be
17applied first to the earliest year for which there is a
18liability. If there is a credit under this subsection from more
19than one tax year that is available to offset a liability the
20earliest credit arising under this subsection shall be applied
21first.
22    If, during any taxable year ending on or after December 31,
231986, 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 taxable
5year 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, and for tax years ending on or after December 31, 2012
9and on or before December 30, 2022, a taxpayer shall be allowed
10a credit against the tax imposed by subsections (a) and (b)
11under this Section for all amounts paid or accrued, on behalf
12of all persons employed by the taxpayer in Illinois or Illinois
13residents employed outside of Illinois by a taxpayer, for
14educational or vocational training in semi-technical or
15technical fields or semi-skilled or skilled fields, which were
16deducted from gross income in the computation of taxable
17income. The credit against the tax imposed by subsections (a)
18and (b) shall be 1.6% of such training expenses for tax years
19ending prior to December 31, 2003 and 2% for tax years ending
20on or after December 31, 2012 and on or before December 30,
212022. For partners, shareholders of subchapter S corporations,
22and owners of limited liability companies, if the liability
23company is treated as a partnership for purposes of federal and
24State income taxation, there shall be allowed a credit under
25this subsection (j) to be determined in accordance with the
26determination of income and distributive share of income under

 

 

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1Sections 702 and 704 and subchapter S of the Internal Revenue
2Code.
3    Any credit allowed under this subsection which is unused in
4the year the credit is earned may be carried forward to each of
5the 5 taxable years following the year for which the credit is
6first computed until it is used. This credit shall be applied
7first to the earliest year for which there is a liability. If
8there is a credit under this subsection from more than one tax
9year that is available to offset a liability the earliest
10credit arising under this subsection shall be applied first. No
11carryforward credit may be claimed in any tax year ending on or
12after December 31, 2003 and prior to December 31, 2012.
13    (k) Research and development credit.
14    For tax years ending after July 1, 1990 and prior to
15December 31, 2003, and beginning again for tax years ending on
16or after December 31, 2004, and ending prior to January 1,
172011, a taxpayer shall be allowed a credit against the tax
18imposed by subsections (a) and (b) of this Section for
19increasing research activities in this State. The credit
20allowed against the tax imposed by subsections (a) and (b)
21shall be equal to 6 1/2% of the qualifying expenditures for
22increasing research activities in this State. For partners,
23shareholders of subchapter S corporations, and owners of
24limited liability companies, if the liability company is
25treated as a partnership for purposes of federal and State
26income taxation, there shall be allowed a credit under this

 

 

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1subsection to be determined in accordance with the
2determination of income and distributive share of income under
3Sections 702 and 704 and subchapter S of the Internal Revenue
4Code.
5    For purposes of this subsection, "qualifying expenditures"
6means the qualifying expenditures as defined for the federal
7credit for increasing research activities which would be
8allowable under Section 41 of the Internal Revenue Code and
9which are conducted in this State, "qualifying expenditures for
10increasing research activities in this State" means the excess
11of qualifying expenditures for the taxable year in which
12incurred over qualifying expenditures for the base period,
13"qualifying expenditures for the base period" means the average
14of the qualifying expenditures for each year in the base
15period, and "base period" means the 3 taxable years immediately
16preceding the taxable year for which the determination is being
17made.
18    Any credit in excess of the tax liability for the taxable
19year may be carried forward. A taxpayer may elect to have the
20unused credit shown on its final completed return carried over
21as a credit against the tax liability for the following 5
22taxable years or until it has been fully used, whichever occurs
23first; provided that no credit earned in a tax year ending
24prior to December 31, 2003 may be carried forward to any year
25ending on or after December 31, 2003, and no credit may be
26carried forward to any taxable year ending on or after January

 

 

