Rep. John E. Bradley

Filed: 12/8/2011

 

 


 

 


 
09700SB0397ham006LRB097 04209 HLH 60625 a

1
AMENDMENT TO SENATE BILL 397

2    AMENDMENT NO. ______. Amend Senate Bill 397, AS AMENDED, by
3replacing everything after the enacting clause with the
4following:
 
5
"Article 1. Findings

 
6    Section 1-1. Legislative findings.
7    (1) The House of Representatives adopted House Resolution
8110 on March 8, 2011, setting forth the estimates of general
9funds the House expects to be available during State fiscal
10year 2012.
11    (2) In determining the estimates of general funds expected
12to be available during State fiscal year 2012, the House
13Revenue & Finance Committee assumed that the State would not
14collect approximately $600,000,000 of income tax revenues due
15to the allowance of special bonus depreciation rules approved
16by the federal government.

 

 

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1    (3) The House of Representatives adopted House Resolution
2158 on March 30, 2011, which provides that if the actual amount
3of funds from State sources that become available during State
4fiscal year 2012 exceeds the House's estimates set forth in
5House Resolution 110, then that excess shall first be used to
6reduce the backlog of unpaid State obligations to the extent
7authorized by law.
8    (4) These concepts are prudent and should be continued for
9State fiscal year 2013 and beyond.
10    (5) As the House Revenue & Finance Committee develops the
11estimates of general funds expected to be available during
12State fiscal year 2013, an estimated $250,000,000 of income tax
13revenues in excess of the State fiscal year 2012 budgeted
14amount will become available due to the phasing out of the
15allowance of special bonus depreciation rules approved by the
16federal government.
17    (6) Therefore, the General Assembly finds that a tax
18incentive package that does not exceed $250,000,000 in State
19fiscal year 2013 can be approved without any negative impact to
20the State budget in State fiscal years 2012 and 2013 while
21providing tax relief to a large number of Illinois individual
22and business taxpayers.
 
23
Article 5. Illinois Independent Tax Tribunal Act

 
24    Section 5-1. Short title. This Article may be cited as the

 

 

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1Illinois Independent Tax Tribunal Act.
 
2    Section 5-5. Independent Tax Tribunal Board; Department of
3Revenue.
4    (a) On and after July 1, 2013, the Department of Revenue,
5or any successor agency, shall no longer hear and act upon any
6protests of notices of tax liability or deficiencies for all
7taxes administered by the Department of Revenue.
8    (b) Beginning July 1, 2013, an Independent Tax Tribunal
9Board shall assume, exercise, and administer all rights,
10powers, duties, and responsibilities pertaining to any
11protests of notices of tax liability or deficiencies for all
12taxes administered by the Department of Revenue. The
13Independent Tax Tribunal Board shall be created by law and no
14State agency shall assume the functions of the Board.
 
15
Article 10. Live Theater Production Tax Credit Act

 
16    Section 10-1. Short title. This Article may be cited as the
17Live Theater Production Tax Credit Act. References in this
18Article to "this Act" mean this Article.
 
19    Section 10-5. Purpose. The Illinois economy depends
20heavily on the commercial for-profit live theater industry and
21the pre-Broadway and long-run shows that are presented in
22Illinois. As a result of intense competition from other

 

 

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1prominent theater cities in the United States and abroad in
2attracting pre-Broadway and long-run shows, Illinois must move
3aggressively with new business development investment tools so
4that Illinois is more competitive in site location decision
5making for show producers. In an increasingly global economy,
6Illinois' long term development will benefit from the rational,
7strategic use of State resources in support of pre-Broadway
8live theater and long run show development and growth. It is
9the purpose of this Act to preserve and expand the existing
10work force used in live theater and enhance the marketing of
11the presentation of live theater in Illinois. It shall be the
12policy of this State to promote and encourage the training and
13hiring of Illinois residents who represent the diversity of the
14Illinois population through the creation and implementation of
15training, education, and recruitment programs organized in
16cooperation with Illinois colleges and universities, labor
17organizations, and the commercial for-profit live theater
18industry.
 
19    Section 10-10. Definitions. As used in this Act:
20    "Accredited theater production" means a for-profit live
21stage presentation in a qualified production facility, as
22defined in this Section, that is either (i) a pre-Broadway
23production or (ii) a long-run production for which the
24aggregate Illinois labor and marketing expenditures exceed
25$100,000.

 

 

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1    "Pre-Broadway production" means a live stage production
2that, in its original or adaptive version, is performed in a
3qualified production facility having a presentation scheduled
4for Broadway's Theater District in New York City within 12
5months after its Illinois presentation.
6    "Long-run production" means a live stage production that is
7performed in a qualified production facility for longer than 8
8weeks, with at least 6 performances per week, and includes a
9production that spans the end of one tax year and the
10commencement of a new tax year that, in combination, meets the
11criteria set forth in this definition making it a long-run
12production eligible for a theater tax credit award in each tax
13year or portion thereof.
14    "Accredited theater production certificate" means a
15certificate issued by the Department certifying that the
16production is an accredited theater production that meets the
17guidelines of this Act.
18    "Applicant" means a taxpayer that is a theater producer,
19owner, licensee, operator, or presenter that is presenting or
20has presented a live stage presentation located within the
21State of Illinois who:
22        (1) owns or licenses the theatrical rights of the stage
23    presentation for the Illinois production period; or
24        (2) has contracted or will contract directly with the
25    owner or licensee of the theatrical rights or a person
26    acting on behalf of the owner or licensee to provide live

 

 

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1    performances of the production.
2    An applicant that directly or indirectly owns, controls, or
3operates multiple qualified production facilities shall be
4presumed to be and considered for the purposes of this Act to
5be a single applicant; provided, however, that as to each of
6the applicant's qualified production facilities, the applicant
7shall be eligible to separately and contemporaneously (i) apply
8for and obtain accredited theater production certificates,
9(ii) stage accredited theater productions, and (iii) apply for
10and receive a tax credit award certificate for each of
11applicant's accredited theater productions performed at each
12of the applicant's qualified production facilities.
13    "Department" means the Department of Commerce and Economic
14Opportunity.
15    "Director" means the Director of the Department.
16    "Illinois labor expenditure" means gross salary or wages
17including, but not limited to, taxes, benefits, and any other
18consideration incurred or paid to non-talent employees of the
19applicant for services rendered to and on behalf of the
20accredited theater production. To qualify as an Illinois labor
21expenditure, the expenditure must be:
22        (1) incurred or paid by the applicant on or after the
23    effective date of the Act for services related to any
24    portion of an accredited theater production from its
25    pre-production stages, including, but not limited to, the
26    writing of the script, casting, hiring of service

 

 

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1    providers, purchases from vendors, marketing, advertising,
2    public relations, load in, rehearsals, performances, other
3    accredited theater production related activities, and load
4    out;
5        (2) directly attributable to the accredited theater
6    production;
7        (3) limited to the first $100,000 of wages incurred or
8    paid to each employee of an accredited theater production
9    in each tax year;
10        (4) included in the federal income tax basis of the
11    property;
12        (5) paid in the tax year for which the applicant is
13    claiming the tax credit award, or no later than 60 days
14    after the end of the tax year;
15        (6) paid to persons residing in Illinois at the time
16    payments were made; and
17        (7) reasonable in the circumstances.
18    "Illinois production spending" means any and all expenses
19directly or indirectly incurred relating to an accredited
20theater production presented in any qualified production
21facility of the applicant, including, but not limited to,
22expenditures for:
23        (1) national marketing, public relations, and the
24    creation and placement of print, electronic, television,
25    billboard, and other forms of advertising; and
26        (2) the construction and fabrication of scenic

 

 

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1    materials and elements; provided, however, that the
2    maximum amount of expenditures attributable to the
3    construction and fabrication of scenic materials and
4    elements eligible for a tax credit award shall not exceed
5    $500,000 per applicant per production in any single tax
6    year.
7    "Qualified production facility" means a facility located
8in the State in which live theatrical productions are, or are
9intended to be, exclusively presented that contains at least
10one stage, a seating capacity of 1,200 or more seats, and
11dressing rooms, storage areas, and other ancillary amenities
12necessary for the accredited theater production.
13    "Tax credit award" means the issuance to a taxpayer by the
14Department of a tax credit award in conformance with Sections
1510-40 and 10-45 of this Act.
16    "Tax year" means a calendar year for the period January 1
17to and including December 31.
 
18    Section 10-15. Powers of the Department. The Department, in
19addition to those powers granted under the Civil Administrative
20Code of Illinois, is granted and has all the powers necessary
21or convenient to carry out and effectuate the purposes and
22provisions of this Act, including, but not limited to, the
23power and authority to:
24        (1) adopt rules deemed necessary and appropriate for
25    the administration of the Tax Credit Award program;

 

 

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1    establish forms for applications, notifications,
2    contracts, or any other agreements; and accept
3    applications at any time during the year;
4        (2) assist applicants pursuant to the provisions of
5    this Act to promote, foster, and support live theater
6    development and production and its related job creation or
7    retention within the State;
8        (3) gather information and conduct inquiries, in the
9    manner and by the methods set forth in this Act, required
10    for the Department to comply with Section 10-40 and,
11    without limitation, obtain information with respect to
12    applicants for the purpose of making any designations or
13    certifications necessary or desirable to assist the
14    Department with any recommendation or guidance in the
15    furtherance of the purposes of this Act and relating to
16    applicants' participation in training, education, and
17    recruitment programs that are organized in cooperation
18    with Illinois colleges and universities or labor
19    organizations designed to promote and encourage the
20    training and hiring of Illinois residents who represent the
21    diversity of the Illinois population;
22        (4) provide for sufficient personnel to permit
23    administrative, staffing, operating, and related support
24    required to adequately discharge its duties and
25    responsibilities described in this Act from funds as may be
26    appropriated by the General Assembly for the

 

 

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1    administration of this Act; and
2        (5) require that the applicant at all times keep proper
3    books and records of accounts relating to the tax credit
4    award, in accordance with generally accepted accounting
5    principles consistently applied, and make, upon reasonable
6    written request by the Department, those books and records
7    available for reasonable Department inspection and audit
8    during the applicant's normal business hours. Any
9    documents or data made available to or received from the
10    applicant by any agent, employee, officer, or service
11    provider to the Department shall be deemed confidential and
12    shall not constitute public records to the extent that the
13    documents or data consist of commercial or financial
14    information regarding the operation by the applicant of any
15    theater or any accredited theater production, or any
16    recipient of any tax credit award under this Act.
 
17    Section 10-20. Tax credit award. Subject to the conditions
18set forth in this Act, an applicant is entitled to a tax credit
19award as approved by the Department for qualifying Illinois
20labor expenditures and Illinois production spending for each
21tax year in which the applicant is awarded an accredited
22theater production certificate issued by the Department. The
23amount of tax credits awarded pursuant to this Act shall not
24exceed $2,000,000 in any fiscal year. Credits shall be awarded
25on a first-come, first-served basis. Notwithstanding the

 

 

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1foregoing, if the amount of credits applied for in any fiscal
2year exceeds the amount authorized to be awarded under this
3Section, the excess credit amount shall be awarded in the next
4fiscal year in which credits remain available for award and
5shall be treated as having been applied for on the first day of
6that fiscal year.
 
7    Section 10-25. Application for certification of accredited
8theater production. Any applicant proposing an accredited
9theater production located or planned to be located in Illinois
10may request an accredited theater production certificate by
11application to the Department.
 
12    Section 10-30. Review of application for accredited
13theater production certificate.
14    (a) The Department shall issue an accredited theater
15production certificate to an applicant if it finds that by a
16preponderance the following conditions exist:
17        (1) the applicant intends to make the expenditure in
18    the State required for certification of the accredited
19    theater production;
20        (2) the applicant's accredited theater production is
21    economically sound and will benefit the people of the State
22    of Illinois by increasing opportunities for employment and
23    will strengthen the economy of Illinois;
24        (3) the following requirements related to the

 

 

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1    implementation of a diversity plan have been met: (i) the
2    applicant has filed with the Department a diversity plan
3    outlining specific goals for hiring Illinois labor
4    expenditure eligible minority persons and females, as
5    defined in the Business Enterprise for Minorities,
6    Females, and Persons with Disabilities Act, and for using
7    vendors receiving certification under the Business
8    Enterprise for Minorities, Females, and Persons with
9    Disabilities Act; (ii) the Department has approved the plan
10    as meeting the requirements established by the Department
11    and verified that the applicant has met or made good faith
12    efforts in achieving those goals; and (iii) the Department
13    has adopted any rules that are necessary to ensure
14    compliance with the provisions set forth in this paragraph
15    and necessary to require that the applicant's plan reflects
16    the diversity of the population of this State;
17        (4) the applicant's accredited theater production
18    application indicates whether the applicant intends to
19    participate in training, education, and recruitment
20    programs that are organized in cooperation with Illinois
21    colleges and universities, labor organizations, and the
22    holders of accredited theater production certificates and
23    are designed to promote and encourage the training and
24    hiring of Illinois residents who represent the diversity of
25    Illinois;
26        (5) if not for the tax credit award, the applicant's

 

 

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1    accredited theater production would not occur in Illinois,
2    which may be demonstrated by any means, including, but not
3    limited to, evidence that: (i) the applicant, presenter,
4    owner, or licensee of the production rights has other state
5    or international location options at which to present the
6    production and could reasonably and efficiently locate
7    outside of the State, (ii) at least one other state or
8    nation could be considered for the production, (iii) the
9    receipt of the tax award credit is a major factor in the
10    decision of the applicant, presenter, production owner or
11    licensee as to where the production will be presented and
12    that without the tax credit award the applicant likely
13    would not create or retain jobs in Illinois, or (iv)
14    receipt of the tax credit award is essential to the
15    applicant's decision to create or retain new jobs in the
16    State; and
17        (6) the tax credit award will result in an overall
18    positive impact to the State, as determined by the
19    Department using the best available data.
20    (b) If any of the provisions in this Section conflict with
21any existing collective bargaining agreements, the terms and
22conditions of those collective bargaining agreements shall
23control.
24    (c) The Department shall act expeditiously regarding
25approval of applications for accredited theater production
26certificates so as to accommodate the pre-production work,

 

 

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1booking, commencement of ticket sales, determination of
2performance dates, load in, and other matters relating to the
3live theater productions for which approval is sought.
 
4    Section 10-35. Training programs for skills in critical
5demand. To accomplish the purposes of this Act, the Department
6may use the training programs provided under Section 605-800 of
7the Department of Commerce and Economic Opportunity Law of the
8Civil Administrative Code of Illinois.
 
9    Section 10-40. Issuance of Tax Credit Award Certificate.
10    (a) In order to qualify for a tax credit award under this
11Act, an applicant must file an application for each accredited
12theater production at each of the applicant's qualified
13production facilities, on forms prescribed by the Department,
14providing information necessary to calculate the tax credit
15award and any additional information as reasonably required by
16the Department.
17    (b) Upon satisfactory review of the application, the
18Department shall issue a tax credit award certificate stating
19the amount of the tax credit award to which the applicant is
20entitled for that tax year and shall contemporaneously notify
21the applicant and Illinois Department of Revenue in accordance
22with Section 222 of the Illinois Income Tax Act.
 
23    Section 10-45. Amount and payment of the tax credit award.

 

 

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1The tax credit award shall be calculated each tax year based
2upon the filing by the applicant on forms prescribed by the
3Department containing information regarding qualifying and
4quantified Illinois labor expenditures, as defined in Section
510-10, net of the limitation in that Section, and Illinois
6production spending, as defined in Section 10-10, net of the
7limitation in that Section. From the amount calculated, the
8applicant shall be entitled to receive a tax credit award of up
9to:
10        (1) 20% of the Illinois labor expenditures for each tax
11    year; plus
12        (2) 20% of the Illinois production spending for each
13    tax year; plus
14        (3) 15% of the Illinois labor expenditures generated by
15    the employment of Illinois residents in geographic areas of
16    high poverty or high unemployment in each tax year, as
17    determined by the Department.
18    Following the Department's determination of the tax credit
19award, the Department shall issue the tax credit award to the
20applicant.
 
21    Section 10-50. Live theater tax credit award program
22evaluation and reports.
23    (a) The Department's live theater tax credit award
24evaluation must include:
25        (i) an assessment of the effectiveness of the program

 

 

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1    in creating and retaining new jobs in Illinois;
2        (ii) an assessment of the revenue impact of the
3    program;
4        (iii) in the discretion of the Department, a review of
5    the practices and experiences of other states or nations
6    with similar programs; and
7        (iv) an assessment of the overall success of the
8    program. The Department may make a recommendation to
9    extend, modify, or not extend the program based on the
10    evaluation.
11    (b) At the end of each fiscal quarter, the Department shall
12submit to the General Assembly a report that includes, without
13limitation:
14        (i) an assessment of the economic impact of the
15    program, including the number of jobs created and retained,
16    and whether the job positions are entry level, management,
17    vendor, or production related;
18        (ii) the amount of accredited theater production
19    spending brought to Illinois, including the amount of
20    spending and type of Illinois vendors hired in connection
21    with an accredited theater production; and
22        (iii) a determination of whether those receiving
23    qualifying Illinois labor expenditure salaries or wages
24    reflect the geographical, racial and ethnic, gender, and
25    income level diversity of the State of Illinois.
26    (c) At the end of each fiscal year, the Department shall

 

 

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1submit to the General Assembly a report that includes, without
2limitation:
3        (i) the identification of each vendor that provided
4    goods or services that were included in an accredited
5    theater production's Illinois production spending;
6        (ii) a statement of the amount paid to each identified
7    vendor by the accredited theater production and whether the
8    vendor is a minority or female owned business as defined in
9    Section 2 of the Business Enterprise for Minorities,
10    Females, and Persons with Disabilities Act; and
11        (iii) a description of the steps taken by the
12    Department to encourage accredited theater productions to
13    use vendors who are minority or female owned businesses.
 
14    Section 10-55. Program terms and conditions. Any
15documentary materials or data made available or received from
16an applicant by any agent or employee of the Department are
17confidential and are not public records to the extent that the
18materials or data consist of commercial or financial
19information regarding the operation of or the production of the
20applicant or recipient of any tax credit award under this Act.
 
21    Section 10-80. The Illinois Income Tax Act is amended by
22adding Section 222 as follows:
 
23    (35 ILCS 5/222 new)

 

 

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1    Sec. 222. Live theater production credit.
2    (a) For tax years beginning on or after January 1, 2012, a
3taxpayer who has received a tax credit award under the Live
4Theater Production Tax Credit Act is entitled to a credit
5against the taxes imposed under subsections (a) and (b) of
6Section 201 of this Act in an amount determined under that Act
7by the Department of Commerce and Economic Opportunity.
8    (b) If the taxpayer is a partnership, limited liability
9partnership, limited liability company, or Subchapter S
10corporation, the tax credit award is allowed to the partners,
11unit holders, or shareholders in accordance with the
12determination of income and distributive share of income under
13Sections 702 and 704 and Subchapter S of the Internal Revenue
14Code.
15    (c) A sale, assignment, or transfer of the tax credit award
16may be made by the taxpayer earning the credit within one year
17after the credit is awarded in accordance with rules adopted by
18the Department of Commerce and Economic Opportunity.
19    (d) The Department of Revenue, in cooperation with the
20Department of Commerce and Economic Opportunity, shall adopt
21rules to enforce and administer the provisions of this Section.
22    (e) The tax credit award may not be carried back. If the
23amount of the credit exceeds the tax liability for the year,
24the excess may be carried forward and applied to the tax
25liability of the 5 tax years following the excess credit year.
26The tax credit award shall be applied to the earliest year for

 

 

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1which there is a tax liability. If there are credits from more
2than one tax year that are available to offset liability, the
3earlier credit shall be applied first. In no event may a credit
4under this Section reduce the taxpayer's liability to less than
5zero.
 
6
Article 15. Amendatory Provisions

 
7    Section 15-5. The Economic Development Area Tax Increment
8Allocation Act is amended by changing Sections 3, 4, 5, 8, 9,
9and 11 and by adding Sections 4.5 and 4.7 as follows:
 
10    (20 ILCS 620/3)  (from Ch. 67 1/2, par. 1003)
11    Sec. 3. Definitions. In this Act, words or terms shall have
12the following meanings unless the context or usage clearly
13indicates that another meaning is intended.
14    (a) "Department" means the Department of Commerce and
15Economic Opportunity.
16    (b) "Economic development plan" means the written plan of a
17municipality which sets forth an economic development program
18for an economic development project area. Each economic
19development plan shall include but not be limited to (1)
20estimated economic development project costs, (2) the sources
21of funds to pay such costs, (3) the nature and term of any
22obligations to be issued by the municipality to pay such costs,
23(4) the most recent equalized assessed valuation of the

 

 

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1economic development project area, (5) an estimate of the
2equalized assessed valuation of the economic development
3project area after completion of an economic development
4project, (6) the estimated date of completion of any economic
5development project proposed to be undertaken, (7) a general
6description of any proposed developer, user, or tenant of any
7property to be located or improved within the economic
8development project area, (8) a description of the type,
9structure and general character of the facilities to be
10developed or improved in the economic development project area,
11(9) a description of the general land uses to apply in the
12economic development project area, (10) a description of the
13type, class and number of employees to be employed in the
14operation of the facilities to be developed or improved in the
15economic development project area, and (11) a commitment by the
16municipality to fair employment practices and an affirmative
17action plan with respect to any economic development program to
18be undertaken by the municipality.
19    (c) "Economic development project" means any development
20project in furtherance of the objectives of this Act.
21    (d) "Economic development project area" means any improved
22or vacant area which (1) is located within or partially within
23or partially without the territorial limits of a municipality,
24provided that no area without the territorial limits of a
25municipality shall be included in an economic development
26project area without the express consent of the Department,

 

 

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1acting as agent for the State, (2) is contiguous, (3) is not
2less in the aggregate than three hundred twenty acres, (4) is
3suitable for siting by any commercial, manufacturing,
4industrial, research or transportation enterprise of
5facilities to include but not be limited to commercial
6businesses, offices, factories, mills, processing plants,
7assembly plants, packing plants, fabricating plants,
8industrial or commercial distribution centers, warehouses,
9repair overhaul or service facilities, freight terminals,
10research facilities, test facilities or transportation
11facilities, whether or not such area has been used at any time
12for such facilities and whether or not the area has been used
13or is suitable for other uses, including commercial
14agricultural purposes, and (5) which has been approved and
15certified by the Department pursuant to this Act.
16    (e) "Economic development project costs" mean and include
17the sum total of all reasonable or necessary costs incurred by
18a municipality incidental to an economic development project,
19including, without limitation, the following:
20    (1) Costs of studies, surveys, development of plans and
21specifications, implementation and administration of an
22economic development plan, personnel and professional service
23costs for architectural, engineering, legal, marketing,
24financial, planning, police, fire, public works or other
25services, provided that no charges for professional services
26may be based on a percentage of incremental tax revenues;

 

 

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1    (2) Property assembly costs within an economic development
2project area, including but not limited to acquisition of land
3and other real or personal property or rights or interests
4therein, and specifically including payments to developers or
5other nongovernmental persons as reimbursement for property
6assembly costs incurred by such developer or other
7nongovernmental person;
8    (3) Site preparation costs, including but not limited to
9clearance of any area within an economic development project
10area by demolition or removal of any existing buildings,
11structures, fixtures, utilities and improvements and clearing
12and grading; and including installation, repair, construction,
13reconstruction, or relocation of public streets, public
14utilities, and other public site improvements within or without
15an economic development project area which are essential to the
16preparation of the economic development project area for use in
17accordance with an economic development plan; and specifically
18including payments to developers or other nongovernmental
19persons as reimbursement for site preparation costs incurred by
20such developer or nongovernmental person;
21    (4) Costs of renovation, rehabilitation, reconstruction,
22relocation, repair or remodeling of any existing buildings,
23improvements, and fixtures within an economic development
24project area, and specifically including payments to
25developers or other nongovernmental persons as reimbursement
26for such costs incurred by such developer or nongovernmental

 

 

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1person;
2    (5) Costs of construction, acquisition, and operation
3within an economic development project area of public
4improvements, including but not limited to, publicly-owned
5buildings, structures, works, utilities or fixtures; provided
6that no allocation made to the municipality pursuant to
7subparagraph (A) of paragraph (2) of subsection (g) of Section
84 of this Act or subparagraph (A) of paragraph (4) of
9subsection (g) of Section 4 of this Act shall be used to
10operate a convention center or similar entertainment complex or
11venue;
12    (6) Financing costs, including but not limited to all
13necessary and incidental expenses related to the issuance of
14obligations, payment of any interest on any obligations issued
15hereunder which accrues during the estimated period of
16construction of any economic development project for which such
17obligations are issued and for not exceeding 36 months
18thereafter, and any reasonable reserves related to the issuance
19of such obligations;
20    (7) All or a portion of a taxing district's capital costs
21resulting from an economic development project necessarily
22incurred or estimated to be incurred by a taxing district in
23the furtherance of the objectives of an economic development
24project, to the extent that the municipality by written
25agreement accepts and approves such costs;
26    (8) Relocation costs to the extent that a municipality

 

 

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1determines that relocation costs shall be paid or is required
2to make payment of relocation costs by federal or State law;
3    (9) The estimated tax revenues from real property in an
4economic development project area acquired by a municipality
5which, according to the economic development plan, is to be
6used for a private use and which any taxing district would have
7received had the municipality not adopted tax increment
8allocation financing for an economic development project area
9and which would result from such taxing district's levies made
10after the time of the adoption by the municipality of tax
11increment allocation financing to the time the current
12equalized assessed value of real property in the economic
13development project area exceeds the total initial equalized
14value of real property in said area;
15    (10) Costs of job training, advanced vocational or career
16education, including but not limited to courses in
17occupational, semi-technical or technical fields leading
18directly to employment, incurred by one or more taxing
19districts, provided that such costs are related to the
20establishment and maintenance of additional job training,
21advanced vocational education or career education programs for
22persons employed or to be employed by employers located in an
23economic development project area, and further provided that
24when such costs are incurred by a taxing district or taxing
25districts other than the municipality they shall be set forth
26in a written agreement by or among the municipality and the

 

 

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1taxing district or taxing districts, which agreement describes
2the program to be undertaken, including but not limited to the
3number of employees to be trained, a description of the
4training and services to be provided, the number and type of
5positions available or to be available, itemized costs of the
6program and sources of funds to pay the same, and the term of
7the agreement. Such costs include, specifically, the payment by
8community college districts of costs pursuant to Sections 3-37,
93-38, 3-40 and 3-40.1 of the Public Community College Act and
10by school districts of costs pursuant to Sections 10-22.20a and
1110-23.3a of The School Code;
12    (11) Private financing costs incurred by developers or
13other nongovernmental persons in connection with an economic
14development project, and specifically including payments to
15developers or other nongovernmental persons as reimbursement
16for such costs incurred by such developer or other
17nongovernmental person, provided that:
18    (A) private financing costs shall be paid or reimbursed by
19a municipality only pursuant to the prior official action of
20the municipality evidencing an intent to pay or reimburse such
21private financing costs;
22    (B) except as provided in subparagraph (D), the aggregate
23amount of such costs paid or reimbursed by a municipality in
24any one year shall not exceed 30% of such costs paid or
25incurred by the developer or other nongovernmental person in
26that year;

 

 

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1    (C) private financing costs shall be paid or reimbursed by
2a municipality solely from the special tax allocation fund
3established pursuant to this Act and shall not be paid or
4reimbursed from the proceeds of any obligations issued by a
5municipality;
6    (D) if there are not sufficient funds available in the
7special tax allocation fund in any year to make such payment or
8reimbursement in full, any amount of such interest cost
9remaining to be paid or reimbursed by a municipality shall
10accrue and be payable when funds are available in the special
11tax allocation fund to make such payment; and
12    (E) in connection with its approval and certification of an
13economic development project pursuant to Section 5 of this Act,
14the Department shall review any agreement authorizing the
15payment or reimbursement by a municipality of private financing
16costs in its consideration of the impact on the revenues of the
17municipality and the affected taxing districts of the use of
18tax increment allocation financing.
19    (f) "Municipality" means a city, village or incorporated
20town.
21    (g) "Obligations" means any instrument evidencing the
22obligation of a municipality to pay money, including without
23limitation, bonds, notes, installment or financing contracts,
24certificates, tax anticipation warrants or notes, vouchers,
25and any other evidence of indebtedness.
26    (h) "Taxing districts" means counties, townships,

 

 

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1municipalities, and school, road, park, sanitary, mosquito
2abatement, forest preserve, public health, fire protection,
3river conservancy, tuberculosis sanitarium and any other
4municipal corporations or districts with the power to levy
5taxes upon property located within the economic development
6project area.
7(Source: P.A. 94-793, eff. 5-19-06.)
 