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11, 2011.
2    If an unused credit is carried forward to a given year from
32 or more earlier years, that credit arising in the earliest
4year will be applied first against the tax liability for the
5given year. If a tax liability for the given year still
6remains, the credit from the next earliest year will then be
7applied, and so on, until all credits have been used or no tax
8liability for the given year remains. Any remaining unused
9credit or credits then will be carried forward to the next
10following year in which a tax liability is incurred, except
11that no credit can be carried forward to a year which is more
12than 5 years after the year in which the expense for which the
13credit is given was incurred.
14    No inference shall be drawn from this amendatory Act of the
1591st General Assembly in construing this Section for taxable
16years beginning before January 1, 1999.
17    (l) Environmental Remediation Tax Credit.
18        (i) For tax years ending after December 31, 1997 and on
19    or before December 31, 2001, a taxpayer shall be allowed a
20    credit against the tax imposed by subsections (a) and (b)
21    of this Section for certain amounts paid for unreimbursed
22    eligible remediation costs, as specified in this
23    subsection. For purposes of this Section, "unreimbursed
24    eligible remediation costs" means costs approved by the
25    Illinois Environmental Protection Agency ("Agency") under
26    Section 58.14 of the Environmental Protection Act that were

 

 

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

 

 

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

 

 

HB5801- 32 -LRB097 18205 HLH 63429 b

1    was granted. The purchaser of a remediation site and the
2    tax credit shall succeed to the unused credit and remaining
3    carry-forward period of the seller. To perfect the
4    transfer, the assignor shall record the transfer in the
5    chain of title for the site and provide written notice to
6    the Director of the Illinois Department of Revenue of the
7    assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (m) Education expense credit. Beginning with tax years
16ending after December 31, 1999, a taxpayer who is the custodian
17of one or more qualifying pupils shall be allowed a credit
18against the tax imposed by subsections (a) and (b) of this
19Section for qualified education expenses incurred on behalf of
20the qualifying pupils. The credit shall be equal to 25% of
21qualified education expenses, but in no event may the total
22credit under this subsection claimed by a family that is the
23custodian of qualifying pupils exceed $500. In no event shall a
24credit under this subsection reduce the taxpayer's liability
25under this Act to less than zero. This subsection is exempt
26from the provisions of Section 250 of this Act.

 

 

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1    For purposes of this subsection:
2    "Qualifying pupils" means individuals who (i) are
3residents of the State of Illinois, (ii) are under the age of
421 at the close of the school year for which a credit is
5sought, and (iii) during the school year for which a credit is
6sought were full-time pupils enrolled in a kindergarten through
7twelfth grade education program at any school, as defined in
8this subsection.
9    "Qualified education expense" means the amount incurred on
10behalf of a qualifying pupil in excess of $250 for tuition,
11book fees, and lab fees at the school in which the pupil is
12enrolled during the regular school year.
13    "School" means any public or nonpublic elementary or
14secondary school in Illinois that is in compliance with Title
15VI of the Civil Rights Act of 1964 and attendance at which
16satisfies the requirements of Section 26-1 of the School Code,
17except that nothing shall be construed to require a child to
18attend any particular public or nonpublic school to qualify for
19the credit under this Section.
20    "Custodian" means, with respect to qualifying pupils, an
21Illinois resident who is a parent, the parents, a legal
22guardian, or the legal guardians of the qualifying pupils.
23    (n) River Edge Redevelopment Zone site remediation tax
24credit.
25        (i) For tax years ending on or after December 31, 2006,
26    a taxpayer shall be allowed a credit against the tax

 

 

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

 

 

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1    Internal Revenue Code and "related party" includes the
2    persons disallowed a deduction for losses by paragraphs
3    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
4    Code by virtue of being a related taxpayer, as well as any
5    of its partners. The credit allowed against the tax imposed
6    by subsections (a) and (b) shall be equal to 25% of the
7    unreimbursed eligible remediation costs in excess of
8    $100,000 per site.
9        (ii) A credit allowed under this subsection that is
10    unused in the year the credit is earned may be carried
11    forward to each of the 5 taxable years following the year
12    for which the credit is first earned until it is used. This
13    credit shall be applied first to the earliest year for
14    which there is a liability. If there is a credit under this
15    subsection from more than one tax year that is available to
16    offset a liability, the earliest credit arising under this
17    subsection shall be applied first. A credit allowed under
18    this subsection may be sold to a buyer as part of a sale of
19    all or part of the remediation site for which the credit
20    was granted. The purchaser of a remediation site and the
21    tax credit shall succeed to the unused credit and remaining
22    carry-forward period of the seller. To perfect the
23    transfer, the assignor shall record the transfer in the
24    chain of title for the site and provide written notice to
25    the Director of the Illinois Department of Revenue of the
26    assignor's intent to sell the remediation site and the

 

 

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1    amount of the tax credit to be transferred as a portion of
2    the sale. In no event may a credit be transferred to any
3    taxpayer if the taxpayer or a related party would not be
4    eligible under the provisions of subsection (i).
5        (iii) For purposes of this Section, the term "site"
6    shall have the same meaning as under Section 58.2 of the
7    Environmental Protection Act.
8(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
101-13-11; 97-2, eff. 5-6-11.)
 
11    (Text of Section after amendment by P.A. 97-636)
12    Sec. 201. Tax Imposed.
13    (a) In general. A tax measured by net income is hereby
14imposed on every individual, corporation, trust and estate for
15each taxable year ending after July 31, 1969 on the privilege
16of earning or receiving income in or as a resident of this
17State. Such tax shall be in addition to all other occupation or
18privilege taxes imposed by this State or by any municipal
19corporation or political subdivision thereof.
20    (b) Rates. The tax imposed by subsection (a) of this
21Section shall be determined as follows, except as adjusted by
22subsection (d-1):
23        (1) In the case of an individual, trust or estate, for
24    taxable years ending prior to July 1, 1989, an amount equal
25    to 2 1/2% of the taxpayer's net income for the taxable

 

 

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

 

 

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

 

 

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

 

 

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1        (12) In the case of a corporation, for taxable years
2    beginning on or after January 1, 2015, and ending prior to
3    January 1, 2025, an amount equal to 5.25% of the taxpayer's
4    net income for the taxable year.
5        (13) In the case of a corporation, for taxable years
6    beginning prior to January 1, 2025, and ending after
7    December 31, 2024, an amount equal to the sum of (i) 5.25%
8    of the taxpayer's net income for the period prior to
9    January 1, 2025, as calculated under Section 202.5, and
10    (ii) 4.8% of the taxpayer's net income for the period after
11    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, 2025, an amount equal to
14    4.8% 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    (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 receiving
24income in or as a resident of this State. The Personal Property
25Tax Replacement Income Tax shall be in addition to the income
26tax imposed by subsections (a) and (b) of this Section and in

 

 

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1addition to all other occupation or privilege taxes imposed by
2this State or by any municipal corporation or political
3subdivision 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

 

 

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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 such
11income by the foreign insurer's state of domicile. For the
12purposes of this subsection (d-1), an inter-affiliate includes
13a 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 foreign
18        insurer under this Act for a taxable year, net of all
19        credits allowed under this Act, plus
20            (B) the privilege tax imposed by Section 409 of the
21        Illinois Insurance Code, the fire insurance company
22        tax imposed by Section 12 of the Fire Investigation
23        Act, and the fire department taxes imposed under
24        Section 11-10-1 of the Illinois Municipal Code,
25    equals 1.25% for taxable years ending prior to December 31,
26    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 Section
3    409 of the Illinois Insurance Code. This paragraph will in
4    no event increase the rates imposed under subsections (b)
5    and (d).
6        (2) Any reduction in the rates of tax imposed by this
7    subsection shall be applied first against the rates imposed
8    by subsection (b) and only after the tax imposed by
9    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 credit
16against the Personal Property Tax Replacement Income Tax for
17investment 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 during
20    the taxable year, provided such property is placed in
21    service on or after July 1, 1984. There shall be allowed an
22    additional credit equal to .5% of the basis of qualified
23    property placed in service during the taxable year,
24    provided such property is placed in service on or after
25    July 1, 1986, and the taxpayer's base employment within
26    Illinois has increased by 1% or more over the preceding

 

 