8    (20 ILCS 620/4)  (from Ch. 67 1/2, par. 1004)
9    Sec. 4. Establishment of economic development project
10areas; ordinance; notice; hearing; changes in economic
11development plan. Economic development project areas shall be
12established as follows:
13    (a) The corporate authorities of a municipality shall by
14ordinance propose the establishment of an economic development
15project area and fix a time and place for a public hearing, and
16shall submit a certified copy of the ordinance as adopted to
17the Department.
18    (b) (1) Notice of the public hearing shall be given by
19publication and mailing. Notice by publication shall be given
20by publication at least twice, the first publication to be not
21more than 30 nor less than 10 days prior to the hearing in a
22newspaper of general circulation within the taxing districts
23having property in the proposed economic development project
24area. Notice by mailing shall be given by depositing such
25notice together with a copy of the proposed economic

 

 

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1development plan in the United States mails by certified mail
2addressed to the person or persons in whose name the general
3taxes for the last preceding year were paid on each lot, block,
4tract, or parcel of land lying within the economic development
5project area. The notice shall be mailed not less than 10 days
6prior to the date set for the public hearing. In the event
7taxes for the last preceding year were not paid, the notice
8shall also be sent to the persons last listed on the tax rolls
9within the preceding 3 years as the owners of such property.
10    (2) The notices issued pursuant to this Section shall
11include the following:
12    (A) The time and place of public hearing;
13    (B) The boundaries of the proposed economic development
14project area by legal description and by street location where
15possible;
16    (C) A notification that all interested persons will be
17given an opportunity to be heard at the public hearing;
18    (D) An invitation for any person to submit alternative
19proposals or bids for any proposed conveyance, lease, mortgage
20or other disposition of land within the proposed economic
21development project area;
22    (E) A description of the economic development plan or
23economic development project if a plan or project is a subject
24matter of the hearing; and
25    (F) Such other matters as the municipality may deem
26appropriate.

 

 

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1    (3) Not less than 30 days prior to the date set for
2hearing, the municipality shall give notice by mail as provided
3in this subsection (b) to all taxing districts, of which
4taxable property is included in the economic development
5project area, and to the Department. In addition to the other
6requirements under this subsection (b), the notice shall
7include an invitation to the Department and each taxing
8district to submit comments to the municipality concerning the
9subject matter of the hearing prior to the date of hearing.
10    (c) At the public hearing any interested person, the
11Department or any affected taxing district may file written
12objections with the municipal clerk and may be heard orally
13with respect to any issues embodied in the notice. The
14municipality shall hear and determine all alternate proposals
15or bids for any proposed conveyance, lease, mortgage or other
16disposition of land and all protests and objections at the
17hearing, and the hearing may be adjourned to another date
18without further notice other than a motion to be entered upon
19the minutes fixing the time and place of the adjourned hearing.
20Public hearings with regard to an economic development plan,
21economic development project area, or economic development
22project may be held simultaneously.
23    (d) At the public hearing or at any time prior to the
24adoption by the municipality of an ordinance approving an
25economic development plan, the municipality may make changes in
26the economic development plan. Changes which (1) alter the

 

 

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1exterior boundaries of the proposed economic development
2project area, (2) substantially affect the general land uses
3established in the proposed economic development plan, (3)
4substantially change the nature of the proposed economic
5development project, (4) change the general description of any
6proposed developer, user or tenant of any property to be
7located or improved within the economic development project
8area, or (5) change the description of the type, class and
9number of employees to be employed in the operation of the
10facilities to be developed or improved within the economic
11development project area shall be made only after notice and
12hearing pursuant to the procedures set forth in this Section.
13Changes which do not (1) alter the exterior boundaries of a
14proposed economic development project area, (2) substantially
15affect the general land uses established in the proposed
16economic development plan, (3) substantially change the nature
17of the proposed economic development project, (4) change the
18general description of any proposed developer, user or tenant
19of any property to be located or improved within the economic
20development project area, or (5) change the description of the
21type, class and number of employees to be employed in the
22operation of the facilities to be developed or improved within
23the economic development project area may be made without
24further hearing, provided that the municipality shall give
25notice of its changes by mail to the Department and to each
26affected taxing district and by publication in a newspaper or

 

 

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1newspapers of general circulation within the affected taxing
2districts. Such notice by mail and by publication shall each
3occur not later than 10 days following the adoption by
4ordinance of such changes.
5    (e) At any time within 30 days of the final adjournment of
6the public hearing, a municipality may, by ordinance, approve
7the economic development plan, establish the economic
8development project area, and authorize tax increment
9allocation financing for such economic development project
10area. Any ordinance adopted which approves an economic
11development plan shall contain findings that the developer or
12any of its successor entities and its subsidiaries economic
13development project shall create or retain not less than 4,250
142,000 full-time equivalent jobs, that private investment in an
15amount not less than $100,000,000 shall occur in the economic
16development project area, that the economic development
17project will encourage the increase of commerce and industry
18within the State, thereby reducing the evils attendant upon
19unemployment and increasing opportunities for personal income,
20and that the economic development project will increase or
21maintain the property, sales and income tax bases of the
22municipality and of the State. Any ordinance adopted which
23establishes an economic development project area shall contain
24the boundaries of such area by legal description and, where
25possible, by street location. Any ordinance adopted which
26authorizes tax increment allocation financing shall provide

 

 

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1that the ad valorem taxes, if any, arising from the levies upon
2taxable real property in such economic development project area
3by taxing districts and tax rates determined in the manner
4provided in subsection (b) of Section 6 of this Act each year
5after the effective date of the ordinance until economic
6development project costs and all municipal obligations
7financing economic development project costs incurred under
8this Act have been paid shall be divided as follows:
9    (1) That portion of taxes levied upon each taxable lot,
10block, tract or parcel of real property which is attributable
11to the lower of the current equalized assessed value or the
12initial equalized assessed value of each such taxable lot,
13block, tract or parcel of real property in the economic
14development project area shall be allocated to and when
15collected shall be paid by the county collector to the
16respective affected taxing districts in the manner required by
17law in the absence of the adoption of tax increment allocation
18financing.
19    (2) That portion, if any, of such taxes which is
20attributable to the increase in the current equalized assessed
21valuation of each taxable lot, block, tract or parcel of real
22property in the economic development project area over and
23above the initial equalized assessed value of each property in
24the economic development project area shall be allocated to and
25when collected shall be paid to the municipal treasurer who
26shall deposit such taxes into a special fund called the special

 

 

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1tax allocation fund of the municipality for the purpose of
2paying economic development project costs and obligations
3incurred in the payment thereof.
4    (f) After a municipality has by ordinance approved an
5economic development plan and established an economic
6development project area, the plan may be amended and the
7boundaries of the area may be altered only as herein provided.
8Amendments which (1) alter the exterior boundaries of an
9economic development project area, (2) substantially affect
10the general land uses established pursuant to the economic
11development plan, (3) substantially change the nature of the
12economic development project, (4) change the general
13description of any proposed developer, user, or tenant of any
14property to be located or improved within the economic
15development project area, or (5) change the description of the
16type, class and number of employees to be employed in the
17operation of the facilities to be developed or improved within
18the economic development project area, shall be made only after
19notice and hearing pursuant to the procedures set forth in this
20Section. Amendments which do not (1) alter the boundaries of
21the economic development project area, (2) substantially
22affect the general land uses established in the economic
23development plan, (3) substantially change the nature of the
24economic development project, (4) change the general
25description of any proposed developer, user, or tenant of any
26property to be located or improved within the economic

 

 

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1development project area, or (5) change the description of the
2type, class and number of employees to be employed in the
3operation of the facilities to be developed or improved within
4the economic development project area may be made without
5further hearing, provided that the municipality shall give
6notice of any amendment by mail to the Department and to each
7taxing district and by publication in a newspaper or newspapers
8of general circulation within the affected taxing districts.
9Such notice by mail and by publication shall each occur not
10later than 10 days following the adoption by ordinance of any
11amendments.
12    (g) Extension of economic development project area;
13allocations; payment of outstanding claims; changes in
14equalized assessed valuation.
15    (1) Notwithstanding anything to the contrary set forth in
16this Act, upon the effective date of this amendatory Act of the
1797th General Assembly, the duration of any existing economic
18development plan created pursuant to this Act is extended to
19the duration permitted under this subsection, up to a maximum
20duration of 15 years.
21    (2) For the purposes of this Section, real estate taxes
22paid on property within the economic development project area
23during calendar year 2013 and remitted to the developer and the
24taxing districts in 2014 shall be the "base amount". Beginning
25with real estate taxes remitted in 2014, for any economic
26development plan extended by operation of item (1) of this

 

 

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1subsection (g), until such time as all existing obligations, as
2that term is defined in item (5) of this subsection (g), have
3been satisfied, the allocation of the special tax allocation
4fund shall be as follows:
5        (A) All receipts up to the first $350,000 shall be
6    maintained by the municipality in an escrow account to be
7    used solely for (i) expenses relating to the reports
8    required by Section 4.7 of this Act and (ii) legal expenses
9    incurred in defense of any civil action brought against the
10    municipality relating to the economic development
11    agreement. The escrow account shall be within the scope of
12    the annual audit provided in Section 4.7 of this Act. Each
13    December 31 following a deposit into the escrow account,
14    any unobligated balance in the escrow account shall be
15    distributed to the taxing districts in the same manner and
16    proportion as the most recent distribution by the county
17    collector to the taxing districts in the economic
18    development project area.
19        (B) After the allocation required pursuant to
20    paragraph (A) of this item (2), the next $5,000,000 of the
21    receipts shall be allocated to the municipality.
22        (C) After the allocations required pursuant to
23    paragraphs (A) and (B) of this item (2), 55% of the
24    remaining receipts shall be allocated to the developer.
25        (D) After the allocations required pursuant to parts
26    (A) and (B) of this item (2), 45% of the remaining receipts

 

 

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1    shall be allocated to the taxing districts located within
2    the economic development project area, excluding the
3    municipality.
4    (3) For real estate taxes paid in 2012 and remitted to the
5developer and the taxing districts in 2013 and prior years, the
6allocation formula contained in any economic development plan
7in effect immediately prior to the effective date of this
8amendatory Act of the 97th General Assembly shall apply.
9    (4) Beginning with real estate taxes paid in 2014 and
10remitted to the developer and the taxing districts in 2015 and
11each year thereafter, if the taxes paid within the economic
12development project area change from the base amount, the
13allocation of the special tax allocation fund shall be as
14follows:
15        (A) If the amount of current year taxes paid is less
16    than the base amount, then the administrative escrow
17    account shall receive the first $350,000 of receipts, the
18    municipality shall receive the next $5,000,000 of
19    receipts, the developer shall receive 55% of receipts over
20    $5,350,000, and the remaining 45% of receipts over
21    $5,350,000 shall be distributed to the taxing districts
22    (excluding the municipality) in the same manner and
23    proportion as the most recent distribution by the county
24    collector to those taxing districts in the economic
25    development project area.
26        (B) If the amount of current year taxes paid is greater

 

 

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1    than the base amount, then 75% of the increase in real
2    estate tax receipts shall be payable to the developer and
3    the remaining 25% of the increase in real estate tax
4    receipts shall be distributed to the taxing districts
5    (including the municipality) pursuant to the formula in
6    this subsection.
7    (5) After (i) all existing obligations and interest thereon
8have been satisfied, (ii) any excess moneys have been
9distributed pursuant to this subsection, and (iii) final
10closing of the books and records of the economic development
11project area has occurred, the municipality shall adopt an
12ordinance dissolving the special tax allocation fund for the
13economic development project area and terminating the
14designation of the economic development project area as an
15economic development project area. All excess moneys in the
16special tax allocation fund shall be distributed to the taxing
17districts in the same manner and proportion as the most recent
18distribution by the county collector to those taxing districts
19in the economic development project area. For the purpose of
20this subsection (g), "existing obligations" means (i) the
21obligations of the developer that existed before the base year,
22as certified by a sworn affidavit of the principal financial
23officer of the developer attesting that the amounts set forth
24are true and correct, (ii) obligations of the municipality
25relating to the payment of the obligations of the developer,
26and (iii) any amounts payable by taxing districts to the

 

 

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1developer for property taxes determined to have been overpaid,
2to the extent that those amounts payable have been carried
3forward as an interest bearing note due to the developer. All
4obligations of the developer due and payable shall be processed
5and paid in the order received, with the oldest notes to be
6processed and paid first. Beginning January 1, 2012, all
7outstanding interest bearing notes shall bear interest at the
8rate of 4% until paid.
9    (h) Beginning on the effective date of this amendatory Act
10of the 97th General Assembly, the taxing districts shall meet
11annually 180 days after the close of the municipal fiscal year,
12or as soon as the economic development project audit for that
13fiscal year becomes available, to review the effectiveness and
14status of the economic development project area up to that
15date.
16(Source: P.A. 86-38.)
 
17    (20 ILCS 620/4.5 new)
18    Sec. 4.5. Recapture.
19    (a) In the event that the developer terminates all of its
20operations and vacates the redevelopment area within 60 months
21after the effective date of this amendatory Act of the 97th
22General Assembly, the developer shall be required to remit to
23the Department an amount equal to the payments disbursed to the
24developer in 2014 and subsequent years under the Agreement.
25Within 30 days after receipt, the Department shall remit such

 

 

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1funds to the county collector. The county collector shall
2thereafter make distribution to the respective taxing
3districts in the same manner and proportion as the most recent
4distribution by the county collector to those taxing districts
5of real property taxes from real property in the economic
6development project area.
7    (b) In the event the developer fails to maintain 4,250 jobs
8at any time before the termination of the economic development
9project area, except as provided in subsection (c), the
10developer shall forfeit an amount of its allocations from the
11special tax allocation fund for that time period in which the
12developer failed to maintain 4,250 jobs. The amount forfeited
13shall equal the percentage of the year that the developer
14failed to maintain 4,250 multiplied by the amount the developer
15would have received if they maintained 4,250 jobs for the
16entire year. Any funds that are forfeited shall be distributed
17to the taxing districts in the same manner and proportion as
18the most recent distribution by the county collector to those
19taxing districts (inclusive of the municipality) in the
20economic development project area.
21    (c) In the event that the developer maintains no jobs at
22any time before the termination of the economic development
23project area, the municipality shall adopt an ordinance
24dissolving the special tax allocation fund for the economic
25development project area and terminating the economic
26development project area as an economic development project

 

 

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1area. That ordinance shall be adopted no later than one year
2after the date that the developer maintains no jobs within the
3economic development project area. All excess moneys in the
4special tax allocation fund shall be distributed to the taxing
5districts in the same manner and proportion as the most recent
6distribution by the county collector to those taxing districts
7in the economic development project area.
 
8    (20 ILCS 620/4.7 new)
9    Sec. 4.7. Municipal reports. After the effective date of
10this amendatory Act of the 97th General Assembly, a
11municipality shall submit in an electronic format all of the
12following information for each economic development project
13area (i) to the State Comptroller and (ii) to all taxing
14districts overlapping the economic development project area no
15later than 180 days after the close of each municipal fiscal
16year or as soon thereafter as the audited financial statements
17become available:
18        (1) Any amendments to the economic development plan or
19    the economic development project area.
20        (2) Audited financial statements of the special tax
21    allocation fund once a cumulative total of $100,000 has
22    been deposited into the fund.
23        (3) Certification of the Chief Executive Officer of the
24    municipality that the municipality has complied with all of
25    the requirements of this Act during the preceding fiscal

 

 

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1    year.
2        (4) An opinion of legal counsel that the municipality
3    is in compliance with this Act.
4        (5) An analysis of the special tax allocation fund that
5    sets forth:
6            (A) the balance in the special tax allocation fund
7        at the beginning of the fiscal year;
8            (B) all amounts deposited in the special tax
9        allocation fund by source;
10            (C) an itemized list of all expenditures from the
11        special tax allocation fund by category of permissible
12        economic development project cost; and
13            (D) the balance in the special tax allocation fund
14        at the end of the fiscal year, including a breakdown of
15        that balance by source and a breakdown of that balance
16        identifying any portion of the balance that is
17        required, pledged, earmarked, or otherwise designated
18        for payment of or securing of obligations and
19        anticipated economic development project costs; any
20        portion of that ending balance that has not been
21        identified or is not identified as being required,
22        pledged, earmarked, or otherwise designated for
23        payment of or securing of obligations or anticipated
24        economic development projects costs shall be
25        designated as surplus as set forth in Section 8 of this
26        Act.

 

 

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1        (6) A description of all property purchased by the
2    municipality within the economic development project area
3    including:
4            (A) street address;
5            (B) approximate size or description of property;
6            (C) purchase price; and
7            (D) the seller of the property.
8        (7) A statement setting forth all activities
9    undertaken in furtherance of the objectives of the economic
10    development plan, including:
11            (A) any project implemented in the preceding
12        fiscal year;
13            (B) a description of the economic development
14        activities undertaken;
15            (C) a description of any agreements entered into by
16        the municipality with regard to the disposition or
17        redevelopment of any property within the economic
18        development project area;
19            (D) additional information on the use of all funds
20        received under this Act and steps taken by the
21        municipality to achieve the objectives of the economic
22        development plan;
23            (E) information regarding contracts that the
24        municipality's tax increment advisors or consultants
25        have entered into with entities or persons that have
26        received, or are receiving, payments financed by tax

 

 

09700SB0397ham006- 43 -LRB097 04209 HLH 60625 a

1        increment revenues produced by the same economic
2        development project area; and
3            (F) a review of public and, to the extent possible,
4        private investment actually undertaken on or after the
5        effective date of this amendatory Act of the 97th
6        General Assembly and prior to the date of the report
7        and estimated to be undertaken during the following
8        fiscal year; this review shall, on a project by project
9        basis, set forth the estimated amounts of public and
10        private investment incurred after the effective date
11        of this amendatory Act of the 97th General Assembly and
12        provide the ratio of private investment to public
13        investment to the date of the report and as estimated
14        to the completion of the economic development project.
15        (8) With regard to any obligations issued by the
16    municipality:
17            (A) copies of any official statements; and
18            (B) an analysis prepared by financial advisor or
19        underwriter setting forth: (i) the nature and term of
20        those obligations; and (ii) projected debt service
21        including required reserves and debt coverage.
22        (9) For special tax allocation funds that have
23    experienced cumulative deposits of incremental tax
24    revenues of $100,000 or more, a certified audit report
25    reviewing compliance with this Act performed by an
26    independent certified public accountant licensed by the

 

 

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1    authority of the State of Illinois. The financial portion
2    of the audit must be conducted in accordance with Standards
3    for Audits of Governmental Organizations, Programs,
4    Activities, and Functions adopted by the Comptroller
5    General of the United States (1981), as amended, or the
6    standards specified by Section 8-8-5 of the Illinois
7    Municipal Auditing Law of the Illinois Municipal Code. The
8    audit report shall contain a letter from the independent
9    certified public accountant indicating compliance or
10    noncompliance with the requirements of subsection (e) of
11    Section 3 of this Act.
12        (10) A list of all intergovernmental agreements in
13    effect during the fiscal year to which the municipality is
14    a party and an accounting of any moneys transferred or
15    received by the municipality during that fiscal year
16    pursuant to those intergovernmental agreements.
 
17    (20 ILCS 620/5)  (from Ch. 67 1/2, par. 1005)
18    Sec. 5. Submission to Department; certification by
19Department; limitation on number of permissible economic
20development project areas. (a) The municipality shall submit
21certified copies of any ordinances adopted approving an
22economic development plan, establishing an economic
23development project area, and authorizing tax increment
24allocation financing for such economic development project
25area to the Department, together with (1) a map of the economic

 

 

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1development project area, (2) a copy of the economic
2development plan as approved, (3) an analysis, and any
3supporting documents and statistics, demonstrating that the
4developer or any of its successor entities and its subsidiaries
5economic development project shall create or retain not less
6than 4,250 2,000 full-time equivalent jobs and that private
7investment in the amount of not less than $100,000,000 shall
8occur in the economic development project area, (4) an estimate
9of the economic impact of the economic development project and
10the use of tax increment allocation financing upon the revenues
11of the municipality and the affected taxing districts, (5) a
12record of all public hearings had in connection with the
13establishment of the economic development project area, and (6)
14such other information as the Department by regulation may
15require.
16    (b) Upon receipt of an application from a municipality the
17Department shall review the application to determine whether
18the economic development project area qualifies as an economic
19development project area under this Act. At its discretion, the
20Department may accept or reject the application or may request
21such additional information as it deems necessary or advisable
22to aid its review. If any such area is found to be qualified to
23be an economic development project area, the Department shall
24approve and certify such economic development project area and
25shall provide written notice of its approval and certification
26to the municipality and to the county clerk. In determining

 

 

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1whether an economic development project area shall be approved
2and certified, the Department shall consider (1) whether,
3without public intervention, the State would suffer
4substantial economic dislocation, such as relocation of a
5commercial business or industrial or manufacturing facility to
6another state, territory or country, or would not otherwise
7benefit from private investment offering substantial
8employment opportunities and economic growth, and (2) the
9impact on the revenues of the municipality and the affected
10taxing districts of the use of tax increment allocation
11financing in connection with the economic development project.
12    (c) On or before the date which is 18 months following the
13date on which this Act becomes law, the Department shall submit
14to the General Assembly a report detailing the number of
15economic development project areas it has approved and
16certified, the number and type of jobs created or retained
17therein, the aggregate amount of private investment therein,
18the impact on the revenues of municipalities and affected
19taxing districts of the use of tax increment allocation
20financing therein, and such additional information as the
21Department may determine to be relevant. On or after the date
22which is 20 months following the date on which this Act becomes
23law the authority granted hereunder to municipalities to
24establish economic development project areas and to adopt tax
25increment allocation financing in connection therewith and to
26the Department to approve and certify economic development

 

 

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1project areas shall expire unless the General Assembly shall
2have authorized municipalities and the Department to continue
3to exercise the powers granted to them hereunder.
4(Source: P.A. 86-38.)
 
5    (20 ILCS 620/8)  (from Ch. 67 1/2, par. 1008)
6    Sec. 8. Issuance of obligations for economic development
7project costs. Obligations secured by the special tax
8allocation fund provided for in Section 7 of this Act for an
9economic development project area may be issued to provide for
10economic development project costs. Those obligations, when so
11issued, shall be retired in the manner provided in the
12ordinance authorizing the issuance of the obligations by the
13receipts of taxes levied as specified in Section 6 of this Act
14against the taxable property included in the economic
15development project area and by other revenue designated or
16pledged by the municipality. A municipality may in the
17ordinance pledge all or any part of the funds in and to be
18deposited in the special tax allocation fund created pursuant
19to Section 7 of this Act to the payment of the economic
20development project costs and obligations. Whenever a
21municipality pledges all of the funds to the credit of a
22special tax allocation fund to secure obligations issued or to
23be issued to pay economic development project costs, the
24municipality may specifically provide that funds remaining to
25the credit of such special tax allocation fund after the

 

 

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1payment of such obligations shall be accounted for annually and
2shall be deemed to be "surplus" funds, and such "surplus" funds
3shall be distributed as hereinafter provided. Whenever a
4municipality pledges less than all of the monies to the credit
5of a special tax allocation fund to secure obligations issued
6or to be issued to pay economic development project costs, the
7municipality shall provide that monies to the credit of the
8special tax allocation fund and not subject to such pledge or
9otherwise encumbered or required for payment of contractual
10obligations for specific economic development project costs
11shall be calculated annually and shall be deemed to be
12"surplus" funds, and such "surplus" funds shall be distributed
13as hereinafter provided. All funds to the credit of a special
14tax allocation fund which are deemed to be "surplus" funds
15shall be distributed annually within 180 days of the close of
16the municipality's fiscal year by being paid by the municipal
17treasurer to the county collector. The county collector shall
18thereafter make distribution to the respective taxing
19districts in the same manner and proportion as the most recent
20distribution by the county collector to those taxing districts
21of real property taxes from real property in the economic
22development project area.
23    Without limiting the foregoing in this Section the
24municipality may, in addition to obligations secured by the
25special tax allocation fund, pledge for a period not greater
26than the term of the obligations towards payment of those

 

 

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1obligations any part or any combination of the following: (i)
2net revenues of all or part of any economic development
3project; (ii) taxes levied and collected on any or all property
4in the municipality, including, specifically, taxes levied or
5imposed by the municipality in a special service area pursuant
6to "An Act to provide the manner of levying or imposing taxes
7for the provision of special services to areas within the
8boundaries of home rule units and non-home rule municipalities
9and counties", approved September 21, 1973, as now or hereafter
10amended; (iii) the full faith and credit of the municipality;
11(iv) a mortgage on part or all of the economic development
12project; or (v) any other taxes or anticipated receipts that
13the municipality may lawfully pledge.
14    Such obligations may be issued in one or more series
15bearing interest at such rate or rates as the corporate
16authorities of the municipality shall determine by ordinance,
17which rate or rates may be variable or fixed, without regard to
18any limitations contained in any law now in effect or hereafter
19adopted. Such obligations shall bear such date or dates, mature
20at such time or times not exceeding 38 20 years from their
21respective dates, but in no event exceeding 38 23 years from
22the date of establishment of the economic development project
23area, be in such denomination, be in such form, whether coupon,
24registered or book-entry, carry such registration, conversion
25and exchange privileges, be executed in such manner, be payable
26in such medium of payment at such place or places within or

 

 

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1without the State of Illinois, contain such covenants, terms
2and conditions, be subject to redemption with or without
3premium, be subject to defeasance upon such terms, and have
4such rank or priority, as such ordinance shall provide.
5Obligations issued pursuant to this Act may be sold at public
6or private sale at such price as shall be determined by the
7corporate authorities of the municipalities. Such obligations
8may, but need not, be issued utilizing the provisions of any
9one or more of the omnibus bond Acts specified in Section 1.33
10of "An Act to revise the law in relation to the construction of
11the statutes", approved March 5, 1874, as now or hereafter
12amended. No referendum approval of the electors shall be
13required as a condition to the issuance of obligations pursuant
14to this Act except as provided in this Section.
15    Whenever a municipality issues bonds for the purpose of
16financing economic development project costs, the municipality
17may provide by ordinance for the appointment of a trustee,
18which may be any trust company within the State, and for the
19establishment of the funds or accounts to be maintained by such
20trustee as the municipality shall deem necessary to provide for
21the security and payment of the bonds. If the municipality
22provides for the appointment of a trustee, the trustee shall be
23considered the assignee of any payments assigned by the
24municipality pursuant to the ordinance and this Section. Any
25amounts paid to the trustee as assignee shall be deposited in
26the funds or accounts established pursuant to the trust