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1    year as determined by the taxpayer's employment records
2    filed with the Illinois Department of Employment Security.
3    Taxpayers who are new to Illinois shall be deemed to have
4    met the 1% growth in base employment for the first year in
5    which they file employment records with the Illinois
6    Department of Employment Security. The provisions added to
7    this Section by Public Act 85-1200 (and restored by Public
8    Act 87-895) shall be construed as declaratory of existing
9    law and not as a new enactment. If, in any year, the
10    increase in base employment within Illinois over the
11    preceding year is less than 1%, the additional credit shall
12    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) and
9    (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 or
17    the liability as later amended, such excess may be carried
18    forward and applied to the tax liability of the 5 taxable
19    years following the excess credit years. The credit shall
20    be applied to the earliest year for which there is a
21    liability. If there is credit from more than one tax year
22    that is available to offset a liability, earlier credit
23    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 or
3        improvements to real property that are not a structural
4        component of a building such as landscaping, sewer
5        lines, local access roads, fencing, parking lots, and
6        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 of
4    this subsection (e) the term "mining" shall have the same
5    meaning as the term "mining" in Section 613(c) of the
6    Internal Revenue Code. For purposes of this subsection (e),
7    the term "retailing" means the sale of tangible personal
8    property for use or consumption and not for resale, or
9    services rendered in conjunction with the sale of tangible
10    personal property for use or consumption and not for
11    resale. For purposes of this subsection (e), "tangible
12    personal property" has the same meaning as when that term
13    is used in the Retailers' Occupation Tax Act, and, for
14    taxable years ending after December 31, 2008, does not
15    include the generation, transmission, or distribution of
16    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 tax
21    depreciation purposes is increased after it has been placed
22    in service in Illinois by the taxpayer, the amount of such
23    increase shall be deemed property placed in service on the
24    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.

 

 

HB5801- 48 -LRB097 18205 HLH 63429 b

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

 

 

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

 

 

HB5801- 50 -LRB097 18205 HLH 63429 b

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

 

 

HB5801- 51 -LRB097 18205 HLH 63429 b

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

 

 

HB5801- 52 -LRB097 18205 HLH 63429 b

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

 

 

HB5801- 53 -LRB097 18205 HLH 63429 b

1        (7) There shall be allowed an additional credit equal
2    to 0.5% of the basis of qualified property placed in
3    service during the taxable year in a River Edge
4    Redevelopment Zone, provided such property is placed in
5    service on or after July 1, 2006, and the taxpayer's base
6    employment within Illinois has increased by 1% or more over
7    the preceding year as determined by the taxpayer's
8    employment records filed with the Illinois Department of
9    Employment Security. Taxpayers who are new to Illinois
10    shall be deemed to have met the 1% growth in base
11    employment for the first year in which they file employment
12    records with the Illinois Department of Employment
13    Security. If, in any year, the increase in base employment
14    within Illinois over the preceding year is less than 1%,
15    the additional credit shall be limited to that percentage
16    times a fraction, the numerator of which is 0.5% and the
17    denominator of which is 1%, but shall not exceed 0.5%.
18    (g) Jobs Tax Credit; Enterprise Zone, River Edge
19Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
20        (1) A taxpayer conducting a trade or business in an
21    enterprise zone or a High Impact Business designated by the
22    Department of Commerce and Economic Opportunity or for
23    taxable years ending on or after December 31, 2006, in a
24    River Edge Redevelopment Zone conducting a trade or
25    business in a federally designated Foreign Trade Zone or
26    Sub-Zone shall be allowed a credit against the tax imposed

 

 

HB5801- 54 -LRB097 18205 HLH 63429 b

1    by subsections (a) and (b) of this Section in the amount of
2    $500 per eligible employee hired to work in the zone during
3    the taxable year.
4        (2) To qualify for the credit:
5            (A) the taxpayer must hire 5 or more eligible
6        employees to work in an enterprise zone, River Edge
7        Redevelopment Zone, or federally designated Foreign
8        Trade Zone or Sub-Zone during the taxable year;
9            (B) the taxpayer's total employment within the
10        enterprise zone, River Edge Redevelopment Zone, or
11        federally designated Foreign Trade Zone or Sub-Zone
12        must increase by 5 or more full-time employees beyond
13        the total employed in that zone at the end of the
14        previous tax year for which a jobs tax credit under
15        this Section was taken, or beyond the total employed by
16        the taxpayer as of December 31, 1985, whichever is
17        later; and
18            (C) the eligible employees must be employed 180
19        consecutive days in order to be deemed hired for
20        purposes of this subsection.
21        (3) An "eligible employee" means an employee who is:
22            (A) Certified by the Department of Commerce and
23        Economic Opportunity as "eligible for services"
24        pursuant to regulations promulgated in accordance with
25        Title II of the Job Training Partnership Act, Training
26        Services for the Disadvantaged or Title III of the Job

 

 

HB5801- 55 -LRB097 18205 HLH 63429 b

1        Training Partnership Act, Employment and Training
2        Assistance for Dislocated Workers Program.
3            (B) Hired after the enterprise zone, River Edge
4        Redevelopment Zone, or federally designated Foreign
5        Trade Zone or Sub-Zone was designated or the trade or
6        business was located in that zone, whichever is later.
7            (C) Employed in the enterprise zone, River Edge
8        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
9        An employee is employed in an enterprise zone or
10        federally designated Foreign Trade Zone or Sub-Zone if
11        his services are rendered there or it is the base of
12        operations for the services performed.
13            (D) A full-time employee working 30 or more hours
14        per week.
15        (4) For tax years ending on or after December 31, 1985
16    and prior to December 31, 1988, the credit shall be allowed
17    for the tax year in which the eligible employees are hired.
18    For tax years ending on or after December 31, 1988, the
19    credit shall be allowed for the tax year immediately
20    following the tax year in which the eligible employees are
21    hired. If the amount of the credit exceeds the tax
22    liability for that year, whether it exceeds the original
23    liability or the liability as later amended, such excess
24    may be carried forward and applied to the tax liability of
25    the 5 taxable years following the excess credit year. The
26    credit shall be applied to the earliest year for which

 

 

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1    there is a liability. If there is credit from more than one
2    tax year that is available to offset a liability, earlier
3    credit shall be applied first.
4        (5) The Department of Revenue shall promulgate such
5    rules and regulations as may be deemed necessary to carry
6    out the purposes of this subsection (g).
7        (6) The credit shall be available for eligible
8    employees hired on or after January 1, 1986.
9    (h) Investment credit; High Impact Business.
10        (1) Subject to subsections (b) and (b-5) of Section 5.5
11    of the Illinois Enterprise Zone Act, a taxpayer shall be
12    allowed a credit against the tax imposed by subsections (a)
13    and (b) of this Section for investment in qualified
14    property which is placed in service by a Department of
15    Commerce and Economic Opportunity designated High Impact
16    Business. The credit shall be .5% of the basis for such
17    property. The credit shall not be available (i) until the
18    minimum investments in qualified property set forth in
19    subdivision (a)(3)(A) of Section 5.5 of the Illinois
20    Enterprise Zone Act have been satisfied or (ii) until the
21    time authorized in subsection (b-5) of the Illinois
22    Enterprise Zone Act for entities designated as High Impact
23    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
24    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
25    Act, and shall not be allowed to the extent that it would
26    reduce a taxpayer's liability for the tax imposed by

 

 

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1    subsections (a) and (b) of this Section to below zero. The
2    credit applicable to such investments shall be taken in the
3    taxable year in which such investments have been completed.
4    The credit for additional investments beyond the minimum
5    investment by a designated high impact business authorized
6    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
7    Enterprise Zone Act shall be available only in the taxable
8    year in which the property is placed in service and shall
9    not be allowed to the extent that it would reduce a
10    taxpayer's liability for the tax imposed by subsections (a)
11    and (b) of this Section to below zero. For tax years ending
12    on or after December 31, 1987, the credit shall be allowed
13    for the tax year in which the property is placed in
14    service, or, if the amount of the credit exceeds the tax
15    liability for that year, whether it exceeds the original
16    liability or the liability as later amended, such excess
17    may be carried forward and applied to the tax liability of
18    the 5 taxable years following the excess credit year. The
19    credit shall be applied to the earliest year for which
20    there is a liability. If there is credit from more than one
21    tax year that is available to offset a liability, the
22    credit accruing first in time shall be applied first.
23        Changes made in this subdivision (h)(1) by Public Act
24    88-670 restore changes made by Public Act 85-1182 and
25    reflect existing law.
26        (2) The term qualified property means property which:

 

 

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1            (A) is tangible, whether new or used, including
2        buildings and structural components of buildings;
3            (B) is depreciable pursuant to Section 167 of the
4        Internal Revenue Code, except that "3-year property"
5        as defined in Section 168(c)(2)(A) of that Code is not
6        eligible for the credit provided by this subsection
7        (h);
8            (C) is acquired by purchase as defined in Section
9        179(d) of the Internal Revenue Code; and
10            (D) is not eligible for the Enterprise Zone
11        Investment Credit provided by subsection (f) of this
12        Section.
13        (3) The basis of qualified property shall be the basis
14    used to compute the depreciation deduction for federal
15    income tax purposes.
16        (4) If the basis of the property for federal income tax
17    depreciation purposes is increased after it has been placed
18    in service in a federally designated Foreign Trade Zone or
19    Sub-Zone located in Illinois by the taxpayer, the amount of
20    such increase shall be deemed property placed in service on
21    the date of such increase in basis.
22        (5) The term "placed in service" shall have the same
23    meaning as under Section 46 of the Internal Revenue Code.
24        (6) If during any taxable year ending on or before
25    December 31, 1996, any property ceases to be qualified
26    property in the hands of the taxpayer within 48 months