 

 

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1agreement, and shall be held by the trustee in trust for the
2benefit of the holders of the bonds, and the holders shall have
3a lien on and a security interest in those bonds or accounts so
4long as the bonds remain outstanding and unpaid. Upon
5retirement of the bonds, the trustee shall pay over any excess
6amounts held to the municipality for deposit in the special tax
7allocation fund.
8    In the event the municipality authorizes the issuance of
9obligations pursuant to the authority of this Act secured by
10the full faith and credit of the municipality, or pledges ad
11valorem taxes pursuant to clause (ii) of the second paragraph
12of this Section, which obligations are other than obligations
13which may be issued under home rule powers provided by Article
14VII, Section 6 of the Illinois Constitution or which ad valorem
15taxes are other than ad valorem taxes which may be pledged
16under home rule powers provided by Article VII, Section 6 of
17the Illinois Constitution or which are levied in a special
18service area pursuant to "An Act to provide the manner of
19levying or imposing taxes for the provision of special services
20to areas within the boundaries of home rule units and non-home
21rule municipalities and counties", approved September 21,
221973, as now or hereafter amended, the ordinance authorizing
23the issuance of those obligations or pledging those taxes shall
24be published within 10 days after the ordinance has been
25adopted, in one or more newspapers having a general circulation
26within the municipality. The publication of the ordinance shall

 

 

09700SB0397ham006- 52 -LRB097 04209 HLH 60625 a

1be accompanied by a notice of (1) the specific number of voters
2required to sign a petition requesting the question of the
3issuance of the obligations or pledging such ad valorem taxes
4to be submitted to the electors; (2) the time within which the
5petition must be filed; and (3) the date of the prospective
6referendum. The municipal clerk shall provide a petition form
7to any individual requesting one.
8    If no petition is filed with the municipal clerk, as
9hereinafter provided in this Section, within 21 days after the
10publication of the ordinance, the ordinance shall be in effect.
11However, if within that 21 day period a petition is filed with
12the municipal clerk, signed by electors numbering not less than
1315% of the number of electors voting for the mayor or president
14at the last general municipal election, asking that the
15question of issuing obligations using full faith and credit of
16the municipality as security for the cost of paying for
17economic development project costs, or of pledging such ad
18valorem taxes for the payment of those obligations, or both, be
19submitted to the electors of the municipality, the municipality
20shall not be authorized to issue obligations of the
21municipality using the full faith and credit of the
22municipality as security or pledging such ad valorem taxes for
23the payment of those obligations, or both, until the
24proposition has been submitted to and approved by a majority of
25the voters voting on the proposition at a regularly scheduled
26election. The municipality shall certify the proposition to the

 

 

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1proper election authorities for submission in accordance with
2the general election law.
3    The ordinance authorizing the obligations may provide that
4the obligations shall contain a recital that they are issued
5pursuant to this Act, which recital shall be conclusive
6evidence of their validity and of the regularity of their
7issuance.
8    In the event the municipality authorizes issuance of
9obligations pursuant to this Act secured by the full faith and
10credit of the municipality, the ordinance authorizing the
11obligations may provide for the levy and collection of a direct
12annual tax upon all taxable property within the municipality
13sufficient to pay the principal thereof and interest thereon as
14it matures, which levy may be in addition to and exclusive of
15the maximum of all other taxes authorized to be levied by the
16municipality, which levy, however, shall be abated to the
17extent that monies from other sources are available for payment
18of the obligations and the municipality certifies the amount of
19those monies available to the county clerk.
20    A certified copy of the ordinance shall be filed with the
21county clerk of each county in which any portion of the
22municipality is situated, and shall constitute the authority
23for the extension and collection of the taxes to be deposited
24in the special tax allocation fund.
25    A municipality may also issue its obligations to refund, in
26whole or in part, obligations theretofore issued by the

 

 

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1municipality under the authority of this Act, whether at or
2prior to maturity. However, the last maturity of the refunding
3obligations shall not be expressed to mature later than 38 23
4years from the date of the ordinance establishing the economic
5development project area.
6    In the event a municipality issues obligations under home
7rule powers or other legislative authority, the proceeds of
8which are pledged to pay for economic development project
9costs, the municipality may, if it has followed the procedures
10in conformance with this Act, retire those obligations from
11funds in the special tax allocation fund in amounts and in such
12manner as if those obligations had been issued pursuant to the
13provisions of this Act.
14    No obligations issued pursuant to this Act shall be
15regarded as indebtedness of the municipality issuing those
16obligations or any other taxing district for the purpose of any
17limitation imposed by law.
18    Obligations issued pursuant to this Act shall not be
19subject to the provisions of "An Act to authorize public
20corporations to issue bonds, other evidences of indebtedness
21and tax anticipation warrants subject to interest rate
22limitations set forth therein", approved May 26, 1970, as
23amended.
24(Source: P.A. 86-38.)
 
25    (20 ILCS 620/9)  (from Ch. 67 1/2, par. 1009)

 

 

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1    Sec. 9. Powers of municipalities. In addition to powers
2which it may now have, any municipality has the power under
3this Act:
4    (a) To make and enter into all contracts necessary or
5incidental to the implementation and furtherance of an economic
6development plan.
7    (b) Within an economic development project area, to acquire
8by purchase, donation, lease or eminent domain, and to own,
9convey, lease, mortgage or dispose of land and other real or
10personal property or rights or interests therein; and to grant
11or acquire licenses, easements and options with respect
12thereto, all in the manner and at such price the municipality
13determines is reasonably necessary to achieve the objectives of
14the economic development project. No conveyance, lease,
15mortgage, disposition of land or other property acquired by the
16municipality, or agreement relating to the development of
17property, shall be made or executed except pursuant to prior
18official action of the municipality. No conveyance, lease,
19mortgage or other disposition of land, and no agreement
20relating to the development of property, shall be made without
21making public disclosure of the terms and disposition of all
22bids and proposals submitted to the municipality in connection
23therewith.
24    (c) To clear any area within an economic development
25project area by demolition or removal of any existing
26buildings, structures, fixtures, utilities or improvements,

 

 

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1and to clear and grade land.
2    (d) To install, repair, construct, reconstruct or relocate
3public streets, public utilities, and other public site
4improvements within or without an economic development project
5area which are essential to the preparation of an economic
6development project area for use in accordance with an economic
7development plan.
8    (e) To renovate, rehabilitate, reconstruct, relocate,
9repair or remodel any existing buildings, improvements, and
10fixtures within an economic development project area.
11    (f) To construct, acquire, and operate public
12improvements, including but not limited to, publicly-owned
13buildings, structures, works, utilities or fixtures within any
14economic development project area, subject to the restrictions
15of item (5) of subsection (e) of Section 3 of this Act.
16    (g) To issue obligations as provided in this Act provided.
17    (h) To fix, charge and collect fees, rents and charges for
18the use of any building, facility or property or any portion
19thereof owned or leased by the municipality within an economic
20development project area.
21    (i) To accept grants, guarantees, donations of property or
22labor, or any other thing of value for use in connection with
23an economic development project.
24    (j) To pay or cause to be paid economic development project
25costs. Any payments to be made by the municipality to
26developers or other nongovernmental persons for economic

 

 

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1development project costs incurred by such developer or other
2nongovernmental person shall be made only pursuant to the prior
3official action of the municipality evidencing an intent to pay
4or cause to be paid such economic development project costs. A
5municipality is not required to obtain any right, title or
6interest in any real or personal property in order to pay
7economic development project costs associated with such
8property. The municipality shall adopt such accounting
9procedures as may be necessary to determine that such economic
10development project costs are properly paid.
11    (k) To exercise any and all other powers necessary to
12effectuate the purposes of this Act.
13    (l) To create a commission of not less than 5 or more than
1415 persons to be appointed by the mayor or president of the
15municipality with the consent of the majority of the corporate
16authorities of the municipality. Members of a commission shall
17be appointed for initial terms of 1, 2, 3, 4, and 5 years,
18respectively, in such numbers as to provide that the terms of
19not more than 1/3 of all such members shall expire in any one
20year. Their successors shall be appointed for a term of 5
21years. The commission, subject to approval of the corporate
22authorities, may exercise the powers enumerated in this
23Section. The commission shall also have the power to hold the
24public hearings required by this Act and make recommendations
25to the corporate authorities concerning the approval of
26economic development plans, the establishment of economic

 

 

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1development project areas, and the adoption of tax increment
2allocation financing for economic development project areas.
3(Source: P.A. 91-357, eff. 7-29-99.)
 
4    (20 ILCS 620/11)  (from Ch. 67 1/2, par. 1011)
5    Sec. 11. Payment of project costs; revenues from
6governmental municipal property. Revenues received by a taxing
7district municipality from any property, building or facility
8owned, leased or operated by the taxing district municipality
9or any agency or authority established by the taxing district
10municipality may be used to pay economic development project
11costs, or reduce outstanding obligations of the taxing district
12municipality incurred under this Act for economic development
13project costs. The taxing district municipality may place those
14revenues in the special tax allocation fund which shall be held
15by the municipal treasurer of the taxing district or other
16person designated by the taxing district municipality. Revenue
17received by a taxing district the municipality from the sale or
18other disposition of real or personal property or rights or
19interests therein acquired by a taxing district the
20municipality with the proceeds of obligations funded by tax
21increment allocation financing may be used to acquire and
22operate other governmental property that is within the economic
23development project area or that provides services within the
24economic development project area, subject to the restrictions
25of item (5) of subsection (e) of Section 3 of this Act. shall

 

 

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1be deposited by the municipality in the special tax allocation
2fund.
3(Source: P.A. 86-38.)
 
4    Section 15-7. The New Markets Development Program Act is
5amended by changing Section 50 as follows:
 
6    (20 ILCS 663/50)
7    Sec. 50. Sunset. For fiscal years following fiscal year
82017 2012, qualified equity investments shall not be made under
9this Act unless reauthorization is made pursuant to this
10Section. For all fiscal years following fiscal year 2017 2012,
11unless the General Assembly adopts a joint resolution granting
12authority to the Department to approve qualified equity
13investments for the Illinois new markets development program
14and clearly describing the amount of tax credits available for
15the next fiscal year, or otherwise complies with the provisions
16of this Section, no qualified equity investments may be
17permitted to be made under this Act. The amount of available
18tax credits contained in such a resolution shall not exceed the
19limitation provided under Section 20. Nothing in this Section
20precludes a taxpayer who makes a qualified equity investment
21prior to the expiration of authority to make qualified equity
22investments from claiming tax credits relating to that
23qualified equity investment for each applicable credit
24allowance date.

 

 

09700SB0397ham006- 60 -LRB097 04209 HLH 60625 a

1(Source: P.A. 95-1024, eff. 12-31-08.)
 
2    Section 15-10. The Illinois Income Tax Act is amended by
3changing Sections 201, 207, 250, 304, 804, and 1501 as follows:
 
4    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
5    Sec. 201. Tax Imposed.
6    (a) In general. A tax measured by net income is hereby
7imposed on every individual, corporation, trust and estate for
8each taxable year ending after July 31, 1969 on the privilege
9of earning or receiving income in or as a resident of this
10State. Such tax shall be in addition to all other occupation or
11privilege taxes imposed by this State or by any municipal
12corporation or political subdivision thereof.
13    (b) Rates. The tax imposed by subsection (a) of this
14Section shall be determined as follows, except as adjusted by
15subsection (d-1):
16        (1) In the case of an individual, trust or estate, for
17    taxable years ending prior to July 1, 1989, an amount equal
18    to 2 1/2% of the taxpayer's net income for the taxable
19    year.
20        (2) In the case of an individual, trust or estate, for
21    taxable years beginning prior to July 1, 1989 and ending
22    after June 30, 1989, an amount equal to the sum of (i) 2
23    1/2% of the taxpayer's net income for the period prior to
24    July 1, 1989, as calculated under Section 202.3, and (ii)

 

 

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1    3% of the taxpayer's net income for the period after June
2    30, 1989, as calculated under Section 202.3.
3        (3) In the case of an individual, trust or estate, for
4    taxable years beginning after June 30, 1989, and ending
5    prior to January 1, 2011, an amount equal to 3% of the
6    taxpayer's net income for the taxable year.
7        (4) In the case of an individual, trust, or estate, for
8    taxable years beginning prior to January 1, 2011, and
9    ending after December 31, 2010, an amount equal to the sum
10    of (i) 3% of the taxpayer's net income for the period prior
11    to January 1, 2011, as calculated under Section 202.5, and
12    (ii) 5% of the taxpayer's net income for the period after
13    December 31, 2010, as calculated under Section 202.5.
14        (5) In the case of an individual, trust, or estate, for
15    taxable years beginning on or after January 1, 2011, and
16    ending prior to January 1, 2015, an amount equal to 5% of
17    the taxpayer's net income for the taxable year.
18        (5.1) In the case of an individual, trust, or estate,
19    for taxable years beginning prior to January 1, 2015, and
20    ending after December 31, 2014, an amount equal to the sum
21    of (i) 5% of the taxpayer's net income for the period prior
22    to January 1, 2015, as calculated under Section 202.5, and
23    (ii) 3.75% of the taxpayer's net income for the period
24    after December 31, 2014, as calculated under Section 202.5.
25        (5.2) In the case of an individual, trust, or estate,
26    for taxable years beginning on or after January 1, 2015,

 

 

09700SB0397ham006- 62 -LRB097 04209 HLH 60625 a

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

 

 

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1    1, 2011, an amount equal to 4.8% of the taxpayer's net
2    income for the taxable year.
3        (9) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2011, and ending after
5    December 31, 2010, an amount equal to the sum of (i) 4.8%
6    of the taxpayer's net income for the period prior to
7    January 1, 2011, as calculated under Section 202.5, and
8    (ii) 7% of the taxpayer's net income for the period after
9    December 31, 2010, as calculated under Section 202.5.
10        (10) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2011, and ending prior to
12    January 1, 2015, an amount equal to 7% of the taxpayer's
13    net income for the taxable year.
14        (11) In the case of a corporation, for taxable years
15    beginning prior to January 1, 2015, and ending after
16    December 31, 2014, an amount equal to the sum of (i) 7% of
17    the taxpayer's net income for the period prior to January
18    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
19    of the taxpayer's net income for the period after December
20    31, 2014, as calculated under Section 202.5.
21        (12) In the case of a corporation, for taxable years
22    beginning on or after January 1, 2015, and ending prior to
23    January 1, 2025, an amount equal to 5.25% of the taxpayer's
24    net income for the taxable year.
25        (13) In the case of a corporation, for taxable years
26    beginning prior to January 1, 2025, and ending after

 

 

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

 

 

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1in the case of a corporation, other than a Subchapter S
2corporation and except as adjusted by subsection (d-1), shall
3be an additional amount equal to 2.85% of such taxpayer's net
4income for the taxable year, except that beginning on January
51, 1981, and thereafter, the rate of 2.85% specified in this
6subsection shall be reduced to 2.5%, and in the case of a
7partnership, trust or a Subchapter S corporation shall be an
8additional amount equal to 1.5% of such taxpayer's net income
9for the taxable year.
10    (d-1) Rate reduction for certain foreign insurers. In the
11case of a foreign insurer, as defined by Section 35A-5 of the
12Illinois Insurance Code, whose state or country of domicile
13imposes on insurers domiciled in Illinois a retaliatory tax
14(excluding any insurer whose premiums from reinsurance assumed
15are 50% or more of its total insurance premiums as determined
16under paragraph (2) of subsection (b) of Section 304, except
17that for purposes of this determination premiums from
18reinsurance do not include premiums from inter-affiliate
19reinsurance arrangements), beginning with taxable years ending
20on or after December 31, 1999, the sum of the rates of tax
21imposed by subsections (b) and (d) shall be reduced (but not
22increased) to the rate at which the total amount of tax imposed
23under this Act, net of all credits allowed under this Act,
24shall equal (i) the total amount of tax that would be imposed
25on the foreign insurer's net income allocable to Illinois for
26the taxable year by such foreign insurer's state or country of

 

 

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

 

 

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1    subsection shall be applied first against the rates imposed
2    by subsection (b) and only after the tax imposed by
3    subsection (a) net of all credits allowed under this
4    Section other than the credit allowed under subsection (i)
5    has been reduced to zero, against the rates imposed by
6    subsection (d).
7    This subsection (d-1) is exempt from the provisions of
8Section 250.
9    (e) Investment credit. A taxpayer shall be allowed a credit
10against the Personal Property Tax Replacement Income Tax for
11investment in qualified property.
12        (1) A taxpayer shall be allowed a credit equal to .5%
13    of the basis of qualified property placed in service during
14    the taxable year, provided such property is placed in
15    service on or after July 1, 1984. There shall be allowed an
16    additional credit equal to .5% of the basis of qualified
17    property placed in service during the taxable year,
18    provided such property is placed in service on or after
19    July 1, 1986, and the taxpayer's base employment within
20    Illinois has increased by 1% or more over the preceding
21    year as determined by the taxpayer's employment records
22    filed with the Illinois Department of Employment Security.
23    Taxpayers who are new to Illinois shall be deemed to have
24    met the 1% growth in base employment for the first year in
25    which they file employment records with the Illinois
26    Department of Employment Security. The provisions added to

 

 

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

 

 

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1    Department of Commerce and Economic Opportunity) as
2    complying with the requirements specified in clause (i) and
3    (ii) by July 1, 1986. The Department of Commerce and
4    Community Affairs (now Department of Commerce and Economic
5    Opportunity) shall notify the Department of Revenue of all
6    such certifications immediately. For tax years ending
7    after December 31, 1988, the credit shall be allowed for
8    the tax year in which the property is placed in service,
9    or, if the amount of the credit exceeds the tax liability
10    for that year, whether it exceeds the original liability or
11    the liability as later amended, such excess may be carried
12    forward and applied to the tax liability of the 5 taxable
13    years following the excess credit years. The credit shall
14    be applied to the earliest year for which there is a
15    liability. If there is credit from more than one tax year
16    that is available to offset a liability, earlier credit
17    shall be applied first.
18        (2) The term "qualified property" means property
19    which:
20            (A) is tangible, whether new or used, including
21        buildings and structural components of buildings and
22        signs that are real property, but not including land or
23        improvements to real property that are not a structural
24        component of a building such as landscaping, sewer
25        lines, local access roads, fencing, parking lots, and
26        other appurtenances;

 

 

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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        (e);
6            (C) is acquired by purchase as defined in Section
7        179(d) of the Internal Revenue Code;
8            (D) is used in Illinois by a taxpayer who is
9        primarily engaged in manufacturing, or in mining coal
10        or fluorite, or in retailing, or was placed in service
11        on or after July 1, 2006 in a River Edge Redevelopment
12        Zone established pursuant to the River Edge
13        Redevelopment Zone Act; and
14            (E) has not previously been used in Illinois in
15        such a manner and by such a person as would qualify for
16        the credit provided by this subsection (e) or
17        subsection (f).
18        (3) For purposes of this subsection (e),
19    "manufacturing" means the material staging and production
20    of tangible personal property by procedures commonly
21    regarded as manufacturing, processing, fabrication, or
22    assembling which changes some existing material into new
23    shapes, new qualities, or new combinations. For purposes of
24    this subsection (e) the term "mining" shall have the same
25    meaning as the term "mining" in Section 613(c) of the
26    Internal Revenue Code. For purposes of this subsection (e),

 

 

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1    the term "retailing" means the sale of tangible personal
2    property for use or consumption and not for resale, or
3    services rendered in conjunction with the sale of tangible
4    personal property for use or consumption and not for
5    resale. For purposes of this subsection (e), "tangible
6    personal property" has the same meaning as when that term
7    is used in the Retailers' Occupation Tax Act, and, for
8    taxable years ending after December 31, 2008, does not
9    include the generation, transmission, or distribution of
10    electricity.
11        (4) The basis of qualified property shall be the basis
12    used to compute the depreciation deduction for federal
13    income tax purposes.
14        (5) If the basis of the property for federal income tax
15    depreciation purposes is increased after it has been placed
16    in service in Illinois by the taxpayer, the amount of such
17    increase shall be deemed property placed in service on the
18    date of such increase in basis.
19        (6) The term "placed in service" shall have the same
20    meaning as under Section 46 of the Internal Revenue Code.
21        (7) If during any taxable year, any property ceases to
22    be qualified property in the hands of the taxpayer within
23    48 months after being placed in service, or the situs of
24    any qualified property is moved outside Illinois within 48
25    months after being placed in service, the Personal Property
26    Tax Replacement Income Tax for such taxable year shall be

 

 

09700SB0397ham006- 72 -LRB097 04209 HLH 60625 a

1    increased. Such increase shall be determined by (i)
2    recomputing the investment credit which would have been
3    allowed for the year in which credit for such property was
4    originally allowed by eliminating such property from such
5    computation and, (ii) subtracting such recomputed credit
6    from the amount of credit previously allowed. For the
7    purposes of this paragraph (7), a reduction of the basis of
8    qualified property resulting from a redetermination of the
9    purchase price shall be deemed a disposition of qualified
10    property to the extent of such reduction.
11        (8) Unless the investment credit is extended by law,
12    the basis of qualified property shall not include costs
13    incurred after December 31, 2018 2013, except for costs
14    incurred pursuant to a binding contract entered into on or
15    before December 31, 2018 2013.
16        (9) Each taxable year ending before December 31, 2000,
17    a partnership may elect to pass through to its partners the
18    credits to which the partnership is entitled under this
19    subsection (e) for the taxable year. A partner may use the
20    credit allocated to him or her under this paragraph only
21    against the tax imposed in subsections (c) and (d) of this
22    Section. If the partnership makes that election, those
23    credits shall be allocated among the partners in the
24    partnership in accordance with the rules set forth in
25    Section 704(b) of the Internal Revenue Code, and the rules
26    promulgated under that Section, and the allocated amount of

 

 

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

 

 

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

 

 

09700SB0397ham006- 75 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 76 -LRB097 04209 HLH 60625 a

1    date of such increase in basis.
2        (5) The term "placed in service" shall have the same
3    meaning as under Section 46 of the Internal Revenue Code.
4        (6) If during any taxable year, any property ceases to
5    be qualified property in the hands of the taxpayer within
6    48 months after being placed in service, or the situs of
7    any qualified property is moved outside the Enterprise Zone
8    or River Edge Redevelopment Zone within 48 months after
9    being placed in service, the tax imposed under subsections
10    (a) and (b) of this Section for such taxable year shall be
11    increased. Such increase shall be determined by (i)
12    recomputing the investment credit which would have been
13    allowed for the year in which credit for such property was
14    originally allowed by eliminating such property from such
15    computation, and (ii) subtracting such recomputed credit
16    from the amount of credit previously allowed. For the
17    purposes of this paragraph (6), a reduction of the basis of
18    qualified property resulting from a redetermination of the
19    purchase price shall be deemed a disposition of qualified
20    property to the extent of such reduction.
21        (7) There shall be allowed an additional credit equal
22    to 0.5% of the basis of qualified property placed in
23    service during the taxable year in a River Edge
24    Redevelopment Zone, provided such property is placed in
25    service on or after July 1, 2006, and the taxpayer's base
26    employment within Illinois has increased by 1% or more over

 

 

09700SB0397ham006- 77 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 78 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 79 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 80 -LRB097 04209 HLH 60625 a

1        (6) The credit shall be available for eligible
2    employees hired on or after January 1, 1986.
3    (h) Investment credit; High Impact Business.
4        (1) Subject to subsections (b) and (b-5) of Section 5.5
5    of the Illinois Enterprise Zone Act, a taxpayer shall be
6    allowed a credit against the tax imposed by subsections (a)
7    and (b) of this Section for investment in qualified
8    property which is placed in service by a Department of
9    Commerce and Economic Opportunity designated High Impact
10    Business. The credit shall be .5% of the basis for such
11    property. The credit shall not be available (i) until the
12    minimum investments in qualified property set forth in
13    subdivision (a)(3)(A) of Section 5.5 of the Illinois
14    Enterprise Zone Act have been satisfied or (ii) until the
15    time authorized in subsection (b-5) of the Illinois
16    Enterprise Zone Act for entities designated as High Impact
17    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
18    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
19    Act, and shall not be allowed to the extent that it would
20    reduce a taxpayer's liability for the tax imposed by
21    subsections (a) and (b) of this Section to below zero. The
22    credit applicable to such investments shall be taken in the
23    taxable year in which such investments have been completed.
24    The credit for additional investments beyond the minimum
25    investment by a designated high impact business authorized
26    under subdivision (a)(3)(A) of Section 5.5 of the Illinois

 

 

09700SB0397ham006- 81 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 82 -LRB097 04209 HLH 60625 a

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

 

 

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1    been allowed for the year in which credit for such property
2    was originally allowed by eliminating such property from
3    such computation, and (ii) subtracting such recomputed
4    credit from the amount of credit previously allowed. For
5    the purposes of this paragraph (6), a reduction of the
6    basis of qualified property resulting from a
7    redetermination of the purchase price shall be deemed a
8    disposition of qualified property to the extent of such
9    reduction.
10        (7) Beginning with tax years ending after December 31,
11    1996, if a taxpayer qualifies for the credit under this
12    subsection (h) and thereby is granted a tax abatement and
13    the taxpayer relocates its entire facility in violation of
14    the explicit terms and length of the contract under Section
15    18-183 of the Property Tax Code, the tax imposed under
16    subsections (a) and (b) of this Section shall be increased
17    for the taxable year in which the taxpayer relocated its
18    facility by an amount equal to the amount of credit
19    received by the taxpayer under this subsection (h).
20    (i) Credit for Personal Property Tax Replacement Income
21Tax. For tax years ending prior to December 31, 2003, a credit
22shall be allowed against the tax imposed by subsections (a) and
23(b) of this Section for the tax imposed by subsections (c) and
24(d) of this Section. This credit shall be computed by
25multiplying the tax imposed by subsections (c) and (d) of this
26Section by a fraction, the numerator of which is base income

 

 

09700SB0397ham006- 84 -LRB097 04209 HLH 60625 a

1allocable to Illinois and the denominator of which is Illinois
2base income, and further multiplying the product by the tax
3rate imposed by subsections (a) and (b) of this Section.
4    Any credit earned on or after December 31, 1986 under this
5subsection which is unused in the year the credit is computed
6because it exceeds the tax liability imposed by subsections (a)
7and (b) for that year (whether it exceeds the original
8liability or the liability as later amended) may be carried
9forward and applied to the tax liability imposed by subsections
10(a) and (b) of the 5 taxable years following the excess credit
11year, provided that no credit may be carried forward to any
12year ending on or after December 31, 2003. This credit shall be
13applied first to the earliest year for which there is a
14liability. If there is a credit under this subsection from more
15than one tax year that is available to offset a liability the
16earliest credit arising under this subsection shall be applied
17first.
18    If, during any taxable year ending on or after December 31,
191986, the tax imposed by subsections (c) and (d) of this
20Section for which a taxpayer has claimed a credit under this
21subsection (i) is reduced, the amount of credit for such tax
22shall also be reduced. Such reduction shall be determined by
23recomputing the credit to take into account the reduced tax
24imposed by subsections (c) and (d). If any portion of the
25reduced amount of credit has been carried to a different
26taxable year, an amended return shall be filed for such taxable