 

 

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1    after being placed in service, or the situs of any
2    qualified property is moved outside Illinois within 48
3    months after being placed in service, the tax imposed under
4    subsections (a) and (b) of this Section for such taxable
5    year shall be increased. Such increase shall be determined
6    by (i) recomputing the investment credit which would have
7    been allowed for the year in which credit for such property
8    was originally allowed by eliminating such property from
9    such computation, and (ii) subtracting such recomputed
10    credit from the amount of credit previously allowed. For
11    the purposes of this paragraph (6), a reduction of the
12    basis of qualified property resulting from a
13    redetermination of the purchase price shall be deemed a
14    disposition of qualified property to the extent of such
15    reduction.
16        (7) Beginning with tax years ending after December 31,
17    1996, if a taxpayer qualifies for the credit under this
18    subsection (h) and thereby is granted a tax abatement and
19    the taxpayer relocates its entire facility in violation of
20    the explicit terms and length of the contract under Section
21    18-183 of the Property Tax Code, the tax imposed under
22    subsections (a) and (b) of this Section shall be increased
23    for the taxable year in which the taxpayer relocated its
24    facility by an amount equal to the amount of credit
25    received by the taxpayer under this subsection (h).
26    (i) Credit for Personal Property Tax Replacement Income

 

 

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1Tax. For tax years ending prior to December 31, 2003, a credit
2shall be allowed against the tax imposed by subsections (a) and
3(b) of this Section for the tax imposed by subsections (c) and
4(d) of this Section. This credit shall be computed by
5multiplying the tax imposed by subsections (c) and (d) of this
6Section by a fraction, the numerator of which is base income
7allocable to Illinois and the denominator of which is Illinois
8base income, and further multiplying the product by the tax
9rate imposed by subsections (a) and (b) of this Section.
10    Any credit earned on or after December 31, 1986 under this
11subsection which is unused in the year the credit is computed
12because it exceeds the tax liability imposed by subsections (a)
13and (b) for that year (whether it exceeds the original
14liability or the liability as later amended) may be carried
15forward and applied to the tax liability imposed by subsections
16(a) and (b) of the 5 taxable years following the excess credit
17year, provided that no credit may be carried forward to any
18year ending on or after December 31, 2003. This credit shall be
19applied first to the earliest year for which there is a
20liability. If there is a credit under this subsection from more
21than one tax year that is available to offset a liability the
22earliest credit arising under this subsection shall be applied
23first.
24    If, during any taxable year ending on or after December 31,
251986, the tax imposed by subsections (c) and (d) of this
26Section for which a taxpayer has claimed a credit under this

 

 

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1subsection (i) is reduced, the amount of credit for such tax
2shall also be reduced. Such reduction shall be determined by
3recomputing the credit to take into account the reduced tax
4imposed by subsections (c) and (d). If any portion of the
5reduced amount of credit has been carried to a different
6taxable year, an amended return shall be filed for such taxable
7year to reduce the amount of credit claimed.
8    (j) Training expense credit. Beginning with tax years
9ending on or after December 31, 1986 and prior to December 31,
102003, and for tax years ending on or after December 31, 2012
11and on or before December 30, 2022, a taxpayer shall be allowed
12a credit against the tax imposed by subsections (a) and (b)
13under this Section for all amounts paid or accrued, on behalf
14of all persons employed by the taxpayer in Illinois or Illinois
15residents employed outside of Illinois by a taxpayer, for
16educational or vocational training in semi-technical or
17technical fields or semi-skilled or skilled fields, which were
18deducted from gross income in the computation of taxable
19income. The credit against the tax imposed by subsections (a)
20and (b) shall be 1.6% of such training expenses for tax years
21ending prior to December 31, 2003 and 2% for tax years ending
22on or after December 31, 2012 and on or before December 30,
232022. For partners, shareholders of subchapter S corporations,
24and owners of limited liability companies, if the liability
25company is treated as a partnership for purposes of federal and
26State income taxation, there shall be allowed a credit under