 

 

09700SB0397ham006- 85 -LRB097 04209 HLH 60625 a

1year to reduce the amount of credit claimed.
2    (j) Training expense credit. Beginning with tax years
3ending on or after December 31, 1986 and prior to December 31,
42003, a taxpayer shall be allowed a credit against the tax
5imposed by subsections (a) and (b) under this Section for all
6amounts paid or accrued, on behalf of all persons employed by
7the taxpayer in Illinois or Illinois residents employed outside
8of Illinois by a taxpayer, for educational or vocational
9training in semi-technical or technical fields or semi-skilled
10or skilled fields, which were deducted from gross income in the
11computation of taxable income. The credit against the tax
12imposed by subsections (a) and (b) shall be 1.6% of such
13training expenses. For partners, shareholders of subchapter S
14corporations, and owners of limited liability companies, if the
15liability company is treated as a partnership for purposes of
16federal and State income taxation, there shall be allowed a
17credit under this subsection (j) to be determined in accordance
18with the determination of income and distributive share of
19income under Sections 702 and 704 and subchapter S of the
20Internal Revenue Code.
21    Any credit allowed under this subsection which is unused in
22the year the credit is earned may be carried forward to each of
23the 5 taxable years following the year for which the credit is
24first computed until it is used. This credit shall be applied
25first to the earliest year for which there is a liability. If
26there is a credit under this subsection from more than one tax

 

 

09700SB0397ham006- 86 -LRB097 04209 HLH 60625 a

1year that is available to offset a liability the earliest
2credit arising under this subsection shall be applied first. No
3carryforward credit may be claimed in any tax year ending on or
4after December 31, 2003.
5    (k) Research and development credit.
6    For tax years ending after July 1, 1990 and prior to
7December 31, 2003, and beginning again for tax years ending on
8or after December 31, 2004, and ending prior to January 1, 2016
9January 1, 2011, a taxpayer shall be allowed a credit against
10the tax imposed by subsections (a) and (b) of this Section for
11increasing research activities in this State. The credit
12allowed against the tax imposed by subsections (a) and (b)
13shall be equal to 6 1/2% of the qualifying expenditures for
14increasing research activities in this State. For partners,
15shareholders of subchapter S corporations, and owners of
16limited liability companies, if the liability company is
17treated as a partnership for purposes of federal and State
18income taxation, there shall be allowed a credit under this
19subsection to be determined in accordance with the
20determination of income and distributive share of income under
21Sections 702 and 704 and subchapter S of the Internal Revenue
22Code.
23    For purposes of this subsection, "qualifying expenditures"
24means the qualifying expenditures as defined for the federal
25credit for increasing research activities which would be
26allowable under Section 41 of the Internal Revenue Code and

 

 

09700SB0397ham006- 87 -LRB097 04209 HLH 60625 a

1which are conducted in this State, "qualifying expenditures for
2increasing research activities in this State" means the excess
3of qualifying expenditures for the taxable year in which
4incurred over qualifying expenditures for the base period,
5"qualifying expenditures for the base period" means the average
6of the qualifying expenditures for each year in the base
7period, and "base period" means the 3 taxable years immediately
8preceding the taxable year for which the determination is being
9made.
10    Any credit in excess of the tax liability for the taxable
11year may be carried forward. A taxpayer may elect to have the
12unused credit shown on its final completed return carried over
13as a credit against the tax liability for the following 5
14taxable years or until it has been fully used, whichever occurs
15first; provided that no credit earned in a tax year ending
16prior to December 31, 2003 may be carried forward to any year
17ending on or after December 31, 2003, and no credit may be
18carried forward to any taxable year ending on or after January
191, 2011.
20    If an unused credit is carried forward to a given year from
212 or more earlier years, that credit arising in the earliest
22year will be applied first against the tax liability for the
23given year. If a tax liability for the given year still
24remains, the credit from the next earliest year will then be
25applied, and so on, until all credits have been used or no tax
26liability for the given year remains. Any remaining unused

 

 

09700SB0397ham006- 88 -LRB097 04209 HLH 60625 a

1credit or credits then will be carried forward to the next
2following year in which a tax liability is incurred, except
3that no credit can be carried forward to a year which is more
4than 5 years after the year in which the expense for which the
5credit is given was incurred.
6    No inference shall be drawn from this amendatory Act of the
791st General Assembly in construing this Section for taxable
8years beginning before January 1, 1999.
9    (l) Environmental Remediation Tax Credit.
10        (i) For tax years ending after December 31, 1997 and on
11    or before December 31, 2001, a taxpayer shall be allowed a
12    credit against the tax imposed by subsections (a) and (b)
13    of this Section for certain amounts paid for unreimbursed
14    eligible remediation costs, as specified in this
15    subsection. For purposes of this Section, "unreimbursed
16    eligible remediation costs" means costs approved by the
17    Illinois Environmental Protection Agency ("Agency") under
18    Section 58.14 of the Environmental Protection Act that were
19    paid in performing environmental remediation at a site for
20    which a No Further Remediation Letter was issued by the
21    Agency and recorded under Section 58.10 of the
22    Environmental Protection Act. The credit must be claimed
23    for the taxable year in which Agency approval of the
24    eligible remediation costs is granted. The credit is not
25    available to any taxpayer if the taxpayer or any related
26    party caused or contributed to, in any material respect, a

 

 

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1    release of regulated substances on, in, or under the site
2    that was identified and addressed by the remedial action
3    pursuant to the Site Remediation Program of the
4    Environmental Protection Act. After the Pollution Control
5    Board rules are adopted pursuant to the Illinois
6    Administrative Procedure Act for the administration and
7    enforcement of Section 58.9 of the Environmental
8    Protection Act, determinations as to credit availability
9    for purposes of this Section shall be made consistent with
10    those rules. For purposes of this Section, "taxpayer"
11    includes a person whose tax attributes the taxpayer has
12    succeeded to under Section 381 of the Internal Revenue Code
13    and "related party" includes the persons disallowed a
14    deduction for losses by paragraphs (b), (c), and (f)(1) of
15    Section 267 of the Internal Revenue Code by virtue of being
16    a related taxpayer, as well as any of its partners. The
17    credit allowed against the tax imposed by subsections (a)
18    and (b) shall be equal to 25% of the unreimbursed eligible
19    remediation costs in excess of $100,000 per site, except
20    that the $100,000 threshold shall not apply to any site
21    contained in an enterprise zone as determined by the
22    Department of Commerce and Community Affairs (now
23    Department of Commerce and Economic Opportunity). The
24    total credit allowed shall not exceed $40,000 per year with
25    a maximum total of $150,000 per site. For partners and
26    shareholders of subchapter S corporations, there shall be

 

 

09700SB0397ham006- 90 -LRB097 04209 HLH 60625 a

1    allowed a credit under this subsection to be determined in
2    accordance with the determination of income and
3    distributive share of income under Sections 702 and 704 and
4    subchapter S of the Internal Revenue Code.
5        (ii) A credit allowed under this subsection that is
6    unused in the year the credit is earned may be carried
7    forward to each of the 5 taxable years following the year
8    for which the credit is first earned until it is used. The
9    term "unused credit" does not include any amounts of
10    unreimbursed eligible remediation costs in excess of the
11    maximum credit per site authorized under paragraph (i).
12    This credit shall be applied first to the earliest year for
13    which there is a liability. If there is a credit under this
14    subsection from more than one tax year that is available to
15    offset a liability, the earliest credit arising under this
16    subsection shall be applied first. A credit allowed under
17    this subsection may be sold to a buyer as part of a sale of
18    all or part of the remediation site for which the credit
19    was granted. The purchaser of a remediation site and the
20    tax credit shall succeed to the unused credit and remaining
21    carry-forward period of the seller. To perfect the
22    transfer, the assignor shall record the transfer in the
23    chain of title for the site and provide written notice to
24    the Director of the Illinois Department of Revenue of the
25    assignor's intent to sell the remediation site and the
26    amount of the tax credit to be transferred as a portion of

 

 

09700SB0397ham006- 91 -LRB097 04209 HLH 60625 a

1    the sale. In no event may a credit be transferred to any
2    taxpayer if the taxpayer or a related party would not be
3    eligible under the provisions of subsection (i).
4        (iii) For purposes of this Section, the term "site"
5    shall have the same meaning as under Section 58.2 of the
6    Environmental Protection Act.
7    (m) Education expense credit. Beginning with tax years
8ending after December 31, 1999, a taxpayer who is the custodian
9of one or more qualifying pupils shall be allowed a credit
10against the tax imposed by subsections (a) and (b) of this
11Section for qualified education expenses incurred on behalf of
12the qualifying pupils. The credit shall be equal to 25% of
13qualified education expenses, but in no event may the total
14credit under this subsection claimed by a family that is the
15custodian of qualifying pupils exceed $500. In no event shall a
16credit under this subsection reduce the taxpayer's liability
17under this Act to less than zero. This subsection is exempt
18from the provisions of Section 250 of this Act.
19    For purposes of this subsection:
20    "Qualifying pupils" means individuals who (i) are
21residents of the State of Illinois, (ii) are under the age of
2221 at the close of the school year for which a credit is
23sought, and (iii) during the school year for which a credit is
24sought were full-time pupils enrolled in a kindergarten through
25twelfth grade education program at any school, as defined in
26this subsection.

 

 

09700SB0397ham006- 92 -LRB097 04209 HLH 60625 a

1    "Qualified education expense" means the amount incurred on
2behalf of a qualifying pupil in excess of $250 for tuition,
3book fees, and lab fees at the school in which the pupil is
4enrolled during the regular school year.
5    "School" means any public or nonpublic elementary or
6secondary school in Illinois that is in compliance with Title
7VI of the Civil Rights Act of 1964 and attendance at which
8satisfies the requirements of Section 26-1 of the School Code,
9except that nothing shall be construed to require a child to
10attend any particular public or nonpublic school to qualify for
11the credit under this Section.
12    "Custodian" means, with respect to qualifying pupils, an
13Illinois resident who is a parent, the parents, a legal
14guardian, or the legal guardians of the qualifying pupils.
15    (n) River Edge Redevelopment Zone site remediation tax
16credit.
17        (i) For tax years ending on or after December 31, 2006,
18    a taxpayer shall be allowed a credit against the tax
19    imposed by subsections (a) and (b) of this Section for
20    certain amounts paid for unreimbursed eligible remediation
21    costs, as specified in this subsection. For purposes of
22    this Section, "unreimbursed eligible remediation costs"
23    means costs approved by the Illinois Environmental
24    Protection Agency ("Agency") under Section 58.14a of the
25    Environmental Protection Act that were paid in performing
26    environmental remediation at a site within a River Edge

 

 

09700SB0397ham006- 93 -LRB097 04209 HLH 60625 a

1    Redevelopment Zone for which a No Further Remediation
2    Letter was issued by the Agency and recorded under Section
3    58.10 of the Environmental Protection Act. The credit must
4    be claimed for the taxable year in which Agency approval of
5    the eligible remediation costs is granted. The credit is
6    not available to any taxpayer if the taxpayer or any
7    related party caused or contributed to, in any material
8    respect, a release of regulated substances on, in, or under
9    the site that was identified and addressed by the remedial
10    action pursuant to the Site Remediation Program of the
11    Environmental Protection Act. Determinations as to credit
12    availability for purposes of this Section shall be made
13    consistent with rules adopted by the Pollution Control
14    Board pursuant to the Illinois Administrative Procedure
15    Act for the administration and enforcement of Section 58.9
16    of the Environmental Protection Act. For purposes of this
17    Section, "taxpayer" includes a person whose tax attributes
18    the taxpayer has succeeded to under Section 381 of the
19    Internal Revenue Code and "related party" includes the
20    persons disallowed a deduction for losses by paragraphs
21    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
22    Code by virtue of being a related taxpayer, as well as any
23    of its partners. The credit allowed against the tax imposed
24    by subsections (a) and (b) shall be equal to 25% of the
25    unreimbursed eligible remediation costs in excess of
26    $100,000 per site.

 

 

09700SB0397ham006- 94 -LRB097 04209 HLH 60625 a

1        (ii) A credit allowed under this subsection that is
2    unused in the year the credit is earned may be carried
3    forward to each of the 5 taxable years following the year
4    for which the credit is first earned until it is used. This
5    credit shall be applied first to the earliest year for
6    which there is a liability. If there is a credit under this
7    subsection from more than one tax year that is available to
8    offset a liability, the earliest credit arising under this
9    subsection shall be applied first. A credit allowed under
10    this subsection may be sold to a buyer as part of a sale of
11    all or part of the remediation site for which the credit
12    was granted. The purchaser of a remediation site and the
13    tax credit shall succeed to the unused credit and remaining
14    carry-forward period of the seller. To perfect the
15    transfer, the assignor shall record the transfer in the
16    chain of title for the site and provide written notice to
17    the Director of the Illinois Department of Revenue of the
18    assignor's intent to sell the remediation site and the
19    amount of the tax credit to be transferred as a portion of
20    the sale. In no event may a credit be transferred to any
21    taxpayer if the taxpayer or a related party would not be
22    eligible under the provisions of subsection (i).
23        (iii) For purposes of this Section, the term "site"
24    shall have the same meaning as under Section 58.2 of the
25    Environmental Protection Act.
26(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;

 

 

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196-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
21-13-11; 97-2, eff. 5-6-11.)
 
3    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
4    Sec. 207. Net Losses.
5    (a) If after applying all of the (i) modifications provided
6for in paragraph (2) of Section 203(b), paragraph (2) of
7Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
8allocation and apportionment provisions of Article 3 of this
9Act and subsection (c) of this Section, the taxpayer's net
10income results in a loss;
11        (1) for any taxable year ending prior to December 31,
12    1999, such loss shall be allowed as a carryover or
13    carryback deduction in the manner allowed under Section 172
14    of the Internal Revenue Code;
15        (2) for any taxable year ending on or after December
16    31, 1999 and prior to December 31, 2003, such loss shall be
17    allowed as a carryback to each of the 2 taxable years
18    preceding the taxable year of such loss and shall be a net
19    operating loss carryover to each of the 20 taxable years
20    following the taxable year of such loss; and
21        (3) for any taxable year ending on or after December
22    31, 2003, such loss shall be allowed as a net operating
23    loss carryover to each of the 12 taxable years following
24    the taxable year of such loss, except as provided in
25    subsection (d).

 

 

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1    (a-5) Election to relinquish carryback and order of
2application of losses.
3            (A) For losses incurred in tax years ending prior
4        to December 31, 2003, the taxpayer may elect to
5        relinquish the entire carryback period with respect to
6        such loss. Such election shall be made in the form and
7        manner prescribed by the Department and shall be made
8        by the due date (including extensions of time) for
9        filing the taxpayer's return for the taxable year in
10        which such loss is incurred, and such election, once
11        made, shall be irrevocable.
12            (B) The entire amount of such loss shall be carried
13        to the earliest taxable year to which such loss may be
14        carried. The amount of such loss which shall be carried
15        to each of the other taxable years shall be the excess,
16        if any, of the amount of such loss over the sum of the
17        deductions for carryback or carryover of such loss
18        allowable for each of the prior taxable years to which
19        such loss may be carried.
20    (b) Any loss determined under subsection (a) of this
21Section must be carried back or carried forward in the same
22manner for purposes of subsections (a) and (b) of Section 201
23of this Act as for purposes of subsections (c) and (d) of
24Section 201 of this Act.
25    (c) Notwithstanding any other provision of this Act, for
26each taxable year ending on or after December 31, 2008, for

 

 

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1purposes of computing the loss for the taxable year under
2subsection (a) of this Section and the deduction taken into
3account for the taxable year for a net operating loss carryover
4under paragraphs (1), (2), and (3) of subsection (a) of this
5Section, the loss and net operating loss carryover shall be
6reduced in an amount equal to the reduction to the net
7operating loss and net operating loss carryover to the taxable
8year, respectively, required under Section 108(b)(2)(A) of the
9Internal Revenue Code, multiplied by a fraction, the numerator
10of which is the amount of discharge of indebtedness income that
11is excluded from gross income for the taxable year (but only if
12the taxable year ends on or after December 31, 2008) under
13Section 108(a) of the Internal Revenue Code and that would have
14been allocated and apportioned to this State under Article 3 of
15this Act but for that exclusion, and the denominator of which
16is the total amount of discharge of indebtedness income
17excluded from gross income under Section 108(a) of the Internal
18Revenue Code for the taxable year. The reduction required under
19this subsection (c) shall be made after the determination of
20Illinois net income for the taxable year in which the
21indebtedness is discharged.
22    (d) In the case of a corporation (other than a Subchapter S
23corporation), no carryover deduction shall be allowed under
24this Section for any taxable year ending after December 31,
252010 and prior to December 31, 2012, and no carryover deduction
26shall exceed $100,000 for any taxable year ending on or after

 

 

09700SB0397ham006- 98 -LRB097 04209 HLH 60625 a

1December 31, 2012 and prior to December 31, 2014; provided
2that, for purposes of determining the taxable years to which a
3net loss may be carried under subsection (a) of this Section,
4no taxable year for which a deduction is disallowed under this
5subsection, or for which the deduction would exceed $100,000 if
6not for this subsection, shall be counted.
7    (e) In the case of a residual interest holder in a real
8estate mortgage investment conduit subject to Section 860E of
9the Internal Revenue Code, the net loss in subsection (a) shall
10be equal to:
11        (1) the amount computed under subsection (a), without
12    regard to this subsection (e), or if that amount is
13    positive, zero;
14        (2) minus an amount equal to the amount computed under
15    subsection (a), without regard to this subsection (e),
16    minus the amount that would be computed under subsection
17    (a) if the taxpayer's federal taxable income were computed
18    without regard to Section 860E of the Internal Revenue Code
19    and without regard to this subsection (e).
20    The modification in this subsection (e) is exempt from the
21provisions of Section 250.
22(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11.)
 
23    (35 ILCS 5/250)
24    Sec. 250. Sunset of exemptions, credits, and deductions.
25    (a) The application of every exemption, credit, and

 

 

09700SB0397ham006- 99 -LRB097 04209 HLH 60625 a

1deduction against tax imposed by this Act that becomes law
2after the effective date of this amendatory Act of 1994 shall
3be limited by a reasonable and appropriate sunset date. A
4taxpayer is not entitled to take the exemption, credit, or
5deduction for tax years beginning on or after the sunset date.
6Except as provided in subsection (b) of this Section, if If a
7reasonable and appropriate sunset date is not specified in the
8Public Act that creates the exemption, credit, or deduction, a
9taxpayer shall not be entitled to take the exemption, credit,
10or deduction for tax years beginning on or after 5 years after
11the effective date of the Public Act creating the exemption,
12credit, or deduction and thereafter; provided, however, that in
13the case of any Public Act authorizing the issuance of
14tax-exempt obligations that does not specify a sunset date for
15the exemption or deduction of income derived from the
16obligations, the exemption or deduction shall not terminate
17until after the obligations have been paid by the issuer.
18    (b) Notwithstanding the provisions of subsection (a) of
19this Section, the sunset date of any exemption, credit, or
20deduction that is scheduled to expire in 2011, 2012, or 2013 by
21operation of this Section shall be extended by 5 years.
22(Source: P.A. 88-660, eff. 9-16-94; 89-460, eff. 5-24-96.)
 
23    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
24    Sec. 304. Business income of persons other than residents.
25    (a) In general. The business income of a person other than

 

 

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1a resident shall be allocated to this State if such person's
2business income is derived solely from this State. If a person
3other than a resident derives business income from this State
4and one or more other states, then, for tax years ending on or
5before December 30, 1998, and except as otherwise provided by
6this Section, such person's business income shall be
7apportioned to this State by multiplying the income by a
8fraction, the numerator of which is the sum of the property
9factor (if any), the payroll factor (if any) and 200% of the
10sales factor (if any), and the denominator of which is 4
11reduced by the number of factors other than the sales factor
12which have a denominator of zero and by an additional 2 if the
13sales factor has a denominator of zero. For tax years ending on
14or after December 31, 1998, and except as otherwise provided by
15this Section, persons other than residents who derive business
16income from this State and one or more other states shall
17compute their apportionment factor by weighting their
18property, payroll, and sales factors as provided in subsection
19(h) of this Section.
20    (1) Property factor.
21        (A) The property factor is a fraction, the numerator of
22    which is the average value of the person's real and
23    tangible personal property owned or rented and used in the
24    trade or business in this State during the taxable year and
25    the denominator of which is the average value of all the
26    person's real and tangible personal property owned or

 

 

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1    rented and used in the trade or business during the taxable
2    year.
3        (B) Property owned by the person is valued at its
4    original cost. Property rented by the person is valued at 8
5    times the net annual rental rate. Net annual rental rate is
6    the annual rental rate paid by the person less any annual
7    rental rate received by the person from sub-rentals.
8        (C) The average value of property shall be determined
9    by averaging the values at the beginning and ending of the
10    taxable year but the Director may require the averaging of
11    monthly values during the taxable year if reasonably
12    required to reflect properly the average value of the
13    person's property.
14    (2) Payroll factor.
15        (A) The payroll factor is a fraction, the numerator of
16    which is the total amount paid in this State during the
17    taxable year by the person for compensation, and the
18    denominator of which is the total compensation paid
19    everywhere during the taxable year.
20        (B) Compensation is paid in this State if:
21            (i) The individual's service is performed entirely
22        within this State;
23            (ii) The individual's service is performed both
24        within and without this State, but the service
25        performed without this State is incidental to the
26        individual's service performed within this State; or

 

 

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1            (iii) Some of the service is performed within this
2        State and either the base of operations, or if there is
3        no base of operations, the place from which the service
4        is directed or controlled is within this State, or the
5        base of operations or the place from which the service
6        is directed or controlled is not in any state in which
7        some part of the service is performed, but the
8        individual's residence is in this State.
9            (iv) Compensation paid to nonresident professional
10        athletes.
11            (a) General. The Illinois source income of a
12        nonresident individual who is a member of a
13        professional athletic team includes the portion of the
14        individual's total compensation for services performed
15        as a member of a professional athletic team during the
16        taxable year which the number of duty days spent within
17        this State performing services for the team in any
18        manner during the taxable year bears to the total
19        number of duty days spent both within and without this
20        State during the taxable year.
21            (b) Travel days. Travel days that do not involve
22        either a game, practice, team meeting, or other similar
23        team event are not considered duty days spent in this
24        State. However, such travel days are considered in the
25        total duty days spent both within and without this
26        State.

 

 

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1            (c) Definitions. For purposes of this subpart
2        (iv):
3                (1) The term "professional athletic team"
4            includes, but is not limited to, any professional
5            baseball, basketball, football, soccer, or hockey
6            team.
7                (2) The term "member of a professional
8            athletic team" includes those employees who are
9            active players, players on the disabled list, and
10            any other persons required to travel and who travel
11            with and perform services on behalf of a
12            professional athletic team on a regular basis.
13            This includes, but is not limited to, coaches,
14            managers, and trainers.
15                (3) Except as provided in items (C) and (D) of
16            this subpart (3), the term "duty days" means all
17            days during the taxable year from the beginning of
18            the professional athletic team's official
19            pre-season training period through the last game
20            in which the team competes or is scheduled to
21            compete. Duty days shall be counted for the year in
22            which they occur, including where a team's
23            official pre-season training period through the
24            last game in which the team competes or is
25            scheduled to compete, occurs during more than one
26            tax year.