 

 

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1this subsection (j) to be determined in accordance with the
2determination of income and distributive share of income under
3Sections 702 and 704 and subchapter S of the Internal Revenue
4Code.
5    Any credit allowed under this subsection which is unused in
6the year the credit is earned may be carried forward to each of
7the 5 taxable years following the year for which the credit is
8first computed until it is used. This credit shall be applied
9first to the earliest year for which there is a liability. If
10there is a credit under this subsection from more than one tax
11year that is available to offset a liability the earliest
12credit arising under this subsection shall be applied first. No
13carryforward credit may be claimed in any tax year ending on or
14after December 31, 2003 and prior to December 31, 2012.
15    (k) Research and development credit.
16    For tax years ending after July 1, 1990 and prior to
17December 31, 2003, and beginning again for tax years ending on
18or after December 31, 2004, and ending prior to January 1,
192016, a taxpayer shall be allowed a credit against the tax
20imposed by subsections (a) and (b) of this Section for
21increasing research activities in this State. The credit
22allowed against the tax imposed by subsections (a) and (b)
23shall be equal to 6 1/2% of the qualifying expenditures for
24increasing research activities in this State. For partners,
25shareholders of subchapter S corporations, and owners of
26limited liability companies, if the liability company is

 

 

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1treated as a partnership for purposes of federal and State
2income taxation, there shall be allowed a credit under this
3subsection to be determined in accordance with the
4determination of income and distributive share of income under
5Sections 702 and 704 and subchapter S of the Internal Revenue
6Code.
7    For purposes of this subsection, "qualifying expenditures"
8means the qualifying expenditures as defined for the federal
9credit for increasing research activities which would be
10allowable under Section 41 of the Internal Revenue Code and
11which are conducted in this State, "qualifying expenditures for
12increasing research activities in this State" means the excess
13of qualifying expenditures for the taxable year in which
14incurred over qualifying expenditures for the base period,
15"qualifying expenditures for the base period" means the average
16of the qualifying expenditures for each year in the base
17period, and "base period" means the 3 taxable years immediately
18preceding the taxable year for which the determination is being
19made.
20    Any credit in excess of the tax liability for the taxable
21year may be carried forward. A taxpayer may elect to have the
22unused credit shown on its final completed return carried over
23as a credit against the tax liability for the following 5
24taxable years or until it has been fully used, whichever occurs
25first; provided that no credit earned in a tax year ending
26prior to December 31, 2003 may be carried forward to any year

 

 

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1ending on or after December 31, 2003.
2    If an unused credit is carried forward to a given year from
32 or more earlier years, that credit arising in the earliest
4year will be applied first against the tax liability for the
5given year. If a tax liability for the given year still
6remains, the credit from the next earliest year will then be
7applied, and so on, until all credits have been used or no tax
8liability for the given year remains. Any remaining unused
9credit or credits then will be carried forward to the next
10following year in which a tax liability is incurred, except
11that no credit can be carried forward to a year which is more
12than 5 years after the year in which the expense for which the
13credit is given was incurred.
14    No inference shall be drawn from this amendatory Act of the
1591st General Assembly in construing this Section for taxable
16years beginning before January 1, 1999.
17    (l) Environmental Remediation Tax Credit.
18        (i) For tax years ending after December 31, 1997 and on
19    or before December 31, 2001, a taxpayer shall be allowed a
20    credit against the tax imposed by subsections (a) and (b)
21    of this Section for certain amounts paid for unreimbursed
22    eligible remediation costs, as specified in this
23    subsection. For purposes of this Section, "unreimbursed
24    eligible remediation costs" means costs approved by the
25    Illinois Environmental Protection Agency ("Agency") under
26    Section 58.14 of the Environmental Protection Act that were

 

 

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

 

 

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

 

 