 

 

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1                    (A) Duty days shall also include days on
2                which a member of a professional athletic team
3                performs service for a team on a date that does
4                not fall within the foregoing period (e.g.,
5                participation in instructional leagues, the
6                "All Star Game", or promotional "caravans").
7                Performing a service for a professional
8                athletic team includes conducting training and
9                rehabilitation activities, when such
10                activities are conducted at team facilities.
11                    (B) Also included in duty days are game
12                days, practice days, days spent at team
13                meetings, promotional caravans, preseason
14                training camps, and days served with the team
15                through all post-season games in which the team
16                competes or is scheduled to compete.
17                    (C) Duty days for any person who joins a
18                team during the period from the beginning of
19                the professional athletic team's official
20                pre-season training period through the last
21                game in which the team competes, or is
22                scheduled to compete, shall begin on the day
23                that person joins the team. Conversely, duty
24                days for any person who leaves a team during
25                this period shall end on the day that person
26                leaves the team. Where a person switches teams

 

 

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1                during a taxable year, a separate duty-day
2                calculation shall be made for the period the
3                person was with each team.
4                    (D) Days for which a member of a
5                professional athletic team is not compensated
6                and is not performing services for the team in
7                any manner, including days when such member of
8                a professional athletic team has been
9                suspended without pay and prohibited from
10                performing any services for the team, shall not
11                be treated as duty days.
12                    (E) Days for which a member of a
13                professional athletic team is on the disabled
14                list and does not conduct rehabilitation
15                activities at facilities of the team, and is
16                not otherwise performing services for the team
17                in Illinois, shall not be considered duty days
18                spent in this State. All days on the disabled
19                list, however, are considered to be included in
20                total duty days spent both within and without
21                this State.
22                (4) The term "total compensation for services
23            performed as a member of a professional athletic
24            team" means the total compensation received during
25            the taxable year for services performed:
26                    (A) from the beginning of the official

 

 

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1                pre-season training period through the last
2                game in which the team competes or is scheduled
3                to compete during that taxable year; and
4                    (B) during the taxable year on a date which
5                does not fall within the foregoing period
6                (e.g., participation in instructional leagues,
7                the "All Star Game", or promotional caravans).
8                This compensation shall include, but is not
9            limited to, salaries, wages, bonuses as described
10            in this subpart, and any other type of compensation
11            paid during the taxable year to a member of a
12            professional athletic team for services performed
13            in that year. This compensation does not include
14            strike benefits, severance pay, termination pay,
15            contract or option year buy-out payments,
16            expansion or relocation payments, or any other
17            payments not related to services performed for the
18            team.
19                For purposes of this subparagraph, "bonuses"
20            included in "total compensation for services
21            performed as a member of a professional athletic
22            team" subject to the allocation described in
23            Section 302(c)(1) are: bonuses earned as a result
24            of play (i.e., performance bonuses) during the
25            season, including bonuses paid for championship,
26            playoff or "bowl" games played by a team, or for

 

 

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1            selection to all-star league or other honorary
2            positions; and bonuses paid for signing a
3            contract, unless the payment of the signing bonus
4            is not conditional upon the signee playing any
5            games for the team or performing any subsequent
6            services for the team or even making the team, the
7            signing bonus is payable separately from the
8            salary and any other compensation, and the signing
9            bonus is nonrefundable.
10    (3) Sales factor.
11        (A) The sales factor is a fraction, the numerator of
12    which is the total sales of the person in this State during
13    the taxable year, and the denominator of which is the total
14    sales of the person everywhere during the taxable year.
15        (B) Sales of tangible personal property are in this
16    State if:
17            (i) The property is delivered or shipped to a
18        purchaser, other than the United States government,
19        within this State regardless of the f. o. b. point or
20        other conditions of the sale; or
21            (ii) The property is shipped from an office, store,
22        warehouse, factory or other place of storage in this
23        State and either the purchaser is the United States
24        government or the person is not taxable in the state of
25        the purchaser; provided, however, that premises owned
26        or leased by a person who has independently contracted

 

 

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1        with the seller for the printing of newspapers,
2        periodicals or books shall not be deemed to be an
3        office, store, warehouse, factory or other place of
4        storage for purposes of this Section. Sales of tangible
5        personal property are not in this State if the seller
6        and purchaser would be members of the same unitary
7        business group but for the fact that either the seller
8        or purchaser is a person with 80% or more of total
9        business activity outside of the United States and the
10        property is purchased for resale.
11        (B-1) Patents, copyrights, trademarks, and similar
12    items of intangible personal property.
13            (i) Gross receipts from the licensing, sale, or
14        other disposition of a patent, copyright, trademark,
15        or similar item of intangible personal property, other
16        than gross receipts governed by paragraph (B-7) of this
17        item (3), are in this State to the extent the item is
18        utilized in this State during the year the gross
19        receipts are included in gross income.
20            (ii) Place of utilization.
21                (I) A patent is utilized in a state to the
22            extent that it is employed in production,
23            fabrication, manufacturing, or other processing in
24            the state or to the extent that a patented product
25            is produced in the state. If a patent is utilized
26            in more than one state, the extent to which it is

 

 

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1            utilized in any one state shall be a fraction equal
2            to the gross receipts of the licensee or purchaser
3            from sales or leases of items produced,
4            fabricated, manufactured, or processed within that
5            state using the patent and of patented items
6            produced within that state, divided by the total of
7            such gross receipts for all states in which the
8            patent is utilized.
9                (II) A copyright is utilized in a state to the
10            extent that printing or other publication
11            originates in the state. If a copyright is utilized
12            in more than one state, the extent to which it is
13            utilized in any one state shall be a fraction equal
14            to the gross receipts from sales or licenses of
15            materials printed or published in that state
16            divided by the total of such gross receipts for all
17            states in which the copyright is utilized.
18                (III) Trademarks and other items of intangible
19            personal property governed by this paragraph (B-1)
20            are utilized in the state in which the commercial
21            domicile of the licensee or purchaser is located.
22            (iii) If the state of utilization of an item of
23        property governed by this paragraph (B-1) cannot be
24        determined from the taxpayer's books and records or
25        from the books and records of any person related to the
26        taxpayer within the meaning of Section 267(b) of the

 

 

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1        Internal Revenue Code, 26 U.S.C. 267, the gross
2        receipts attributable to that item shall be excluded
3        from both the numerator and the denominator of the
4        sales factor.
5        (B-2) Gross receipts from the license, sale, or other
6    disposition of patents, copyrights, trademarks, and
7    similar items of intangible personal property, other than
8    gross receipts governed by paragraph (B-7) of this item
9    (3), may be included in the numerator or denominator of the
10    sales factor only if gross receipts from licenses, sales,
11    or other disposition of such items comprise more than 50%
12    of the taxpayer's total gross receipts included in gross
13    income during the tax year and during each of the 2
14    immediately preceding tax years; provided that, when a
15    taxpayer is a member of a unitary business group, such
16    determination shall be made on the basis of the gross
17    receipts of the entire unitary business group.
18        (B-5) For taxable years ending on or after December 31,
19    2008, except as provided in subsections (ii) through (vii),
20    receipts from the sale of telecommunications service or
21    mobile telecommunications service are in this State if the
22    customer's service address is in this State.
23            (i) For purposes of this subparagraph (B-5), the
24        following terms have the following meanings:
25            "Ancillary services" means services that are
26        associated with or incidental to the provision of

 

 

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1        "telecommunications services", including but not
2        limited to "detailed telecommunications billing",
3        "directory assistance", "vertical service", and "voice
4        mail services".
5            "Air-to-Ground Radiotelephone service" means a
6        radio service, as that term is defined in 47 CFR 22.99,
7        in which common carriers are authorized to offer and
8        provide radio telecommunications service for hire to
9        subscribers in aircraft.
10            "Call-by-call Basis" means any method of charging
11        for telecommunications services where the price is
12        measured by individual calls.
13            "Communications Channel" means a physical or
14        virtual path of communications over which signals are
15        transmitted between or among customer channel
16        termination points.
17            "Conference bridging service" means an "ancillary
18        service" that links two or more participants of an
19        audio or video conference call and may include the
20        provision of a telephone number. "Conference bridging
21        service" does not include the "telecommunications
22        services" used to reach the conference bridge.
23            "Customer Channel Termination Point" means the
24        location where the customer either inputs or receives
25        the communications.
26            "Detailed telecommunications billing service"

 

 

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1        means an "ancillary service" of separately stating
2        information pertaining to individual calls on a
3        customer's billing statement.
4            "Directory assistance" means an "ancillary
5        service" of providing telephone number information,
6        and/or address information.
7            "Home service provider" means the facilities based
8        carrier or reseller with which the customer contracts
9        for the provision of mobile telecommunications
10        services.
11            "Mobile telecommunications service" means
12        commercial mobile radio service, as defined in Section
13        20.3 of Title 47 of the Code of Federal Regulations as
14        in effect on June 1, 1999.
15            "Place of primary use" means the street address
16        representative of where the customer's use of the
17        telecommunications service primarily occurs, which
18        must be the residential street address or the primary
19        business street address of the customer. In the case of
20        mobile telecommunications services, "place of primary
21        use" must be within the licensed service area of the
22        home service provider.
23            "Post-paid telecommunication service" means the
24        telecommunications service obtained by making a
25        payment on a call-by-call basis either through the use
26        of a credit card or payment mechanism such as a bank

 

 

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1        card, travel card, credit card, or debit card, or by
2        charge made to a telephone number which is not
3        associated with the origination or termination of the
4        telecommunications service. A post-paid calling
5        service includes telecommunications service, except a
6        prepaid wireless calling service, that would be a
7        prepaid calling service except it is not exclusively a
8        telecommunication service.
9            "Prepaid telecommunication service" means the
10        right to access exclusively telecommunications
11        services, which must be paid for in advance and which
12        enables the origination of calls using an access number
13        or authorization code, whether manually or
14        electronically dialed, and that is sold in
15        predetermined units or dollars of which the number
16        declines with use in a known amount.
17            "Prepaid Mobile telecommunication service" means a
18        telecommunications service that provides the right to
19        utilize mobile wireless service as well as other
20        non-telecommunication services, including but not
21        limited to ancillary services, which must be paid for
22        in advance that is sold in predetermined units or
23        dollars of which the number declines with use in a
24        known amount.
25            "Private communication service" means a
26        telecommunication service that entitles the customer

 

 

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1        to exclusive or priority use of a communications
2        channel or group of channels between or among
3        termination points, regardless of the manner in which
4        such channel or channels are connected, and includes
5        switching capacity, extension lines, stations, and any
6        other associated services that are provided in
7        connection with the use of such channel or channels.
8            "Service address" means:
9                (a) The location of the telecommunications
10            equipment to which a customer's call is charged and
11            from which the call originates or terminates,
12            regardless of where the call is billed or paid;
13                (b) If the location in line (a) is not known,
14            service address means the origination point of the
15            signal of the telecommunications services first
16            identified by either the seller's
17            telecommunications system or in information
18            received by the seller from its service provider
19            where the system used to transport such signals is
20            not that of the seller; and
21                (c) If the locations in line (a) and line (b)
22            are not known, the service address means the
23            location of the customer's place of primary use.
24            "Telecommunications service" means the electronic
25        transmission, conveyance, or routing of voice, data,
26        audio, video, or any other information or signals to a

 

 

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1        point, or between or among points. The term
2        "telecommunications service" includes such
3        transmission, conveyance, or routing in which computer
4        processing applications are used to act on the form,
5        code or protocol of the content for purposes of
6        transmission, conveyance or routing without regard to
7        whether such service is referred to as voice over
8        Internet protocol services or is classified by the
9        Federal Communications Commission as enhanced or value
10        added. "Telecommunications service" does not include:
11                (a) Data processing and information services
12            that allow data to be generated, acquired, stored,
13            processed, or retrieved and delivered by an
14            electronic transmission to a purchaser when such
15            purchaser's primary purpose for the underlying
16            transaction is the processed data or information;
17                (b) Installation or maintenance of wiring or
18            equipment on a customer's premises;
19                (c) Tangible personal property;
20                (d) Advertising, including but not limited to
21            directory advertising.
22                (e) Billing and collection services provided
23            to third parties;
24                (f) Internet access service;
25                (g) Radio and television audio and video
26            programming services, regardless of the medium,

 

 

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1            including the furnishing of transmission,
2            conveyance and routing of such services by the
3            programming service provider. Radio and television
4            audio and video programming services shall include
5            but not be limited to cable service as defined in
6            47 USC 522(6) and audio and video programming
7            services delivered by commercial mobile radio
8            service providers, as defined in 47 CFR 20.3;
9                (h) "Ancillary services"; or
10                (i) Digital products "delivered
11            electronically", including but not limited to
12            software, music, video, reading materials or ring
13            tones.
14            "Vertical service" means an "ancillary service"
15        that is offered in connection with one or more
16        "telecommunications services", which offers advanced
17        calling features that allow customers to identify
18        callers and to manage multiple calls and call
19        connections, including "conference bridging services".
20            "Voice mail service" means an "ancillary service"
21        that enables the customer to store, send or receive
22        recorded messages. "Voice mail service" does not
23        include any "vertical services" that the customer may
24        be required to have in order to utilize the "voice mail
25        service".
26            (ii) Receipts from the sale of telecommunications

 

 

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1        service sold on an individual call-by-call basis are in
2        this State if either of the following applies:
3                (a) The call both originates and terminates in
4            this State.
5                (b) The call either originates or terminates
6            in this State and the service address is located in
7            this State.
8            (iii) Receipts from the sale of postpaid
9        telecommunications service at retail are in this State
10        if the origination point of the telecommunication
11        signal, as first identified by the service provider's
12        telecommunication system or as identified by
13        information received by the seller from its service
14        provider if the system used to transport
15        telecommunication signals is not the seller's, is
16        located in this State.
17            (iv) Receipts from the sale of prepaid
18        telecommunications service or prepaid mobile
19        telecommunications service at retail are in this State
20        if the purchaser obtains the prepaid card or similar
21        means of conveyance at a location in this State.
22        Receipts from recharging a prepaid telecommunications
23        service or mobile telecommunications service is in
24        this State if the purchaser's billing information
25        indicates a location in this State.
26            (v) Receipts from the sale of private

 

 

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1        communication services are in this State as follows:
2                (a) 100% of receipts from charges imposed at
3            each channel termination point in this State.
4                (b) 100% of receipts from charges for the total
5            channel mileage between each channel termination
6            point in this State.
7                (c) 50% of the total receipts from charges for
8            service segments when those segments are between 2
9            customer channel termination points, 1 of which is
10            located in this State and the other is located
11            outside of this State, which segments are
12            separately charged.
13                (d) The receipts from charges for service
14            segments with a channel termination point located
15            in this State and in two or more other states, and
16            which segments are not separately billed, are in
17            this State based on a percentage determined by
18            dividing the number of customer channel
19            termination points in this State by the total
20            number of customer channel termination points.
21            (vi) Receipts from charges for ancillary services
22        for telecommunications service sold to customers at
23        retail are in this State if the customer's primary
24        place of use of telecommunications services associated
25        with those ancillary services is in this State. If the
26        seller of those ancillary services cannot determine

 

 

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1        where the associated telecommunications are located,
2        then the ancillary services shall be based on the
3        location of the purchaser.
4            (vii) Receipts to access a carrier's network or
5        from the sale of telecommunication services or
6        ancillary services for resale are in this State as
7        follows:
8                (a) 100% of the receipts from access fees
9            attributable to intrastate telecommunications
10            service that both originates and terminates in
11            this State.
12                (b) 50% of the receipts from access fees
13            attributable to interstate telecommunications
14            service if the interstate call either originates
15            or terminates in this State.
16                (c) 100% of the receipts from interstate end
17            user access line charges, if the customer's
18            service address is in this State. As used in this
19            subdivision, "interstate end user access line
20            charges" includes, but is not limited to, the
21            surcharge approved by the federal communications
22            commission and levied pursuant to 47 CFR 69.
23                (d) Gross receipts from sales of
24            telecommunication services or from ancillary
25            services for telecommunications services sold to
26            other telecommunication service providers for

 

 

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1            resale shall be sourced to this State using the
2            apportionment concepts used for non-resale
3            receipts of telecommunications services if the
4            information is readily available to make that
5            determination. If the information is not readily
6            available, then the taxpayer may use any other
7            reasonable and consistent method.
8        (B-7) For taxable years ending on or after December 31,
9    2008, receipts from the sale of broadcasting services are
10    in this State if the broadcasting services are received in
11    this State. For purposes of this paragraph (B-7), the
12    following terms have the following meanings:
13            "Advertising revenue" means consideration received
14        by the taxpayer in exchange for broadcasting services
15        or allowing the broadcasting of commercials or
16        announcements in connection with the broadcasting of
17        film or radio programming, from sponsorships of the
18        programming, or from product placements in the
19        programming.
20            "Audience factor" means the ratio that the
21        audience or subscribers located in this State of a
22        station, a network, or a cable system bears to the
23        total audience or total subscribers for that station,
24        network, or cable system. The audience factor for film
25        or radio programming shall be determined by reference
26        to the books and records of the taxpayer or by

 

 

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1        reference to published rating statistics provided the
2        method used by the taxpayer is consistently used from
3        year to year for this purpose and fairly represents the
4        taxpayer's activity in this State.
5            "Broadcast" or "broadcasting" or "broadcasting
6        services" means the transmission or provision of film
7        or radio programming, whether through the public
8        airwaves, by cable, by direct or indirect satellite
9        transmission, or by any other means of communication,
10        either through a station, a network, or a cable system.
11            "Film" or "film programming" means the broadcast
12        on television of any and all performances, events, or
13        productions, including but not limited to news,
14        sporting events, plays, stories, or other literary,
15        commercial, educational, or artistic works, either
16        live or through the use of video tape, disc, or any
17        other type of format or medium. Each episode of a
18        series of films produced for television shall
19        constitute separate "film" notwithstanding that the
20        series relates to the same principal subject and is
21        produced during one or more tax periods.
22            "Radio" or "radio programming" means the broadcast
23        on radio of any and all performances, events, or
24        productions, including but not limited to news,
25        sporting events, plays, stories, or other literary,
26        commercial, educational, or artistic works, either

 

 

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1        live or through the use of an audio tape, disc, or any
2        other format or medium. Each episode in a series of
3        radio programming produced for radio broadcast shall
4        constitute a separate "radio programming"
5        notwithstanding that the series relates to the same
6        principal subject and is produced during one or more
7        tax periods.
8                (i) In the case of advertising revenue from
9            broadcasting, the customer is the advertiser and
10            the service is received in this State if the
11            commercial domicile of the advertiser is in this
12            State.
13                (ii) In the case where film or radio
14            programming is broadcast by a station, a network,
15            or a cable system for a fee or other remuneration
16            received from the recipient of the broadcast, the
17            portion of the service that is received in this
18            State is measured by the portion of the recipients
19            of the broadcast located in this State.
20            Accordingly, the fee or other remuneration for
21            such service that is included in the Illinois
22            numerator of the sales factor is the total of those
23            fees or other remuneration received from
24            recipients in Illinois. For purposes of this
25            paragraph, a taxpayer may determine the location
26            of the recipients of its broadcast using the

 

 

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1            address of the recipient shown in its contracts
2            with the recipient or using the billing address of
3            the recipient in the taxpayer's records.
4                (iii) In the case where film or radio
5            programming is broadcast by a station, a network,
6            or a cable system for a fee or other remuneration
7            from the person providing the programming, the
8            portion of the broadcast service that is received
9            by such station, network, or cable system in this
10            State is measured by the portion of recipients of
11            the broadcast located in this State. Accordingly,
12            the amount of revenue related to such an
13            arrangement that is included in the Illinois
14            numerator of the sales factor is the total fee or
15            other total remuneration from the person providing
16            the programming related to that broadcast
17            multiplied by the Illinois audience factor for
18            that broadcast.
19                (iv) In the case where film or radio
20            programming is provided by a taxpayer that is a
21            network or station to a customer for broadcast in
22            exchange for a fee or other remuneration from that
23            customer the broadcasting service is received at
24            the location of the office of the customer from
25            which the services were ordered in the regular
26            course of the customer's trade or business.

 

 

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1            Accordingly, in such a case the revenue derived by
2            the taxpayer that is included in the taxpayer's
3            Illinois numerator of the sales factor is the
4            revenue from such customers who receive the
5            broadcasting service in Illinois.
6                (v) In the case where film or radio programming
7            is provided by a taxpayer that is not a network or
8            station to another person for broadcasting in
9            exchange for a fee or other remuneration from that
10            person, the broadcasting service is received at
11            the location of the office of the customer from
12            which the services were ordered in the regular
13            course of the customer's trade or business.
14            Accordingly, in such a case the revenue derived by
15            the taxpayer that is included in the taxpayer's
16            Illinois numerator of the sales factor is the
17            revenue from such customers who receive the
18            broadcasting service in Illinois.
19        (C) For taxable years ending before December 31, 2008,
20    sales, other than sales governed by paragraphs (B), (B-1),
21    and (B-2), are in this State if:
22            (i) The income-producing activity is performed in
23        this State; or
24            (ii) The income-producing activity is performed
25        both within and without this State and a greater
26        proportion of the income-producing activity is

 

 

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1        performed within this State than without this State,
2        based on performance costs.
3        (C-5) For taxable years ending on or after December 31,
4    2008, sales, other than sales governed by paragraphs (B),
5    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
6    the following criteria are met:
7            (i) Sales from the sale or lease of real property
8        are in this State if the property is located in this
9        State.
10            (ii) Sales from the lease or rental of tangible
11        personal property are in this State if the property is
12        located in this State during the rental period. Sales
13        from the lease or rental of tangible personal property
14        that is characteristically moving property, including,
15        but not limited to, motor vehicles, rolling stock,
16        aircraft, vessels, or mobile equipment are in this
17        State to the extent that the property is used in this
18        State.
19            (iii) In the case of interest, net gains (but not
20        less than zero) and other items of income from
21        intangible personal property, the sale is in this State
22        if:
23                (a) in the case of a taxpayer who is a dealer
24            in the item of intangible personal property within
25            the meaning of Section 475 of the Internal Revenue
26            Code, the income or gain is received from a

 

 

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1            customer in this State. For purposes of this
2            subparagraph, a customer is in this State if the
3            customer is an individual, trust or estate who is a
4            resident of this State and, for all other
5            customers, if the customer's commercial domicile
6            is in this State. Unless the dealer has actual
7            knowledge of the residence or commercial domicile
8            of a customer during a taxable year, the customer
9            shall be deemed to be a customer in this State if
10            the billing address of the customer, as shown in
11            the records of the dealer, is in this State; or
12                (b) in all other cases, if the
13            income-producing activity of the taxpayer is
14            performed in this State or, if the
15            income-producing activity of the taxpayer is
16            performed both within and without this State, if a
17            greater proportion of the income-producing
18            activity of the taxpayer is performed within this
19            State than in any other state, based on performance
20            costs.
21            (iv) Sales of services are in this State if the
22        services are received in this State. For the purposes
23        of this section, gross receipts from the performance of
24        services provided to a corporation, partnership, or
25        trust may only be attributed to a state where that
26        corporation, partnership, or trust has a fixed place of

 

 

09700SB0397ham006- 127 -LRB097 04209 HLH 60625 a

1        business. If the state where the services are received
2        is not readily determinable or is a state where the
3        corporation, partnership, or trust receiving the
4        service does not have a fixed place of business, the
5        services shall be deemed to be received at the location
6        of the office of the customer from which the services
7        were ordered in the regular course of the customer's
8        trade or business. If the ordering office cannot be
9        determined, the services shall be deemed to be received
10        at the office of the customer to which the services are
11        billed. If the taxpayer is not taxable in the state in
12        which the services are received, the sale must be
13        excluded from both the numerator and the denominator of
14        the sales factor. The Department shall adopt rules
15        prescribing where specific types of service are
16        received, including, but not limited to, publishing,
17        and utility service.
18        (D) For taxable years ending on or after December 31,
19    1995, the following items of income shall not be included
20    in the numerator or denominator of the sales factor:
21    dividends; amounts included under Section 78 of the
22    Internal Revenue Code; and Subpart F income as defined in
23    Section 952 of the Internal Revenue Code. No inference
24    shall be drawn from the enactment of this paragraph (D) in
25    construing this Section for taxable years ending before
26    December 31, 1995.

 

 

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1        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
2    ending on or after December 31, 1999, provided that a
3    taxpayer may elect to apply the provisions of these
4    paragraphs to prior tax years. Such election shall be made
5    in the form and manner prescribed by the Department, shall
6    be irrevocable, and shall apply to all tax years; provided
7    that, if a taxpayer's Illinois income tax liability for any
8    tax year, as assessed under Section 903 prior to January 1,
9    1999, was computed in a manner contrary to the provisions
10    of paragraphs (B-1) or (B-2), no refund shall be payable to
11    the taxpayer for that tax year to the extent such refund is
12    the result of applying the provisions of paragraph (B-1) or
13    (B-2) retroactively. In the case of a unitary business
14    group, such election shall apply to all members of such
15    group for every tax year such group is in existence, but
16    shall not apply to any taxpayer for any period during which
17    that taxpayer is not a member of such group.
18    (b) Insurance companies.
19        (1) In general. Except as otherwise provided by
20    paragraph (2), business income of an insurance company for
21    a taxable year shall be apportioned to this State by
22    multiplying such income by a fraction, the numerator of
23    which is the direct premiums written for insurance upon
24    property or risk in this State, and the denominator of
25    which is the direct premiums written for insurance upon
26    property or risk everywhere. For purposes of this

 

 

09700SB0397ham006- 129 -LRB097 04209 HLH 60625 a

1    subsection, the term "direct premiums written" means the
2    total amount of direct premiums written, assessments and
3    annuity considerations as reported for the taxable year on
4    the annual statement filed by the company with the Illinois
5    Director of Insurance in the form approved by the National
6    Convention of Insurance Commissioners or such other form as
7    may be prescribed in lieu thereof.
8        (2) Reinsurance. If the principal source of premiums
9    written by an insurance company consists of premiums for
10    reinsurance accepted by it, the business income of such
11    company shall be apportioned to this State by multiplying
12    such income by a fraction, the numerator of which is the
13    sum of (i) direct premiums written for insurance upon
14    property or risk in this State, plus (ii) premiums written
15    for reinsurance accepted in respect of property or risk in
16    this State, and the denominator of which is the sum of
17    (iii) direct premiums written for insurance upon property
18    or risk everywhere, plus (iv) premiums written for
19    reinsurance accepted in respect of property or risk
20    everywhere. For purposes of this paragraph, premiums
21    written for reinsurance accepted in respect of property or
22    risk in this State, whether or not otherwise determinable,
23    may, at the election of the company, be determined on the
24    basis of the proportion which premiums written for
25    reinsurance accepted from companies commercially domiciled
26    in Illinois bears to premiums written for reinsurance

 

 

09700SB0397ham006- 130 -LRB097 04209 HLH 60625 a

1    accepted from all sources, or, alternatively, in the
2    proportion which the sum of the direct premiums written for
3    insurance upon property or risk in this State by each
4    ceding company from which reinsurance is accepted bears to
5    the sum of the total direct premiums written by each such
6    ceding company for the taxable year. The election made by a
7    company under this paragraph for its first taxable year
8    ending on or after December 31, 2011, shall be binding for
9    that company for that taxable year and for all subsequent
10    taxable years, and may be altered only with the written
11    permission of the Department, which shall not be
12    unreasonably withheld.
13    (c) Financial organizations.
14        (1) In general. For taxable years ending before
15    December 31, 2008, business income of a financial
16    organization shall be apportioned to this State by
17    multiplying such income by a fraction, the numerator of
18    which is its business income from sources within this
19    State, and the denominator of which is its business income
20    from all sources. For the purposes of this subsection, the
21    business income of a financial organization from sources
22    within this State is the sum of the amounts referred to in
23    subparagraphs (A) through (E) following, but excluding the
24    adjusted income of an international banking facility as
25    determined in paragraph (2):
26            (A) Fees, commissions or other compensation for

 

 

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1        financial services rendered within this State;
2            (B) Gross profits from trading in stocks, bonds or
3        other securities managed within this State;
4            (C) Dividends, and interest from Illinois
5        customers, which are received within this State;
6            (D) Interest charged to customers at places of
7        business maintained within this State for carrying
8        debit balances of margin accounts, without deduction
9        of any costs incurred in carrying such accounts; and
10            (E) Any other gross income resulting from the
11        operation as a financial organization within this
12        State. In computing the amounts referred to in
13        paragraphs (A) through (E) of this subsection, any
14        amount received by a member of an affiliated group
15        (determined under Section 1504(a) of the Internal
16        Revenue Code but without reference to whether any such
17        corporation is an "includible corporation" under
18        Section 1504(b) of the Internal Revenue Code) from
19        another member of such group shall be included only to
20        the extent such amount exceeds expenses of the
21        recipient directly related thereto.
22        (2) International Banking Facility. For taxable years
23    ending before December 31, 2008:
24            (A) Adjusted Income. The adjusted income of an
25        international banking facility is its income reduced
26        by the amount of the floor amount.

 

 

09700SB0397ham006- 132 -LRB097 04209 HLH 60625 a

1            (B) Floor Amount. The floor amount shall be the
2        amount, if any, determined by multiplying the income of
3        the international banking facility by a fraction, not
4        greater than one, which is determined as follows:
5                (i) The numerator shall be:
6                The average aggregate, determined on a
7            quarterly basis, of the financial organization's
8            loans to banks in foreign countries, to foreign
9            domiciled borrowers (except where secured
10            primarily by real estate) and to foreign
11            governments and other foreign official
12            institutions, as reported for its branches,
13            agencies and offices within the state on its
14            "Consolidated Report of Condition", Schedule A,
15            Lines 2.c., 5.b., and 7.a., which was filed with
16            the Federal Deposit Insurance Corporation and
17            other regulatory authorities, for the year 1980,
18            minus
19                The average aggregate, determined on a
20            quarterly basis, of such loans (other than loans of
21            an international banking facility), as reported by
22            the financial institution for its branches,
23            agencies and offices within the state, on the
24            corresponding Schedule and lines of the
25            Consolidated Report of Condition for the current
26            taxable year, provided, however, that in no case

 

 

09700SB0397ham006- 133 -LRB097 04209 HLH 60625 a

1            shall the amount determined in this clause (the
2            subtrahend) exceed the amount determined in the
3            preceding clause (the minuend); and
4                (ii) the denominator shall be the average
5            aggregate, determined on a quarterly basis, of the
6            international banking facility's loans to banks in
7            foreign countries, to foreign domiciled borrowers
8            (except where secured primarily by real estate)
9            and to foreign governments and other foreign
10            official institutions, which were recorded in its
11            financial accounts for the current taxable year.
12            (C) Change to Consolidated Report of Condition and
13        in Qualification. In the event the Consolidated Report
14        of Condition which is filed with the Federal Deposit
15        Insurance Corporation and other regulatory authorities
16        is altered so that the information required for
17        determining the floor amount is not found on Schedule
18        A, lines 2.c., 5.b. and 7.a., the financial institution
19        shall notify the Department and the Department may, by
20        regulations or otherwise, prescribe or authorize the
21        use of an alternative source for such information. The
22        financial institution shall also notify the Department
23        should its international banking facility fail to
24        qualify as such, in whole or in part, or should there
25        be any amendment or change to the Consolidated Report
26        of Condition, as originally filed, to the extent such

 

 

09700SB0397ham006- 134 -LRB097 04209 HLH 60625 a

1        amendment or change alters the information used in
2        determining the floor amount.
3        (3) For taxable years ending on or after December 31,
4    2008, the business income of a financial organization shall
5    be apportioned to this State by multiplying such income by
6    a fraction, the numerator of which is its gross receipts
7    from sources in this State or otherwise attributable to
8    this State's marketplace and the denominator of which is
9    its gross receipts everywhere during the taxable year.
10    "Gross receipts" for purposes of this subparagraph (3)
11    means gross income, including net taxable gain on
12    disposition of assets, including securities and money
13    market instruments, when derived from transactions and
14    activities in the regular course of the financial
15    organization's trade or business. The following examples
16    are illustrative:
17            (i) Receipts from the lease or rental of real or
18        tangible personal property are in this State if the
19        property is located in this State during the rental
20        period. Receipts from the lease or rental of tangible
21        personal property that is characteristically moving
22        property, including, but not limited to, motor
23        vehicles, rolling stock, aircraft, vessels, or mobile
24        equipment are from sources in this State to the extent
25        that the property is used in this State.
26            (ii) Interest income, commissions, fees, gains on

 

 

09700SB0397ham006- 135 -LRB097 04209 HLH 60625 a

1        disposition, and other receipts from assets in the
2        nature of loans that are secured primarily by real
3        estate or tangible personal property are from sources
4        in this State if the security is located in this State.
5            (iii) Interest income, commissions, fees, gains on
6        disposition, and other receipts from consumer loans
7        that are not secured by real or tangible personal
8        property are from sources in this State if the debtor
9        is a resident of this State.
10            (iv) Interest income, commissions, fees, gains on
11        disposition, and other receipts from commercial loans
12        and installment obligations that are not secured by
13        real or tangible personal property are from sources in
14        this State if the proceeds of the loan are to be
15        applied in this State. If it cannot be determined where
16        the funds are to be applied, the income and receipts
17        are from sources in this State if the office of the
18        borrower from which the loan was negotiated in the
19        regular course of business is located in this State. If
20        the location of this office cannot be determined, the
21        income and receipts shall be excluded from the
22        numerator and denominator of the sales factor.
23            (v) Interest income, fees, gains on disposition,
24        service charges, merchant discount income, and other
25        receipts from credit card receivables are from sources
26        in this State if the card charges are regularly billed

 

 

09700SB0397ham006- 136 -LRB097 04209 HLH 60625 a

1        to a customer in this State.
2            (vi) Receipts from the performance of services,
3        including, but not limited to, fiduciary, advisory,
4        and brokerage services, are in this State if the
5        services are received in this State within the meaning
6        of subparagraph (a)(3)(C-5)(iv) of this Section.
7            (vii) Receipts from the issuance of travelers
8        checks and money orders are from sources in this State
9        if the checks and money orders are issued from a
10        location within this State.
11            (viii) Receipts from investment assets and
12        activities and trading assets and activities are
13        included in the receipts factor as follows:
14                (1) Interest, dividends, net gains (but not
15            less than zero) and other income from investment
16            assets and activities from trading assets and
17            activities shall be included in the receipts
18            factor. Investment assets and activities and
19            trading assets and activities include but are not
20            limited to: investment securities; trading account
21            assets; federal funds; securities purchased and
22            sold under agreements to resell or repurchase;
23            options; futures contracts; forward contracts;
24            notional principal contracts such as swaps;
25            equities; and foreign currency transactions. With
26            respect to the investment and trading assets and

 

 

09700SB0397ham006- 137 -LRB097 04209 HLH 60625 a

1            activities described in subparagraphs (A) and (B)
2            of this paragraph, the receipts factor shall
3            include the amounts described in such
4            subparagraphs.
5                    (A) The receipts factor shall include the
6                amount by which interest from federal funds
7                sold and securities purchased under resale
8                agreements exceeds interest expense on federal
9                funds purchased and securities sold under
10                repurchase agreements.
11                    (B) The receipts factor shall include the
12                amount by which interest, dividends, gains and
13                other income from trading assets and
14                activities, including but not limited to
15                assets and activities in the matched book, in
16                the arbitrage book, and foreign currency
17                transactions, exceed amounts paid in lieu of
18                interest, amounts paid in lieu of dividends,
19                and losses from such assets and activities.
20                (2) The numerator of the receipts factor
21            includes interest, dividends, net gains (but not
22            less than zero), and other income from investment
23            assets and activities and from trading assets and
24            activities described in paragraph (1) of this
25            subsection that are attributable to this State.
26                    (A) The amount of interest, dividends, net

 

 

09700SB0397ham006- 138 -LRB097 04209 HLH 60625 a

1                gains (but not less than zero), and other
2                income from investment assets and activities
3                in the investment account to be attributed to
4                this State and included in the numerator is
5                determined by multiplying all such income from
6                such assets and activities by a fraction, the
7                numerator of which is the gross income from
8                such assets and activities which are properly
9                assigned to a fixed place of business of the
10                taxpayer within this State and the denominator
11                of which is the gross income from all such
12                assets and activities.
13                    (B) The amount of interest from federal
14                funds sold and purchased and from securities
15                purchased under resale agreements and
16                securities sold under repurchase agreements
17                attributable to this State and included in the
18                numerator is determined by multiplying the
19                amount described in subparagraph (A) of
20                paragraph (1) of this subsection from such
21                funds and such securities by a fraction, the
22                numerator of which is the gross income from
23                such funds and such securities which are
24                properly assigned to a fixed place of business
25                of the taxpayer within this State and the
26                denominator of which is the gross income from

 

 

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1                all such funds and such securities.
2                    (C) The amount of interest, dividends,
3                gains, and other income from trading assets and
4                activities, including but not limited to
5                assets and activities in the matched book, in
6                the arbitrage book and foreign currency
7                transactions (but excluding amounts described
8                in subparagraphs (A) or (B) of this paragraph),
9                attributable to this State and included in the
10                numerator is determined by multiplying the
11                amount described in subparagraph (B) of
12                paragraph (1) of this subsection by a fraction,
13                the numerator of which is the gross income from
14                such trading assets and activities which are
15                properly assigned to a fixed place of business
16                of the taxpayer within this State and the
17                denominator of which is the gross income from
18                all such assets and activities.
19                    (D) Properly assigned, for purposes of
20                this paragraph (2) of this subsection, means
21                the investment or trading asset or activity is
22                assigned to the fixed place of business with
23                which it has a preponderance of substantive
24                contacts. An investment or trading asset or
25                activity assigned by the taxpayer to a fixed
26                place of business without the State shall be

 

 

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1                presumed to have been properly assigned if:
2                        (i) the taxpayer has assigned, in the
3                    regular course of its business, such asset
4                    or activity on its records to a fixed place
5                    of business consistent with federal or
6                    state regulatory requirements;
7                        (ii) such assignment on its records is
8                    based upon substantive contacts of the
9                    asset or activity to such fixed place of
10                    business; and
11                        (iii) the taxpayer uses such records
12                    reflecting assignment of such assets or
13                    activities for the filing of all state and
14                    local tax returns for which an assignment
15                    of such assets or activities to a fixed
16                    place of business is required.
17                    (E) The presumption of proper assignment
18                of an investment or trading asset or activity
19                provided in subparagraph (D) of paragraph (2)
20                of this subsection may be rebutted upon a
21                showing by the Department, supported by a
22                preponderance of the evidence, that the
23                preponderance of substantive contacts
24                regarding such asset or activity did not occur
25                at the fixed place of business to which it was
26                assigned on the taxpayer's records. If the

 

 

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1                fixed place of business that has a
2                preponderance of substantive contacts cannot
3                be determined for an investment or trading
4                asset or activity to which the presumption in
5                subparagraph (D) of paragraph (2) of this
6                subsection does not apply or with respect to
7                which that presumption has been rebutted, that
8                asset or activity is properly assigned to the
9                state in which the taxpayer's commercial
10                domicile is located. For purposes of this
11                subparagraph (E), it shall be presumed,
12                subject to rebuttal, that taxpayer's
13                commercial domicile is in the state of the
14                United States or the District of Columbia to
15                which the greatest number of employees are
16                regularly connected with the management of the
17                investment or trading income or out of which
18                they are working, irrespective of where the
19                services of such employees are performed, as of
20                the last day of the taxable year.
21        (4) (Blank).
22        (5) (Blank).
23    (c-1) Federally-regulated exchanges. For taxable years
24ending on or after December 31, 2012, business income of a
25federally-regulated exchange shall, at the option of the
26federally-regulated exchange, be apportioned to this State by

 

 

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1multiplying such income by a fraction, the numerator of which
2is its business income from sources within this State, and the
3denominator of which is its business income from all sources.
4For purposes of this subsection, the business income within
5this State of a federally-regulated exchange is the sum of the
6following:
7        (1) Receipts attributable to transactions executed on
8    a physical trading floor if that physical trading floor is
9    located in this State.
10        (2) Receipts attributable to all other matching,
11    execution, or clearing transactions, including without
12    limitation receipts from the provision of matching,
13    execution, or clearing services to another entity,
14    multiplied by (i) for taxable years ending on or after
15    December 31, 2012 but before December 31, 2013, 63.77%; and
16    (ii) for taxable years ending on or after December 31,
17    2013, 27.54%.
18        (3) All other receipts not governed by subparagraphs
19    (1) or (2) of this subsection (c-1), to the extent the
20    receipts would be characterized as "sales in this State"
21    under item (3) of subsection (a) of this Section.
22    "Federally-regulated exchange" means (i) a "registered
23entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
24or (C), (ii) an "exchange" or "clearing agency" within the
25meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
26entities regulated under any successor regulatory structure to

 

 

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1the foregoing, and (iv) all taxpayers who are members of the
2same unitary business group as a federally-regulated exchange,
3determined without regard to the prohibition in Section
41501(a)(27) of this Act against including in a unitary business
5group taxpayers who are ordinarily required to apportion
6business income under different subsections of this Section;
7provided that this subparagraph (iv) shall apply only if 50% or
8more of the business receipts of the unitary business group
9determined by application of this subparagraph (iv) for the
10taxable year are attributable to the matching, execution, or
11clearing of transactions conducted by an entity described in
12subparagraph (i), (ii), or (iii) of this paragraph.
13    In no event shall the Illinois apportionment percentage
14computed in accordance with this subsection (c-1) for any
15taxpayer for any tax year be less than the Illinois
16apportionment percentage computed under this subsection (c-1)
17for that taxpayer for the first full tax year ending on or
18after December 31, 2013 for which this subsection (c-1) applied
19to the taxpayer.
20    (d) Transportation services. For taxable years ending
21before December 31, 2008, business income derived from
22furnishing transportation services shall be apportioned to
23this State in accordance with paragraphs (1) and (2):
24        (1) Such business income (other than that derived from
25    transportation by pipeline) shall be apportioned to this
26    State by multiplying such income by a fraction, the

 

 

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1    numerator of which is the revenue miles of the person in
2    this State, and the denominator of which is the revenue
3    miles of the person everywhere. For purposes of this
4    paragraph, a revenue mile is the transportation of 1
5    passenger or 1 net ton of freight the distance of 1 mile
6    for a consideration. Where a person is engaged in the
7    transportation of both passengers and freight, the
8    fraction above referred to shall be determined by means of
9    an average of the passenger revenue mile fraction and the
10    freight revenue mile fraction, weighted to reflect the
11    person's
12            (A) relative railway operating income from total
13        passenger and total freight service, as reported to the
14        Interstate Commerce Commission, in the case of
15        transportation by railroad, and
16            (B) relative gross receipts from passenger and
17        freight transportation, in case of transportation
18        other than by railroad.
19        (2) Such business income derived from transportation
20    by pipeline shall be apportioned to this State by
21    multiplying such income by a fraction, the numerator of
22    which is the revenue miles of the person in this State, and
23    the denominator of which is the revenue miles of the person
24    everywhere. For the purposes of this paragraph, a revenue
25    mile is the transportation by pipeline of 1 barrel of oil,
26    1,000 cubic feet of gas, or of any specified quantity of

 

 

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1    any other substance, the distance of 1 mile for a
2    consideration.
3        (3) For taxable years ending on or after December 31,
4    2008, business income derived from providing
5    transportation services other than airline services shall
6    be apportioned to this State by using a fraction, (a) the
7    numerator of which shall be (i) all receipts from any
8    movement or shipment of people, goods, mail, oil, gas, or
9    any other substance (other than by airline) that both
10    originates and terminates in this State, plus (ii) that
11    portion of the person's gross receipts from movements or
12    shipments of people, goods, mail, oil, gas, or any other
13    substance (other than by airline) that originates in one
14    state or jurisdiction and terminates in another state or
15    jurisdiction, that is determined by the ratio that the
16    miles traveled in this State bears to total miles
17    everywhere and (b) the denominator of which shall be all
18    revenue derived from the movement or shipment of people,
19    goods, mail, oil, gas, or any other substance (other than
20    by airline). Where a taxpayer is engaged in the
21    transportation of both passengers and freight, the
22    fraction above referred to shall first be determined
23    separately for passenger miles and freight miles. Then an
24    average of the passenger miles fraction and the freight
25    miles fraction shall be weighted to reflect the taxpayer's:
26            (A) relative railway operating income from total

 

 

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1        passenger and total freight service, as reported to the
2        Surface Transportation Board, in the case of
3        transportation by railroad; and
4            (B) relative gross receipts from passenger and
5        freight transportation, in case of transportation
6        other than by railroad.
7        (4) For taxable years ending on or after December 31,
8    2008, business income derived from furnishing airline
9    transportation services shall be apportioned to this State
10    by multiplying such income by a fraction, the numerator of
11    which is the revenue miles of the person in this State, and
12    the denominator of which is the revenue miles of the person
13    everywhere. For purposes of this paragraph, a revenue mile
14    is the transportation of one passenger or one net ton of
15    freight the distance of one mile for a consideration. If a
16    person is engaged in the transportation of both passengers
17    and freight, the fraction above referred to shall be
18    determined by means of an average of the passenger revenue
19    mile fraction and the freight revenue mile fraction,
20    weighted to reflect the person's relative gross receipts
21    from passenger and freight airline transportation.
22    (e) Combined apportionment. Where 2 or more persons are
23engaged in a unitary business as described in subsection
24(a)(27) of Section 1501, a part of which is conducted in this
25State by one or more members of the group, the business income
26attributable to this State by any such member or members shall

 

 

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1be apportioned by means of the combined apportionment method.
2    (f) Alternative allocation. If the allocation and
3apportionment provisions of subsections (a) through (e) and of
4subsection (h) do not fairly represent the extent of a person's
5business activity in this State, the person may petition for,
6or the Director may, without a petition, permit or require, in
7respect of all or any part of the person's business activity,
8if reasonable:
9        (1) Separate accounting;
10        (2) The exclusion of any one or more factors;
11        (3) The inclusion of one or more additional factors
12    which will fairly represent the person's business
13    activities in this State; or
14        (4) The employment of any other method to effectuate an
15    equitable allocation and apportionment of the person's
16    business income.
17    (g) Cross reference. For allocation of business income by
18residents, see Section 301(a).
19    (h) For tax years ending on or after December 31, 1998, the
20apportionment factor of persons who apportion their business
21income to this State under subsection (a) shall be equal to:
22        (1) for tax years ending on or after December 31, 1998
23    and before December 31, 1999, 16 2/3% of the property
24    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
25    the sales factor;
26        (2) for tax years ending on or after December 31, 1999

 

 

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1    and before December 31, 2000, 8 1/3% of the property factor
2    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
3    factor;
4        (3) for tax years ending on or after December 31, 2000,
5    the sales factor.
6If, in any tax year ending on or after December 31, 1998 and
7before December 31, 2000, the denominator of the payroll,
8property, or sales factor is zero, the apportionment factor
9computed in paragraph (1) or (2) of this subsection for that
10year shall be divided by an amount equal to 100% minus the
11percentage weight given to each factor whose denominator is
12equal to zero.
13(Source: P.A. 96-763, eff. 8-25-09; 97-507, eff. 8-23-11.)
 
14    (35 ILCS 5/804)  (from Ch. 120, par. 8-804)
15    Sec. 804. Failure to Pay Estimated Tax.
16    (a) In general. In case of any underpayment of estimated
17tax by a taxpayer, except as provided in subsection (d) or (e),
18the taxpayer shall be liable to a penalty in an amount
19determined at the rate prescribed by Section 3-3 of the Uniform
20Penalty and Interest Act upon the amount of the underpayment
21(determined under subsection (b)) for each required
22installment.
23    (b) Amount of underpayment. For purposes of subsection (a),
24the amount of the underpayment shall be the excess of:
25        (1) the amount of the installment which would be

 

 

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1    required to be paid under subsection (c), over
2        (2) the amount, if any, of the installment paid on or
3    before the last date prescribed for payment.
4    (c) Amount of Required Installments.
5        (1) Amount.
6            (A) In General. Except as provided in paragraphs
7        paragraph (2) and (3), the amount of any required
8        installment shall be 25% of the required annual
9        payment.
10            (B) Required Annual Payment. For purposes of
11        subparagraph (A), the term "required annual payment"
12        means the lesser of:
13                (i) 90% of the tax shown on the return for the
14            taxable year, or if no return is filed, 90% of the
15            tax for such year; ,
16                (ii) for installments due prior to February 1,
17            2011, and after January 31, 2012, 100% of the tax
18            shown on the return of the taxpayer for the
19            preceding taxable year if a return showing a
20            liability for tax was filed by the taxpayer for the
21            preceding taxable year and such preceding year was
22            a taxable year of 12 months; or
23                (iii) for installments due after January 31,
24            2011, and prior to February 1, 2012, 150% of the
25            tax shown on the return of the taxpayer for the
26            preceding taxable year if a return showing a

 

 

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1            liability for tax was filed by the taxpayer for the
2            preceding taxable year and such preceding year was
3            a taxable year of 12 months.
4        (2) Lower Required Installment where Annualized Income
5    Installment is Less Than Amount Determined Under Paragraph
6    (1).
7            (A) In General. In the case of any required
8        installment if a taxpayer establishes that the
9        annualized income installment is less than the amount
10        determined under paragraph (1),
11                (i) the amount of such required installment
12            shall be the annualized income installment, and
13                (ii) any reduction in a required installment
14            resulting from the application of this
15            subparagraph shall be recaptured by increasing the
16            amount of the next required installment determined
17            under paragraph (1) by the amount of such
18            reduction, and by increasing subsequent required
19            installments to the extent that the reduction has
20            not previously been recaptured under this clause.
21            (B) Determination of Annualized Income
22        Installment. In the case of any required installment,
23        the annualized income installment is the excess, if
24        any, of:
25                (i) an amount equal to the applicable
26            percentage of the tax for the taxable year computed

 

 

09700SB0397ham006- 151 -LRB097 04209 HLH 60625 a

1            by placing on an annualized basis the net income
2            for months in the taxable year ending before the
3            due date for the installment, over
4                (ii) the aggregate amount of any prior
5            required installments for the taxable year.
6            (C) Applicable Percentage.
7        In the case of the followingThe applicable
8        required installments:percentage is:
9        1st ...............................22.5%
10        2nd ...............................45%
11        3rd ...............................67.5%
12        4th ...............................90%
13            (D) Annualized Net Income; Individuals. For
14        individuals, net income shall be placed on an
15        annualized basis by:
16                (i) multiplying by 12, or in the case of a
17            taxable year of less than 12 months, by the number
18            of months in the taxable year, the net income
19            computed without regard to the standard exemption
20            for the months in the taxable year ending before
21            the month in which the installment is required to
22            be paid;
23                (ii) dividing the resulting amount by the
24            number of months in the taxable year ending before
25            the month in which such installment date falls; and
26                (iii) deducting from such amount the standard

 

 

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1            exemption allowable for the taxable year, such
2            standard exemption being determined as of the last
3            date prescribed for payment of the installment.
4            (E) Annualized Net Income; Corporations. For
5        corporations, net income shall be placed on an
6        annualized basis by multiplying by 12 the taxable
7        income
8                (i) for the first 3 months of the taxable year,
9            in the case of the installment required to be paid
10            in the 4th month,
11                (ii) for the first 3 months or for the first 5
12            months of the taxable year, in the case of the
13            installment required to be paid in the 6th month,
14                (iii) for the first 6 months or for the first 8
15            months of the taxable year, in the case of the
16            installment required to be paid in the 9th month,
17            and
18                (iv) for the first 9 months or for the first 11
19            months of the taxable year, in the case of the
20            installment required to be paid in the 12th month
21            of the taxable year,
22        then dividing the resulting amount by the number of
23        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
24        case may be).
25        (3) Notwithstanding any other provision of this
26    subsection (c), in the case of a federally-regulated

 

 

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1    exchange that elects to apportion its income under Section
2    304(c-1) of this Act, the amount of each required
3    installment due prior to June 30 of the first taxable year
4    to which the election applies shall be 25% of the tax that
5    would have been shown on the return for that taxable year
6    if the taxpayer had not made such election.
7    (d) Exceptions. Notwithstanding the provisions of the
8preceding subsections, the penalty imposed by subsection (a)
9shall not be imposed if the taxpayer was not required to file
10an Illinois income tax return for the preceding taxable year,
11or, for individuals, if the taxpayer had no tax liability for
12the preceding taxable year and such year was a taxable year of
1312 months. The penalty imposed by subsection (a) shall also not
14be imposed on any underpayments of estimated tax due before the
15effective date of this amendatory Act of 1998 which
16underpayments are solely attributable to the change in
17apportionment from subsection (a) to subsection (h) of Section
18304. The provisions of this amendatory Act of 1998 apply to tax
19years ending on or after December 31, 1998.
20    (e) The penalty imposed for underpayment of estimated tax
21by subsection (a) of this Section shall not be imposed to the
22extent that the Director or his or her designate determines,
23pursuant to Section 3-8 of the Uniform Penalty and Interest Act
24that the penalty should not be imposed.
25    (f) Definition of tax. For purposes of subsections (b) and
26(c), the term "tax" means the excess of the tax imposed under

 

 

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1Article 2 of this Act, over the amounts credited against such
2tax under Sections 601(b) (3) and (4).
3    (g) Application of Section in case of tax withheld under
4Article 7. For purposes of applying this Section:
5        (1) tax withheld from compensation for the taxable year
6    shall be deemed a payment of estimated tax, and an equal
7    part of such amount shall be deemed paid on each
8    installment date for such taxable year, unless the taxpayer
9    establishes the dates on which all amounts were actually
10    withheld, in which case the amounts so withheld shall be
11    deemed payments of estimated tax on the dates on which such
12    amounts were actually withheld;
13        (2) amounts timely paid by a partnership, Subchapter S
14    corporation, or trust on behalf of a partner, shareholder,
15    or beneficiary pursuant to subsection (f) of Section 502 or
16    Section 709.5 and claimed as a payment of estimated tax
17    shall be deemed a payment of estimated tax made on the last
18    day of the taxable year of the partnership, Subchapter S
19    corporation, or trust for which the income from the
20    withholding is made was computed; and
21        (3) all other amounts pursuant to Article 7 shall be
22    deemed a payment of estimated tax on the date the payment
23    is made to the taxpayer of the amount from which the tax is
24    withheld.
25    (g-5) Amounts withheld under the State Salary and Annuity
26Withholding Act. An individual who has amounts withheld under

 

 

09700SB0397ham006- 155 -LRB097 04209 HLH 60625 a

1paragraph (10) of Section 4 of the State Salary and Annuity
2Withholding Act may elect to have those amounts treated as
3payments of estimated tax made on the dates on which those
4amounts are actually withheld.
5    (i) Short taxable year. The application of this Section to
6taxable years of less than 12 months shall be in accordance
7with regulations prescribed by the Department.
8    The changes in this Section made by Public Act 84-127 shall
9apply to taxable years ending on or after January 1, 1986.
10(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
11revised 11-18-11.)
 