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1    was granted. The purchaser of a remediation site and the
2    tax credit shall succeed to the unused credit and remaining
3    carry-forward period of the seller. To perfect the
4    transfer, the assignor shall record the transfer in the
5    chain of title for the site and provide written notice to
6    the Director of the Illinois Department of Revenue of the
7    assignor's intent to sell the remediation site and the
8    amount of the tax credit to be transferred as a portion of
9    the sale. In no event may a credit be transferred to any
10    taxpayer if the taxpayer or a related party would not be
11    eligible under the provisions of subsection (i).
12        (iii) For purposes of this Section, the term "site"
13    shall have the same meaning as under Section 58.2 of the
14    Environmental Protection Act.
15    (m) Education expense credit. Beginning with tax years
16ending after December 31, 1999, a taxpayer who is the custodian
17of one or more qualifying pupils shall be allowed a credit
18against the tax imposed by subsections (a) and (b) of this
19Section for qualified education expenses incurred on behalf of
20the qualifying pupils. The credit shall be equal to 25% of
21qualified education expenses, but in no event may the total
22credit under this subsection claimed by a family that is the
23custodian of qualifying pupils exceed $500. In no event shall a
24credit under this subsection reduce the taxpayer's liability
25under this Act to less than zero. This subsection is exempt
26from the provisions of Section 250 of this Act.

 

 

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1    For purposes of this subsection:
2    "Qualifying pupils" means individuals who (i) are
3residents of the State of Illinois, (ii) are under the age of
421 at the close of the school year for which a credit is
5sought, and (iii) during the school year for which a credit is
6sought were full-time pupils enrolled in a kindergarten through
7twelfth grade education program at any school, as defined in
8this subsection.
9    "Qualified education expense" means the amount incurred on
10behalf of a qualifying pupil in excess of $250 for tuition,
11book fees, and lab fees at the school in which the pupil is
12enrolled during the regular school year.
13    "School" means any public or nonpublic elementary or
14secondary school in Illinois that is in compliance with Title
15VI of the Civil Rights Act of 1964 and attendance at which
16satisfies the requirements of Section 26-1 of the School Code,
17except that nothing shall be construed to require a child to
18attend any particular public or nonpublic school to qualify for
19the credit under this Section.
20    "Custodian" means, with respect to qualifying pupils, an
21Illinois resident who is a parent, the parents, a legal
22guardian, or the legal guardians of the qualifying pupils.
23    (n) River Edge Redevelopment Zone site remediation tax
24credit.
25        (i) For tax years ending on or after December 31, 2006,
26    a taxpayer shall be allowed a credit against the tax

 

 

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

 

 

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1    Internal Revenue Code and "related party" includes the
2    persons disallowed a deduction for losses by paragraphs
3    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
4    Code by virtue of being a related taxpayer, as well as any
5    of its partners. The credit allowed against the tax imposed
6    by subsections (a) and (b) shall be equal to 25% of the
7    unreimbursed eligible remediation costs in excess of
8    $100,000 per site.
9        (ii) A credit allowed under this subsection that is
10    unused in the year the credit is earned may be carried
11    forward to each of the 5 taxable years following the year
12    for which the credit is first earned until it is used. This
13    credit shall be applied first to the earliest year for
14    which there is a liability. If there is a credit under this
15    subsection from more than one tax year that is available to
16    offset a liability, the earliest credit arising under this
17    subsection shall be applied first. A credit allowed under
18    this subsection may be sold to a buyer as part of a sale of
19    all or part of the remediation site for which the credit
20    was granted. The purchaser of a remediation site and the
21    tax credit shall succeed to the unused credit and remaining
22    carry-forward period of the seller. To perfect the
23    transfer, the assignor shall record the transfer in the
24    chain of title for the site and provide written notice to
25    the Director of the Illinois Department of Revenue of the
26    assignor's intent to sell the remediation site and the

 

 

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1    amount of the tax credit to be transferred as a portion of
2    the sale. In no event may a credit be transferred to any
3    taxpayer if the taxpayer or a related party would not be
4    eligible under the provisions of subsection (i).
5        (iii) For purposes of this Section, the term "site"
6    shall have the same meaning as under Section 58.2 of the
7    Environmental Protection Act.
8(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
101-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
11    Section 95. No acceleration or delay. Where this Act makes
12changes in a statute that is represented in this Act by text
13that is not yet or no longer in effect (for example, a Section
14represented by multiple versions), the use of that text does
15not accelerate or delay the taking effect of (i) the changes
16made by this Act or (ii) provisions derived from any other
17Public Act.
 
18    Section 99. Effective date. This Act takes effect upon
19becoming law.