12    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
13    Sec. 1501. Definitions.
14    (a) In general. When used in this Act, where not otherwise
15distinctly expressed or manifestly incompatible with the
16intent thereof:
17        (1) Business income. The term "business income" means
18    all income that may be treated as apportionable business
19    income under the Constitution of the United States.
20    Business income is net of the deductions allocable thereto.
21    Such term does not include compensation or the deductions
22    allocable thereto. For each taxable year beginning on or
23    after January 1, 2003, a taxpayer may elect to treat all
24    income other than compensation as business income. This
25    election shall be made in accordance with rules adopted by

 

 

09700SB0397ham006- 156 -LRB097 04209 HLH 60625 a

1    the Department and, once made, shall be irrevocable.
2        (1.5) Captive real estate investment trust:
3            (A) The term "captive real estate investment
4        trust" means a corporation, trust, or association:
5                (i) that is considered a real estate
6            investment trust for the taxable year under
7            Section 856 of the Internal Revenue Code;
8                (ii) the certificates of beneficial interest
9            or shares of which are not regularly traded on an
10            established securities market; and
11                (iii) of which more than 50% of the voting
12            power or value of the beneficial interest or
13            shares, at any time during the last half of the
14            taxable year, is owned or controlled, directly,
15            indirectly, or constructively, by a single
16            corporation.
17            (B) The term "captive real estate investment
18        trust" does not include:
19                (i) a real estate investment trust of which
20            more than 50% of the voting power or value of the
21            beneficial interest or shares is owned or
22            controlled, directly, indirectly, or
23            constructively, by:
24                    (a) a real estate investment trust, other
25                than a captive real estate investment trust;
26                    (b) a person who is exempt from taxation

 

 

09700SB0397ham006- 157 -LRB097 04209 HLH 60625 a

1                under Section 501 of the Internal Revenue Code,
2                and who is not required to treat income
3                received from the real estate investment trust
4                as unrelated business taxable income under
5                Section 512 of the Internal Revenue Code;
6                    (c) a listed Australian property trust, if
7                no more than 50% of the voting power or value
8                of the beneficial interest or shares of that
9                trust, at any time during the last half of the
10                taxable year, is owned or controlled, directly
11                or indirectly, by a single person;
12                    (d) an entity organized as a trust,
13                provided a listed Australian property trust
14                described in subparagraph (c) owns or
15                controls, directly or indirectly, or
16                constructively, 75% or more of the voting power
17                or value of the beneficial interests or shares
18                of such entity; or
19                    (e) an entity that is organized outside of
20                the laws of the United States and that
21                satisfies all of the following criteria:
22                        (1) at least 75% of the entity's total
23                    asset value at the close of its taxable
24                    year is represented by real estate assets
25                    (as defined in Section 856(c)(5)(B) of the
26                    Internal Revenue Code, thereby including

 

 

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1                    shares or certificates of beneficial
2                    interest in any real estate investment
3                    trust), cash and cash equivalents, and
4                    U.S. Government securities;
5                        (2) the entity is not subject to tax on
6                    amounts that are distributed to its
7                    beneficial owners or is exempt from
8                    entity-level taxation;
9                        (3) the entity distributes at least
10                    85% of its taxable income (as computed in
11                    the jurisdiction in which it is organized)
12                    to the holders of its shares or
13                    certificates of beneficial interest on an
14                    annual basis;
15                        (4) either (i) the shares or
16                    beneficial interests of the entity are
17                    regularly traded on an established
18                    securities market or (ii) not more than 10%
19                    of the voting power or value in the entity
20                    is held, directly, indirectly, or
21                    constructively, by a single entity or
22                    individual; and
23                        (5) the entity is organized in a
24                    country that has entered into a tax treaty
25                    with the United States; or
26                (ii) during its first taxable year for which it

 

 

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1            elects to be treated as a real estate investment
2            trust under Section 856(c)(1) of the Internal
3            Revenue Code, a real estate investment trust the
4            certificates of beneficial interest or shares of
5            which are not regularly traded on an established
6            securities market, but only if the certificates of
7            beneficial interest or shares of the real estate
8            investment trust are regularly traded on an
9            established securities market prior to the earlier
10            of the due date (including extensions) for filing
11            its return under this Act for that first taxable
12            year or the date it actually files that return.
13            (C) For the purposes of this subsection (1.5), the
14        constructive ownership rules prescribed under Section
15        318(a) of the Internal Revenue Code, as modified by
16        Section 856(d)(5) of the Internal Revenue Code, apply
17        in determining the ownership of stock, assets, or net
18        profits of any person.
19        (2) Commercial domicile. The term "commercial
20    domicile" means the principal place from which the trade or
21    business of the taxpayer is directed or managed.
22        (3) Compensation. The term "compensation" means wages,
23    salaries, commissions and any other form of remuneration
24    paid to employees for personal services.
25        (4) Corporation. The term "corporation" includes
26    associations, joint-stock companies, insurance companies

 

 

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1    and cooperatives. Any entity, including a limited
2    liability company formed under the Illinois Limited
3    Liability Company Act, shall be treated as a corporation if
4    it is so classified for federal income tax purposes.
5        (5) Department. The term "Department" means the
6    Department of Revenue of this State.
7        (6) Director. The term "Director" means the Director of
8    Revenue of this State.
9        (7) Fiduciary. The term "fiduciary" means a guardian,
10    trustee, executor, administrator, receiver, or any person
11    acting in any fiduciary capacity for any person.
12        (8) Financial organization.
13            (A) The term "financial organization" means any
14        bank, bank holding company, trust company, savings
15        bank, industrial bank, land bank, safe deposit
16        company, private banker, savings and loan association,
17        building and loan association, credit union, currency
18        exchange, cooperative bank, small loan company, sales
19        finance company, investment company, or any person
20        which is owned by a bank or bank holding company. For
21        the purpose of this Section a "person" will include
22        only those persons which a bank holding company may
23        acquire and hold an interest in, directly or
24        indirectly, under the provisions of the Bank Holding
25        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
26        where interests in any person must be disposed of

 

 

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1        within certain required time limits under the Bank
2        Holding Company Act of 1956.
3            (B) For purposes of subparagraph (A) of this
4        paragraph, the term "bank" includes (i) any entity that
5        is regulated by the Comptroller of the Currency under
6        the National Bank Act, or by the Federal Reserve Board,
7        or by the Federal Deposit Insurance Corporation and
8        (ii) any federally or State chartered bank operating as
9        a credit card bank.
10            (C) For purposes of subparagraph (A) of this
11        paragraph, the term "sales finance company" has the
12        meaning provided in the following item (i) or (ii):
13                (i) A person primarily engaged in one or more
14            of the following businesses: the business of
15            purchasing customer receivables, the business of
16            making loans upon the security of customer
17            receivables, the business of making loans for the
18            express purpose of funding purchases of tangible
19            personal property or services by the borrower, or
20            the business of finance leasing. For purposes of
21            this item (i), "customer receivable" means:
22                    (a) a retail installment contract or
23                retail charge agreement within the meaning of
24                the Sales Finance Agency Act, the Retail
25                Installment Sales Act, or the Motor Vehicle
26                Retail Installment Sales Act;

 

 

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1                    (b) an installment, charge, credit, or
2                similar contract or agreement arising from the
3                sale of tangible personal property or services
4                in a transaction involving a deferred payment
5                price payable in one or more installments
6                subsequent to the sale; or
7                    (c) the outstanding balance of a contract
8                or agreement described in provisions (a) or (b)
9                of this item (i).
10                A customer receivable need not provide for
11            payment of interest on deferred payments. A sales
12            finance company may purchase a customer receivable
13            from, or make a loan secured by a customer
14            receivable to, the seller in the original
15            transaction or to a person who purchased the
16            customer receivable directly or indirectly from
17            that seller.
18                (ii) A corporation meeting each of the
19            following criteria:
20                    (a) the corporation must be a member of an
21                "affiliated group" within the meaning of
22                Section 1504(a) of the Internal Revenue Code,
23                determined without regard to Section 1504(b)
24                of the Internal Revenue Code;
25                    (b) more than 50% of the gross income of
26                the corporation for the taxable year must be

 

 

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1                interest income derived from qualifying loans.
2                A "qualifying loan" is a loan made to a member
3                of the corporation's affiliated group that
4                originates customer receivables (within the
5                meaning of item (i)) or to whom customer
6                receivables originated by a member of the
7                affiliated group have been transferred, to the
8                extent the average outstanding balance of
9                loans from that corporation to members of its
10                affiliated group during the taxable year do not
11                exceed the limitation amount for that
12                corporation. The "limitation amount" for a
13                corporation is the average outstanding
14                balances during the taxable year of customer
15                receivables (within the meaning of item (i))
16                originated by all members of the affiliated
17                group. If the average outstanding balances of
18                the loans made by a corporation to members of
19                its affiliated group exceed the limitation
20                amount, the interest income of that
21                corporation from qualifying loans shall be
22                equal to its interest income from loans to
23                members of its affiliated groups times a
24                fraction equal to the limitation amount
25                divided by the average outstanding balances of
26                the loans made by that corporation to members

 

 

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1                of its affiliated group;
2                    (c) the total of all shareholder's equity
3                (including, without limitation, paid-in
4                capital on common and preferred stock and
5                retained earnings) of the corporation plus the
6                total of all of its loans, advances, and other
7                obligations payable or owed to members of its
8                affiliated group may not exceed 20% of the
9                total assets of the corporation at any time
10                during the tax year; and
11                    (d) more than 50% of all interest-bearing
12                obligations of the affiliated group payable to
13                persons outside the group determined in
14                accordance with generally accepted accounting
15                principles must be obligations of the
16                corporation.
17            This amendatory Act of the 91st General Assembly is
18        declaratory of existing law.
19            (D) Subparagraphs (B) and (C) of this paragraph are
20        declaratory of existing law and apply retroactively,
21        for all tax years beginning on or before December 31,
22        1996, to all original returns, to all amended returns
23        filed no later than 30 days after the effective date of
24        this amendatory Act of 1996, and to all notices issued
25        on or before the effective date of this amendatory Act
26        of 1996 under subsection (a) of Section 903, subsection

 

 

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1        (a) of Section 904, subsection (e) of Section 909, or
2        Section 912. A taxpayer that is a "financial
3        organization" that engages in any transaction with an
4        affiliate shall be a "financial organization" for all
5        purposes of this Act.
6            (E) For all tax years beginning on or before
7        December 31, 1996, a taxpayer that falls within the
8        definition of a "financial organization" under
9        subparagraphs (B) or (C) of this paragraph, but who
10        does not fall within the definition of a "financial
11        organization" under the Proposed Regulations issued by
12        the Department of Revenue on July 19, 1996, may
13        irrevocably elect to apply the Proposed Regulations
14        for all of those years as though the Proposed
15        Regulations had been lawfully promulgated, adopted,
16        and in effect for all of those years. For purposes of
17        applying subparagraphs (B) or (C) of this paragraph to
18        all of those years, the election allowed by this
19        subparagraph applies only to the taxpayer making the
20        election and to those members of the taxpayer's unitary
21        business group who are ordinarily required to
22        apportion business income under the same subsection of
23        Section 304 of this Act as the taxpayer making the
24        election. No election allowed by this subparagraph
25        shall be made under a claim filed under subsection (d)
26        of Section 909 more than 30 days after the effective

 

 

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1        date of this amendatory Act of 1996.
2            (F) Finance Leases. For purposes of this
3        subsection, a finance lease shall be treated as a loan
4        or other extension of credit, rather than as a lease,
5        regardless of how the transaction is characterized for
6        any other purpose, including the purposes of any
7        regulatory agency to which the lessor is subject. A
8        finance lease is any transaction in the form of a lease
9        in which the lessee is treated as the owner of the
10        leased asset entitled to any deduction for
11        depreciation allowed under Section 167 of the Internal
12        Revenue Code.
13        (9) Fiscal year. The term "fiscal year" means an
14    accounting period of 12 months ending on the last day of
15    any month other than December.
16        (9.5) Fixed place of business. The term "fixed place of
17    business" has the same meaning as that term is given in
18    Section 864 of the Internal Revenue Code and the related
19    Treasury regulations.
20        (10) Includes and including. The terms "includes" and
21    "including" when used in a definition contained in this Act
22    shall not be deemed to exclude other things otherwise
23    within the meaning of the term defined.
24        (11) Internal Revenue Code. The term "Internal Revenue
25    Code" means the United States Internal Revenue Code of 1954
26    or any successor law or laws relating to federal income

 

 

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1    taxes in effect for the taxable year.
2        (11.5) Investment partnership.
3            (A) The term "investment partnership" means any
4        entity that is treated as a partnership for federal
5        income tax purposes that meets the following
6        requirements:
7                (i) no less than 90% of the partnership's cost
8            of its total assets consists of qualifying
9            investment securities, deposits at banks or other
10            financial institutions, and office space and
11            equipment reasonably necessary to carry on its
12            activities as an investment partnership;
13                (ii) no less than 90% of its gross income
14            consists of interest, dividends, and gains from
15            the sale or exchange of qualifying investment
16            securities; and
17                (iii) the partnership is not a dealer in
18            qualifying investment securities.
19            (B) For purposes of this paragraph (11.5), the term
20        "qualifying investment securities" includes all of the
21        following:
22                (i) common stock, including preferred or debt
23            securities convertible into common stock, and
24            preferred stock;
25                (ii) bonds, debentures, and other debt
26            securities;

 

 

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1                (iii) foreign and domestic currency deposits
2            secured by federal, state, or local governmental
3            agencies;
4                (iv) mortgage or asset-backed securities
5            secured by federal, state, or local governmental
6            agencies;
7                (v) repurchase agreements and loan
8            participations;
9                (vi) foreign currency exchange contracts and
10            forward and futures contracts on foreign
11            currencies;
12                (vii) stock and bond index securities and
13            futures contracts and other similar financial
14            securities and futures contracts on those
15            securities;
16                (viii) options for the purchase or sale of any
17            of the securities, currencies, contracts, or
18            financial instruments described in items (i) to
19            (vii), inclusive;
20                (ix) regulated futures contracts;
21                (x) commodities (not described in Section
22            1221(a)(1) of the Internal Revenue Code) or
23            futures, forwards, and options with respect to
24            such commodities, provided, however, that any item
25            of a physical commodity to which title is actually
26            acquired in the partnership's capacity as a dealer

 

 

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1            in such commodity shall not be a qualifying
2            investment security;
3                (xi) derivatives; and
4                (xii) a partnership interest in another
5            partnership that is an investment partnership.
6        (12) Mathematical error. The term "mathematical error"
7    includes the following types of errors, omissions, or
8    defects in a return filed by a taxpayer which prevents
9    acceptance of the return as filed for processing:
10            (A) arithmetic errors or incorrect computations on
11        the return or supporting schedules;
12            (B) entries on the wrong lines;
13            (C) omission of required supporting forms or
14        schedules or the omission of the information in whole
15        or in part called for thereon; and
16            (D) an attempt to claim, exclude, deduct, or
17        improperly report, in a manner directly contrary to the
18        provisions of the Act and regulations thereunder any
19        item of income, exemption, deduction, or credit.
20        (13) Nonbusiness income. The term "nonbusiness income"
21    means all income other than business income or
22    compensation.
23        (14) Nonresident. The term "nonresident" means a
24    person who is not a resident.
25        (15) Paid, incurred and accrued. The terms "paid",
26    "incurred" and "accrued" shall be construed according to

 

 

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1    the method of accounting upon the basis of which the
2    person's base income is computed under this Act.
3        (16) Partnership and partner. The term "partnership"
4    includes a syndicate, group, pool, joint venture or other
5    unincorporated organization, through or by means of which
6    any business, financial operation, or venture is carried
7    on, and which is not, within the meaning of this Act, a
8    trust or estate or a corporation; and the term "partner"
9    includes a member in such syndicate, group, pool, joint
10    venture or organization.
11        The term "partnership" includes any entity, including
12    a limited liability company formed under the Illinois
13    Limited Liability Company Act, classified as a partnership
14    for federal income tax purposes.
15        The term "partnership" does not include a syndicate,
16    group, pool, joint venture, or other unincorporated
17    organization established for the sole purpose of playing
18    the Illinois State Lottery.
19        (17) Part-year resident. The term "part-year resident"
20    means an individual who became a resident during the
21    taxable year or ceased to be a resident during the taxable
22    year. Under Section 1501(a)(20)(A)(i) residence commences
23    with presence in this State for other than a temporary or
24    transitory purpose and ceases with absence from this State
25    for other than a temporary or transitory purpose. Under
26    Section 1501(a)(20)(A)(ii) residence commences with the

 

 

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1    establishment of domicile in this State and ceases with the
2    establishment of domicile in another State.
3        (18) Person. The term "person" shall be construed to
4    mean and include an individual, a trust, estate,
5    partnership, association, firm, company, corporation,
6    limited liability company, or fiduciary. For purposes of
7    Section 1301 and 1302 of this Act, a "person" means (i) an
8    individual, (ii) a corporation, (iii) an officer, agent, or
9    employee of a corporation, (iv) a member, agent or employee
10    of a partnership, or (v) a member, manager, employee,
11    officer, director, or agent of a limited liability company
12    who in such capacity commits an offense specified in
13    Section 1301 and 1302.
14        (18A) Records. The term "records" includes all data
15    maintained by the taxpayer, whether on paper, microfilm,
16    microfiche, or any type of machine-sensible data
17    compilation.
18        (19) Regulations. The term "regulations" includes
19    rules promulgated and forms prescribed by the Department.
20        (20) Resident. The term "resident" means:
21            (A) an individual (i) who is in this State for
22        other than a temporary or transitory purpose during the
23        taxable year; or (ii) who is domiciled in this State
24        but is absent from the State for a temporary or
25        transitory purpose during the taxable year;
26            (B) The estate of a decedent who at his or her

 

 

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1        death was domiciled in this State;
2            (C) A trust created by a will of a decedent who at
3        his death was domiciled in this State; and
4            (D) An irrevocable trust, the grantor of which was
5        domiciled in this State at the time such trust became
6        irrevocable. For purpose of this subparagraph, a trust
7        shall be considered irrevocable to the extent that the
8        grantor is not treated as the owner thereof under
9        Sections 671 through 678 of the Internal Revenue Code.
10        (21) Sales. The term "sales" means all gross receipts
11    of the taxpayer not allocated under Sections 301, 302 and
12    303.
13        (22) State. The term "state" when applied to a
14    jurisdiction other than this State means any state of the
15    United States, the District of Columbia, the Commonwealth
16    of Puerto Rico, any Territory or Possession of the United
17    States, and any foreign country, or any political
18    subdivision of any of the foregoing. For purposes of the
19    foreign tax credit under Section 601, the term "state"
20    means any state of the United States, the District of
21    Columbia, the Commonwealth of Puerto Rico, and any
22    territory or possession of the United States, or any
23    political subdivision of any of the foregoing, effective
24    for tax years ending on or after December 31, 1989.
25        (23) Taxable year. The term "taxable year" means the
26    calendar year, or the fiscal year ending during such

 

 

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1    calendar year, upon the basis of which the base income is
2    computed under this Act. "Taxable year" means, in the case
3    of a return made for a fractional part of a year under the
4    provisions of this Act, the period for which such return is
5    made.
6        (24) Taxpayer. The term "taxpayer" means any person
7    subject to the tax imposed by this Act.
8        (25) International banking facility. The term
9    international banking facility shall have the same meaning
10    as is set forth in the Illinois Banking Act or as is set
11    forth in the laws of the United States or regulations of
12    the Board of Governors of the Federal Reserve System.
13        (26) Income Tax Return Preparer.
14            (A) The term "income tax return preparer" means any
15        person who prepares for compensation, or who employs
16        one or more persons to prepare for compensation, any
17        return of tax imposed by this Act or any claim for
18        refund of tax imposed by this Act. The preparation of a
19        substantial portion of a return or claim for refund
20        shall be treated as the preparation of that return or
21        claim for refund.
22            (B) A person is not an income tax return preparer
23        if all he or she does is
24                (i) furnish typing, reproducing, or other
25            mechanical assistance;
26                (ii) prepare returns or claims for refunds for

 

 

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1            the employer by whom he or she is regularly and
2            continuously employed;
3                (iii) prepare as a fiduciary returns or claims
4            for refunds for any person; or
5                (iv) prepare claims for refunds for a taxpayer
6            in response to any notice of deficiency issued to
7            that taxpayer or in response to any waiver of
8            restriction after the commencement of an audit of
9            that taxpayer or of another taxpayer if a
10            determination in the audit of the other taxpayer
11            directly or indirectly affects the tax liability
12            of the taxpayer whose claims he or she is
13            preparing.
14        (27) Unitary business group.
15            (A) The term "unitary business group" means a group
16        of persons related through common ownership whose
17        business activities are integrated with, dependent
18        upon and contribute to each other. The group will not
19        include those members whose business activity outside
20        the United States is 80% or more of any such member's
21        total business activity; for purposes of this
22        paragraph and clause (a)(3)(B)(ii) of Section 304,
23        business activity within the United States shall be
24        measured by means of the factors ordinarily applicable
25        under subsections (a), (b), (c), (d), or (h) of Section
26        304 except that, in the case of members ordinarily

 

 

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1        required to apportion business income by means of the 3
2        factor formula of property, payroll and sales
3        specified in subsection (a) of Section 304, including
4        the formula as weighted in subsection (h) of Section
5        304, such members shall not use the sales factor in the
6        computation and the results of the property and payroll
7        factor computations of subsection (a) of Section 304
8        shall be divided by 2 (by one if either the property or
9        payroll factor has a denominator of zero). The
10        computation required by the preceding sentence shall,
11        in each case, involve the division of the member's
12        property, payroll, or revenue miles in the United
13        States, insurance premiums on property or risk in the
14        United States, or financial organization business
15        income from sources within the United States, as the
16        case may be, by the respective worldwide figures for
17        such items. Common ownership in the case of
18        corporations is the direct or indirect control or
19        ownership of more than 50% of the outstanding voting
20        stock of the persons carrying on unitary business
21        activity. Unitary business activity can ordinarily be
22        illustrated where the activities of the members are:
23        (1) in the same general line (such as manufacturing,
24        wholesaling, retailing of tangible personal property,
25        insurance, transportation or finance); or (2) are
26        steps in a vertically structured enterprise or process

 

 

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1        (such as the steps involved in the production of
2        natural resources, which might include exploration,
3        mining, refining, and marketing); and, in either
4        instance, the members are functionally integrated
5        through the exercise of strong centralized management
6        (where, for example, authority over such matters as
7        purchasing, financing, tax compliance, product line,
8        personnel, marketing and capital investment is not
9        left to each member).
10            (B) In no event, shall any unitary business group
11        include members which are ordinarily required to
12        apportion business income under different subsections
13        of Section 304 except that for tax years ending on or
14        after December 31, 1987 this prohibition shall not
15        apply to a holding company that would otherwise be a
16        member of a unitary business group with taxpayers that
17        apportion business income under any of subsections
18        (b), (c), (c-1), or (d) of Section 304. If a unitary
19        business group would, but for the preceding sentence,
20        include members that are ordinarily required to
21        apportion business income under different subsections
22        of Section 304, then for each subsection of Section 304
23        for which there are two or more members, there shall be
24        a separate unitary business group composed of such
25        members. For purposes of the preceding two sentences, a
26        member is "ordinarily required to apportion business

 

 

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1        income" under a particular subsection of Section 304 if
2        it would be required to use the apportionment method
3        prescribed by such subsection except for the fact that
4        it derives business income solely from Illinois. As
5        used in this paragraph, the phrase "United States"
6        means only the 50 states and the District of Columbia,
7        but does not include any territory or possession of the
8        United States or any area over which the United States
9        has asserted jurisdiction or claimed exclusive rights
10        with respect to the exploration for or exploitation of
11        natural resources.
12            (C) Holding companies.
13                (i) For purposes of this subparagraph, a
14            "holding company" is a corporation (other than a
15            corporation that is a financial organization under
16            paragraph (8) of this subsection (a) of Section
17            1501 because it is a bank holding company under the
18            provisions of the Bank Holding Company Act of 1956
19            (12 U.S.C. 1841, et seq.) or because it is owned by
20            a bank or a bank holding company) that owns a
21            controlling interest in one or more other
22            taxpayers ("controlled taxpayers"); that, during
23            the period that includes the taxable year and the 2
24            immediately preceding taxable years or, if the
25            corporation was formed during the current or
26            immediately preceding taxable year, the taxable

 

 

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1            years in which the corporation has been in
2            existence, derived substantially all its gross
3            income from dividends, interest, rents, royalties,
4            fees or other charges received from controlled
5            taxpayers for the provision of services, and gains
6            on the sale or other disposition of interests in
7            controlled taxpayers or in property leased or
8            licensed to controlled taxpayers or used by the
9            taxpayer in providing services to controlled
10            taxpayers; and that incurs no substantial expenses
11            other than expenses (including interest and other
12            costs of borrowing) incurred in connection with
13            the acquisition and holding of interests in
14            controlled taxpayers and in the provision of
15            services to controlled taxpayers or in the leasing
16            or licensing of property to controlled taxpayers.
17                (ii) The income of a holding company which is a
18            member of more than one unitary business group
19            shall be included in each unitary business group of
20            which it is a member on a pro rata basis, by
21            including in each unitary business group that
22            portion of the base income of the holding company
23            that bears the same proportion to the total base
24            income of the holding company as the gross receipts
25            of the unitary business group bears to the combined
26            gross receipts of all unitary business groups (in

 

 

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1            both cases without regard to the holding company)
2            or on any other reasonable basis, consistently
3            applied.
4                (iii) A holding company shall apportion its
5            business income under the subsection of Section
6            304 used by the other members of its unitary
7            business group. The apportionment factors of a
8            holding company which would be a member of more
9            than one unitary business group shall be included
10            with the apportionment factors of each unitary
11            business group of which it is a member on a pro
12            rata basis using the same method used in clause
13            (ii).
14                (iv) The provisions of this subparagraph (C)
15            are intended to clarify existing law.
16            (D) If including the base income and factors of a
17        holding company in more than one unitary business group
18        under subparagraph (C) does not fairly reflect the
19        degree of integration between the holding company and
20        one or more of the unitary business groups, the
21        dependence of the holding company and one or more of
22        the unitary business groups upon each other, or the
23        contributions between the holding company and one or
24        more of the unitary business groups, the holding
25        company may petition the Director, under the
26        procedures provided under Section 304(f), for

 

 

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1        permission to include all base income and factors of
2        the holding company only with members of a unitary
3        business group apportioning their business income
4        under one subsection of subsections (a), (b), (c), or
5        (d) of Section 304. If the petition is granted, the
6        holding company shall be included in a unitary business
7        group only with persons apportioning their business
8        income under the selected subsection of Section 304
9        until the Director grants a petition of the holding
10        company either to be included in more than one unitary
11        business group under subparagraph (C) or to include its
12        base income and factors only with members of a unitary
13        business group apportioning their business income
14        under a different subsection of Section 304.
15            (E) If the unitary business group members'
16        accounting periods differ, the common parent's
17        accounting period or, if there is no common parent, the
18        accounting period of the member that is expected to
19        have, on a recurring basis, the greatest Illinois
20        income tax liability must be used to determine whether
21        to use the apportionment method provided in subsection
22        (a) or subsection (h) of Section 304. The prohibition
23        against membership in a unitary business group for
24        taxpayers ordinarily required to apportion income
25        under different subsections of Section 304 does not
26        apply to taxpayers required to apportion income under

 

 

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1        subsection (a) and subsection (h) of Section 304. The
2        provisions of this amendatory Act of 1998 apply to tax
3        years ending on or after December 31, 1998.
4        (28) Subchapter S corporation. The term "Subchapter S
5    corporation" means a corporation for which there is in
6    effect an election under Section 1362 of the Internal
7    Revenue Code, or for which there is a federal election to
8    opt out of the provisions of the Subchapter S Revision Act
9    of 1982 and have applied instead the prior federal
10    Subchapter S rules as in effect on July 1, 1982.
11        (30) Foreign person. The term "foreign person" means
12    any person who is a nonresident alien individual and any
13    nonindividual entity, regardless of where created or
14    organized, whose business activity outside the United
15    States is 80% or more of the entity's total business
16    activity.
 
17    (b) Other definitions.
18        (1) Words denoting number, gender, and so forth, when
19    used in this Act, where not otherwise distinctly expressed
20    or manifestly incompatible with the intent thereof:
21            (A) Words importing the singular include and apply
22        to several persons, parties or things;
23            (B) Words importing the plural include the
24        singular; and
25            (C) Words importing the masculine gender include

 

 

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1        the feminine as well.
2        (2) "Company" or "association" as including successors
3    and assigns. The word "company" or "association", when used
4    in reference to a corporation, shall be deemed to embrace
5    the words "successors and assigns of such company or
6    association", and in like manner as if these last-named
7    words, or words of similar import, were expressed.
8        (3) Other terms. Any term used in any Section of this
9    Act with respect to the application of, or in connection
10    with, the provisions of any other Section of this Act shall
11    have the same meaning as in such other Section.
12(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11.)
 
13    Section 15-15. The Economic Development for a Growing
14Economy Tax Credit Act is amended by changing Section 5-15 as
15follows:
 
16    (35 ILCS 10/5-15)
17    Sec. 5-15. Tax Credit Awards. Subject to the conditions set
18forth in this Act, a Taxpayer is entitled to a Credit against
19or, as described in subsection (g) of this Section, a payment
20towards taxes imposed pursuant to subsections (a) and (b) of
21Section 201 of the Illinois Income Tax Act that may be imposed
22on the Taxpayer for a taxable year beginning on or after
23January 1, 1999, if the Taxpayer is awarded a Credit by the
24Department under this Act for that taxable year.

 

 

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1    (a) The Department shall make Credit awards under this Act
2to foster job creation and retention in Illinois.
3    (b) A person that proposes a project to create new jobs in
4Illinois must enter into an Agreement with the Department for
5the Credit under this Act.
6    (c) The Credit shall be claimed for the taxable years
7specified in the Agreement.
8    (d) The Credit shall not exceed the Incremental Income Tax
9attributable to the project that is the subject of the
10Agreement.
11    (e) Nothing herein shall prohibit a Tax Credit Award to an
12Applicant that uses a PEO if all other award criteria are
13satisfied.
14    (f) In lieu of the Credit allowed under this Act against
15the taxes imposed pursuant to subsections (a) and (b) of
16Section 201 of the Illinois Income Tax Act for any taxable year
17ending on or after December 31, 2009, the Taxpayer may elect to
18claim the Credit against its obligation to pay over withholding
19under Section 704A of the Illinois Income Tax Act.
20        (1) The election under this subsection (f) may be made
21    only by a Taxpayer that (i) is primarily engaged in one of
22    the following business activities: water purification and
23    treatment, motor vehicle metal stamping, automobile
24    manufacturing, automobile and light duty motor vehicle
25    manufacturing, motor vehicle manufacturing, light truck
26    and utility vehicle manufacturing, heavy duty truck

 

 

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1    manufacturing, motor vehicle body manufacturing, cable
2    television infrastructure design or manufacturing, or
3    wireless telecommunication or computing terminal device
4    design or manufacturing for use on public networks and (ii)
5    meets the following criteria:
6            (A) the Taxpayer (i) had an Illinois net loss or an
7        Illinois net loss deduction under Section 207 of the
8        Illinois Income Tax Act for the taxable year in which
9        the Credit is awarded, (ii) employed a minimum of 1,000
10        full-time employees in this State during the taxable
11        year in which the Credit is awarded, (iii) has an
12        Agreement under this Act on December 14, 2009 (the
13        effective date of Public Act 96-834), and (iv) is in
14        compliance with all provisions of that Agreement;
15            (B) the Taxpayer (i) had an Illinois net loss or an
16        Illinois net loss deduction under Section 207 of the
17        Illinois Income Tax Act for the taxable year in which
18        the Credit is awarded, (ii) employed a minimum of 1,000
19        full-time employees in this State during the taxable
20        year in which the Credit is awarded, and (iii) has
21        applied for an Agreement within 365 days after December
22        14, 2009 (the effective date of Public Act 96-834);
23            (C) the Taxpayer (i) had an Illinois net operating
24        loss carryforward under Section 207 of the Illinois
25        Income Tax Act in a taxable year ending during calendar
26        year 2008, (ii) has applied for an Agreement within 150

 

 

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1        days after the effective date of this amendatory Act of
2        the 96th General Assembly, (iii) creates at least 400
3        new jobs in Illinois, (iv) retains at least 2,000 jobs
4        in Illinois that would have been at risk of relocation
5        out of Illinois over a 10-year period, and (v) makes a
6        capital investment of at least $75,000,000;
7            (D) the Taxpayer (i) had an Illinois net operating
8        loss carryforward under Section 207 of the Illinois
9        Income Tax Act in a taxable year ending during calendar
10        year 2009, (ii) has applied for an Agreement within 150
11        days after the effective date of this amendatory Act of
12        the 96th General Assembly, (iii) creates at least 150
13        new jobs, (iv) retains at least 1,000 jobs in Illinois
14        that would have been at risk of relocation out of
15        Illinois over a 10-year period, and (v) makes a capital
16        investment of at least $57,000,000; or
17            (E) the Taxpayer (i) employed at least 2,500
18        full-time employees in the State during the year in
19        which the Credit is awarded, (ii) commits to make at
20        least $500,000,000 in combined capital improvements
21        and project costs under the Agreement, (iii) applies
22        for an Agreement between January 1, 2011 and June 30,
23        2011, (iv) executes an Agreement for the Credit during
24        calendar year 2011, and (v) was incorporated no more
25        than 5 years before the filing of an application for an
26        Agreement.

 

 

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1        (1.5) The election under this subsection (f) may also
2    be made by a Taxpayer for any Credit awarded pursuant to an
3    agreement that was executed between January 1, 2011 and
4    June 30, 2011, if the Taxpayer (i) is primarily engaged in
5    the manufacture of inner tubes or tires, or both, from
6    natural and synthetic rubber, (ii) employs a minimum of
7    2,400 full-time employees in Illinois at the time of
8    application, (iii) creates at least 350 full-time jobs and
9    retains at least 250 full-time jobs in Illinois that would
10    have been at risk of being created or retained outside of
11    Illinois, and (iv) makes a capital investment of at least
12    $200,000,000 at the project location.
13        (1.6) The election under this subsection (f) may also
14    be made by a Taxpayer for any Credit awarded pursuant to an
15    agreement that was executed within 150 days after the
16    effective date of this amendatory Act of the 97th General
17    Assembly, if the Taxpayer (i) is primarily engaged in the
18    operation of a discount department store, (ii) maintains
19    its corporate headquarters in Illinois, (iii) employs a
20    minimum of 4,250 full time employees at its corporate
21    headquarters in Illinois at the time of application, (iv)
22    retains at least 4,250 full time jobs in Illinois that
23    would have been at risk of being relocated outside of
24    Illinois, (v) had a minimum of $40,000,000,000 in total
25    revenue in 2010, and (vi) makes a capital investment of at
26    least $300,000,000 at the project location.

 

 

09700SB0397ham006- 187 -LRB097 04209 HLH 60625 a

1        (1.7) Notwithstanding any other provision of law, the
2    election under this subsection (f) may also be made by a
3    Taxpayer for any Credit awarded pursuant to an agreement
4    that was executed or applied for on or after July 1, 2011
5    and on or before March 31, 2012, if the Taxpayer is
6    primarily engaged in the manufacture of original and
7    aftermarket filtration parts and products for automobiles,
8    motor vehicles, light duty motor vehicles, light trucks and
9    utility vehicles, and heavy duty trucks, (ii) employs a
10    minimum of 1,000 full-time employees in Illinois at the
11    time of application, (iii) creates at least 250 full-time
12    jobs in Illinois, (iv) relocates its corporate
13    headquarters to Illinois from another state, and (v) makes
14    a capital investment of at least $4,000,000 at the project
15    location.
16        (2) An election under this subsection shall allow the
17    credit to be taken against payments otherwise due under
18    Section 704A of the Illinois Income Tax Act during the
19    first calendar year beginning after the end of the taxable
20    year in which the credit is awarded under this Act.
21        (3) The election shall be made in the form and manner
22    required by the Illinois Department of Revenue and, once
23    made, shall be irrevocable.
24        (4) If a Taxpayer who meets the requirements of
25    subparagraph (A) of paragraph (1) of this subsection (f)
26    elects to claim the Credit against its withholdings as

 

 

09700SB0397ham006- 188 -LRB097 04209 HLH 60625 a

1    provided in this subsection (f), then, on and after the
2    date of the election, the terms of the Agreement between
3    the Taxpayer and the Department may not be further amended
4    during the term of the Agreement.
5    (g) A pass-through entity that has been awarded a credit
6under this Act, its shareholders, or its partners may treat
7some or all of the credit awarded pursuant to this Act as a tax
8payment for purposes of the Illinois Income Tax Act. The term
9"tax payment" means a payment as described in Article 6 or
10Article 8 of the Illinois Income Tax Act or a composite payment
11made by a pass-through entity on behalf of any of its
12shareholders or partners to satisfy such shareholders' or
13partners' taxes imposed pursuant to subsections (a) and (b) of
14Section 201 of the Illinois Income Tax Act. In no event shall
15the amount of the award credited pursuant to this Act exceed
16the Illinois income tax liability of the pass-through entity or
17its shareholders or partners for the taxable year.
18(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
1996-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
203-4-11; 97-2, eff. 5-6-11.)
 
21    Section 15-17. The Business Location Efficiency Incentive
22Act is amended by changing Section 25 as follows:
 
23    (35 ILCS 11/25)
24    (Section scheduled to be repealed on December 31, 2011)

 

 

09700SB0397ham006- 189 -LRB097 04209 HLH 60625 a

1    Sec. 25. Repeal. This Act is repealed on December 31, 2016
22011.
3(Source: P.A. 94-966, eff. 1-1-07.)
 
4    Section 15-18. The Small Business Job Creation Tax Credit
5Act is amended by changing Sections 10 and 25 as follows:
 
6    (35 ILCS 25/10)
7    Sec. 10. Definitions. In this Act:
8    "Applicant" means a person that is operating a business
9located within the State of Illinois that is engaged in
10interstate or intrastate commerce and either:
11        (1) has no more than 50 full-time employees, without
12    regard to the location of employment of such employees at
13    the beginning of the incentive period; or
14        (2) hired within the incentive period an employee who
15    had participated as worker-trainee in the Put Illinois to
16    Work Program during 2010.
17    In the case of any person that is a member of a unitary
18business group within the meaning of subdivision (a)(27) of
19Section 1501 of the Illinois Income Tax Act, "applicant" refers
20to the unitary business group.
21    "Certificate" means the tax credit certificate issued by
22the Department under Section 35 of this Act.
23    "Certificate of eligibility" means the certificate issued
24by the Department under Section 20 of this Act.

 

 

09700SB0397ham006- 190 -LRB097 04209 HLH 60625 a

1    "Credit" means the amount awarded by the Department to an
2applicant by issuance of a certificate under Section 35 of this
3Act for each new full-time equivalent employee hired or job
4created.
5    "Department" means the Department of Commerce and Economic
6Opportunity.
7    "Director" means the Director of the Department.
8    "Full-time employee" means an individual who is employed
9for a basic wage for at least 35 hours each week or who renders
10any other standard of service generally accepted by industry
11custom or practice as full-time employment.
12    "Incentive period" means the period beginning on July 1 and
13ending on June 30 of the following year. The first incentive
14period shall begin on July 1, 2010 and the last incentive
15period shall end ending on June 30, 2016 2011.
16    "Basic wage" means compensation for employment that is no
17less than $10 per hour or the equivalent salary for a new
18employee.
19    "New employee" means a full-time employee:
20        (1) who first became employed by an applicant with less
21    than 50 full-time employees within the incentive period
22    whose hire results in a net increase in the applicant's
23    full-time Illinois employees and who is receiving a basic
24    wage as compensation; or
25        (2) who participated as a worker-trainee in the Put
26    Illinois to Work Program during 2010 and who is

 

 

09700SB0397ham006- 191 -LRB097 04209 HLH 60625 a

1    subsequently hired during the incentive period by an
2    applicant and who is receiving a basic wage as
3    compensation.
4    The term "new employee" does not include:
5        (1) a person who was previously employed in Illinois by
6    the applicant or a related member prior to the onset of the
7    incentive period; or
8        (2) any individual who has a direct or indirect
9    ownership interest of at least 5% in the profits, capital,
10    or value of the applicant or a related member.
11    "Noncompliance date" means, in the case of an applicant
12that is not complying with the requirements of the provisions
13of this Act, the day following the last date upon which the
14taxpayer was in compliance with the requirements of the
15provisions of this Act, as determined by the Director, pursuant
16to Section 45 of this Act.
17    "Put Illinois to Work Program" means a worker training and
18employment program that was established by the State of
19Illinois with funding from the United States Department of
20Health and Human Services of Emergency Temporary Assistance to
21Needy Families funds authorized by the American Recovery and
22Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
23funds were in turn used by the State of Illinois to fund the
24Put Illinois to Work Program.
25    "Related member" means a person that, with respect to the
26applicant during any portion of the incentive period, is any

 

 

09700SB0397ham006- 192 -LRB097 04209 HLH 60625 a

1one of the following,
2        (1) An individual, if the individual and the members of
3    the individual's family (as defined in Section 318 of the
4    Internal Revenue Code) own directly, indirectly,
5    beneficially, or constructively, in the aggregate, at
6    least 50% of the value of the outstanding profits, capital,
7    stock, or other ownership interest in the applicant.
8        (2) A partnership, estate, or trust and any partner or
9    beneficiary, if the partnership, estate, or trust and its
10    partners or beneficiaries own directly, indirectly,
11    beneficially, or constructively, in the aggregate, at
12    least 50% of the profits, capital, stock, or other
13    ownership interest in the applicant.
14        (3) A corporation, and any party related to the
15    corporation in a manner that would require an attribution
16    of stock from the corporation under the attribution rules
17    of Section 318 of the Internal Revenue Code, if the
18    applicant and any other related member own, in the
19    aggregate, directly, indirectly, beneficially, or
20    constructively, at least 50% of the value of the
21    corporation's outstanding stock.
22        (4) A corporation and any party related to that
23    corporation in a manner that would require an attribution
24    of stock from the corporation to the party or from the
25    party to the corporation under the attribution rules of
26    Section 318 of the Internal Revenue Code, if the

 

 

09700SB0397ham006- 193 -LRB097 04209 HLH 60625 a

1    corporation and all such related parties own, in the
2    aggregate, at least 50% of the profits, capital, stock, or
3    other ownership interest in the applicant.
4        (5) A person to or from whom there is attribution of
5    stock ownership in accordance with Section 1563(e) of the
6    Internal Revenue Code, except that for purposes of
7    determining whether a person is a related member under this
8    paragraph, "20%" shall be substituted for "5%" whenever
9    "5%" appears in Section 1563(e) of the Internal Revenue
10    Code.
11(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
12    (35 ILCS 25/25)
13    Sec. 25. Tax credit.
14    (a) Subject to the conditions set forth in this Act, an
15applicant is entitled to a credit against payment of taxes
16withheld under Section 704A of the Illinois Income Tax Act:
17        (1) for new employees who participated as
18    worker-trainees in the Put Illinois to Work Program during
19    2010:
20            (A) in the first calendar year ending on or after
21        the date that is 6 months after December 31, 2010, or
22        the date of hire, whichever is later. Under this
23        subparagraph, the applicant is entitled to one-half of
24        the credit allowable for each new employee who is
25        employed for at least 6 months after the date of hire;

 

 

09700SB0397ham006- 194 -LRB097 04209 HLH 60625 a

1        and
2            (B) in the first calendar year ending on or after
3        the date that is 12 months after December 31, 2010, or
4        the date of hire, whichever is later. Under this
5        subparagraph, the applicant is entitled to one-half of
6        the credit allowable for each new employee who is
7        employed for at least 12 months after the date of hire;
8         (2) for all other new employees, in the first calendar
9    year ending on or after the date that is 12 months after
10    the date of hire of a new employee. The credit shall be
11    allowed as a credit to an applicant for each full-time
12    employee hired during the incentive period that results in
13    a net increase in full-time Illinois employees, where the
14    net increase in the employer's full-time Illinois
15    employees is maintained for at least 12 months.
16    (b) The Department shall make credit awards under this Act
17to further job creation.
18    (c) The credit shall be claimed for the first calendar year
19ending on or after the date on which the certificate is issued
20by the Department.
21    (d) The credit shall not exceed $2,500 per new employee
22hired.
23    (e) The net increase in full-time Illinois employees,
24measured on an annual full-time equivalent basis, shall be the
25total number of full-time Illinois employees of the applicant
26on the final day of the incentive period June 30, 2011, minus

 

 

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1the number of full-time Illinois employees employed by the
2employer on the first day of that same incentive period July 1,
32010. For purposes of the calculation, an employer that begins
4doing business in this State during the incentive period, as
5determined by the Director, shall be treated as having zero
6Illinois employees on the first day of the incentive period
7July 1, 2010.
8    (f) The net increase in the number of full-time Illinois
9employees of the applicant under subsection (e) must be
10sustained continuously for at least 12 months, starting with
11the date of hire of a new employee during the incentive period.
12Eligibility for the credit does not depend on the continuous
13employment of any particular individual. For purposes of this
14subsection (f), if a new employee ceases to be employed before
15the completion of the 12-month period for any reason, the net
16increase in the number of full-time Illinois employees shall be
17treated as continuous if a different new employee is hired as a
18replacement within a reasonable time for the same position.
19(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
20    Section 15-20. The Use Tax Act is amended by changing
21Sections 3-5, 3-10, and 3-90 as follows:
 
22    (35 ILCS 105/3-5)
23    Sec. 3-5. Exemptions. Use of the following tangible
24personal property is exempt from the tax imposed by this Act:

 

 

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

 

 

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1a corporation, society, association, foundation, or
2institution organized and operated exclusively for charitable,
3religious, or educational purposes, or by a not-for-profit
4corporation, society, association, foundation, institution, or
5organization that has no compensated officers or employees and
6that is organized and operated primarily for the recreation of
7persons 55 years of age or older. A limited liability company
8may qualify for the exemption under this paragraph only if the
9limited liability company is organized and operated
10exclusively for educational purposes. On and after July 1,
111987, however, no entity otherwise eligible for this exemption
12shall make tax-free purchases unless it has an active exemption
13identification number issued by the Department.
14    (5) Until July 1, 2003, a passenger car that is a
15replacement vehicle to the extent that the purchase price of
16the car is subject to the Replacement Vehicle Tax.
17    (6) Until July 1, 2003 and beginning again on September 1,
182004 through August 30, 2014, graphic arts machinery and
19equipment, including repair and replacement parts, both new and
20used, and including that manufactured on special order,
21certified by the purchaser to be used primarily for graphic
22arts production, and including machinery and equipment
23purchased for lease. Equipment includes chemicals or chemicals
24acting as catalysts but only if the chemicals or chemicals
25acting as catalysts effect a direct and immediate change upon a
26graphic arts product.

 

 

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1    (7) Farm chemicals.
2    (8) Legal tender, currency, medallions, or gold or silver
3coinage issued by the State of Illinois, the government of the
4United States of America, or the government of any foreign
5country, and bullion.
6    (9) Personal property purchased from a teacher-sponsored
7student organization affiliated with an elementary or
8secondary school located in Illinois.
9    (10) A motor vehicle of the first division, a motor vehicle
10of the second division that is a self-contained motor vehicle
11designed or permanently converted to provide living quarters
12for recreational, camping, or travel use, with direct walk
13through to the living quarters from the driver's seat, or a
14motor vehicle of the second division that is of the van
15configuration designed for the transportation of not less than
167 nor more than 16 passengers, as defined in Section 1-146 of
17the Illinois Vehicle Code, that is used for automobile renting,
18as defined in the Automobile Renting Occupation and Use Tax
19Act.
20    (11) Farm machinery and equipment, both new and used,
21including that manufactured on special order, certified by the
22purchaser to be used primarily for production agriculture or
23State or federal agricultural programs, including individual
24replacement parts for the machinery and equipment, including
25machinery and equipment purchased for lease, and including
26implements of husbandry defined in Section 1-130 of the

 

 

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1Illinois Vehicle Code, farm machinery and agricultural
2chemical and fertilizer spreaders, and nurse wagons required to
3be registered under Section 3-809 of the Illinois Vehicle Code,
4but excluding other motor vehicles required to be registered
5under the Illinois Vehicle Code. Horticultural polyhouses or
6hoop houses used for propagating, growing, or overwintering
7plants shall be considered farm machinery and equipment under
8this item (11). Agricultural chemical tender tanks and dry
9boxes shall include units sold separately from a motor vehicle
10required to be licensed and units sold mounted on a motor
11vehicle required to be licensed if the selling price of the
12tender is separately stated.
13    Farm machinery and equipment shall include precision
14farming equipment that is installed or purchased to be
15installed on farm machinery and equipment including, but not
16limited to, tractors, harvesters, sprayers, planters, seeders,
17or spreaders. Precision farming equipment includes, but is not
18limited to, soil testing sensors, computers, monitors,
19software, global positioning and mapping systems, and other
20such equipment.
21    Farm machinery and equipment also includes computers,
22sensors, software, and related equipment used primarily in the
23computer-assisted operation of production agriculture
24facilities, equipment, and activities such as, but not limited
25to, the collection, monitoring, and correlation of animal and
26crop data for the purpose of formulating animal diets and

 

 

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1agricultural chemicals. This item (11) is exempt from the
2provisions of Section 3-90.
3    (12) Fuel and petroleum products sold to or used by an air
4common carrier, certified by the carrier to be used for
5consumption, shipment, or storage in the conduct of its
6business as an air common carrier, for a flight destined for or
7returning from a location or locations outside the United
8States without regard to previous or subsequent domestic
9stopovers.
10    (13) Proceeds of mandatory service charges separately
11stated on customers' bills for the purchase and consumption of
12food and beverages purchased at retail from a retailer, to the
13extent that the proceeds of the service charge are in fact
14turned over as tips or as a substitute for tips to the
15employees who participate directly in preparing, serving,
16hosting or cleaning up the food or beverage function with
17respect to which the service charge is imposed.
18    (14) Until July 1, 2003, oil field exploration, drilling,
19and production equipment, including (i) rigs and parts of rigs,
20rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
21tubular goods, including casing and drill strings, (iii) pumps
22and pump-jack units, (iv) storage tanks and flow lines, (v) any
23individual replacement part for oil field exploration,
24drilling, and production equipment, and (vi) machinery and
25equipment purchased for lease; but excluding motor vehicles
26required to be registered under the Illinois Vehicle Code.

 

 

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1    (15) Photoprocessing machinery and equipment, including
2repair and replacement parts, both new and used, including that
3manufactured on special order, certified by the purchaser to be
4used primarily for photoprocessing, and including
5photoprocessing machinery and equipment purchased for lease.
6    (16) Until July 1, 2003, coal exploration, mining,
7offhighway hauling, processing, maintenance, and reclamation
8equipment, including replacement parts and equipment, and
9including equipment purchased for lease, but excluding motor
10vehicles required to be registered under the Illinois Vehicle
11Code.
12    (17) Until July 1, 2003, distillation machinery and
13equipment, sold as a unit or kit, assembled or installed by the
14retailer, certified by the user to be used only for the
15production of ethyl alcohol that will be used for consumption
16as motor fuel or as a component of motor fuel for the personal
17use of the user, and not subject to sale or resale.
18    (18) Manufacturing and assembling machinery and equipment
19used primarily in the process of manufacturing or assembling
20tangible personal property for wholesale or retail sale or
21lease, whether that sale or lease is made directly by the
22manufacturer or by some other person, whether the materials
23used in the process are owned by the manufacturer or some other
24person, or whether that sale or lease is made apart from or as
25an incident to the seller's engaging in the service occupation
26of producing machines, tools, dies, jigs, patterns, gauges, or

 

 

09700SB0397ham006- 202 -LRB097 04209 HLH 60625 a

1other similar items of no commercial value on special order for
2a particular purchaser.
3    (19) Personal property delivered to a purchaser or
4purchaser's donee inside Illinois when the purchase order for
5that personal property was received by a florist located
6outside Illinois who has a florist located inside Illinois
7deliver the personal property.
8    (20) Semen used for artificial insemination of livestock
9for direct agricultural production.
10    (21) Horses, or interests in horses, registered with and
11meeting the requirements of any of the Arabian Horse Club
12Registry of America, Appaloosa Horse Club, American Quarter
13Horse Association, United States Trotting Association, or
14Jockey Club, as appropriate, used for purposes of breeding or
15racing for prizes. This item (21) is exempt from the provisions
16of Section 3-90, and the exemption provided for under this item
17(21) applies for all periods beginning May 30, 1995, but no
18claim for credit or refund is allowed on or after January 1,
192008 for such taxes paid during the period beginning May 30,
202000 and ending on January 1, 2008.
21    (22) Computers and communications equipment utilized for
22any hospital purpose and equipment used in the diagnosis,
23analysis, or treatment of hospital patients purchased by a
24lessor who leases the equipment, under a lease of one year or
25longer executed or in effect at the time the lessor would
26otherwise be subject to the tax imposed by this Act, to a

 

 

09700SB0397ham006- 203 -LRB097 04209 HLH 60625 a

1hospital that has been issued an active tax exemption
2identification number by the Department under Section 1g of the
3Retailers' Occupation Tax Act. If the equipment is leased in a
4manner that does not qualify for this exemption or is used in
5any other non-exempt manner, the lessor shall be liable for the
6tax imposed under this Act or the Service Use Tax Act, as the
7case may be, based on the fair market value of the property at
8the time the non-qualifying use occurs. No lessor shall collect
9or attempt to collect an amount (however designated) that
10purports to reimburse that lessor for the tax imposed by this
11Act or the Service Use Tax Act, as the case may be, if the tax
12has not been paid by the lessor. If a lessor improperly
13collects any such amount from the lessee, the lessee shall have
14a legal right to claim a refund of that amount from the lessor.
15If, however, that amount is not refunded to the lessee for any
16reason, the lessor is liable to pay that amount to the
17Department.
18    (23) Personal property purchased by a lessor who leases the
19property, under a lease of one year or longer executed or in
20effect at the time the lessor would otherwise be subject to the
21tax imposed by this Act, to a governmental body that has been
22issued an active sales tax exemption identification number by
23the Department under Section 1g of the Retailers' Occupation
24Tax Act. If the property is leased in a manner that does not
25qualify for this exemption or used in any other non-exempt
26manner, the lessor shall be liable for the tax imposed under

 

 

09700SB0397ham006- 204 -LRB097 04209 HLH 60625 a

1this Act or the Service Use Tax Act, as the case may be, based
2on the fair market value of the property at the time the
3non-qualifying use occurs. No lessor shall collect or attempt
4to collect an amount (however designated) that purports to
5reimburse that lessor for the tax imposed by this Act or the
6Service Use Tax Act, as the case may be, if the tax has not been
7paid by the lessor. If a lessor improperly collects any such
8amount from the lessee, the lessee shall have a legal right to
9claim a refund of that amount from the lessor. If, however,
10that amount is not refunded to the lessee for any reason, the
11lessor is liable to pay that amount to the Department.
12    (24) Beginning with taxable years ending on or after
13December 31, 1995 and ending with taxable years ending on or
14before December 31, 2004, personal property that is donated for
15disaster relief to be used in a State or federally declared
16disaster area in Illinois or bordering Illinois by a
17manufacturer or retailer that is registered in this State to a
18corporation, society, association, foundation, or institution
19that has been issued a sales tax exemption identification
20number by the Department that assists victims of the disaster
21who reside within the declared disaster area.
22    (25) Beginning with taxable years ending on or after
23December 31, 1995 and ending with taxable years ending on or
24before December 31, 2004, personal property that is used in the
25performance of infrastructure repairs in this State, including
26but not limited to municipal roads and streets, access roads,

 

 

09700SB0397ham006- 205 -LRB097 04209 HLH 60625 a

1bridges, sidewalks, waste disposal systems, water and sewer
2line extensions, water distribution and purification
3facilities, storm water drainage and retention facilities, and
4sewage treatment facilities, resulting from a State or
5federally declared disaster in Illinois or bordering Illinois
6when such repairs are initiated on facilities located in the
7declared disaster area within 6 months after the disaster.
8    (26) Beginning July 1, 1999, game or game birds purchased
9at a "game breeding and hunting preserve area" as that term is
10used in the Wildlife Code. This paragraph is exempt from the
11provisions of Section 3-90.
12    (27) A motor vehicle, as that term is defined in Section
131-146 of the Illinois Vehicle Code, that is donated to a
14corporation, limited liability company, society, association,
15foundation, or institution that is determined by the Department
16to be organized and operated exclusively for educational
17purposes. For purposes of this exemption, "a corporation,
18limited liability company, society, association, foundation,
19or institution organized and operated exclusively for
20educational purposes" means all tax-supported public schools,
21private schools that offer systematic instruction in useful
22branches of learning by methods common to public schools and
23that compare favorably in their scope and intensity with the
24course of study presented in tax-supported schools, and
25vocational or technical schools or institutes organized and
26operated exclusively to provide a course of study of not less

 

 

09700SB0397ham006- 206 -LRB097 04209 HLH 60625 a

1than 6 weeks duration and designed to prepare individuals to
2follow a trade or to pursue a manual, technical, mechanical,
3industrial, business, or commercial occupation.
4    (28) Beginning January 1, 2000, personal property,
5including food, purchased through fundraising events for the
6benefit of a public or private elementary or secondary school,
7a group of those schools, or one or more school districts if
8the events are sponsored by an entity recognized by the school
9district that consists primarily of volunteers and includes
10parents and teachers of the school children. This paragraph
11does not apply to fundraising events (i) for the benefit of
12private home instruction or (ii) for which the fundraising
13entity purchases the personal property sold at the events from
14another individual or entity that sold the property for the
15purpose of resale by the fundraising entity and that profits
16from the sale to the fundraising entity. This paragraph is
17exempt from the provisions of Section 3-90.
18    (29) Beginning January 1, 2000 and through December 31,
192001, new or used automatic vending machines that prepare and
20serve hot food and beverages, including coffee, soup, and other
21items, and replacement parts for these machines. Beginning
22January 1, 2002 and through June 30, 2003, machines and parts
23for machines used in commercial, coin-operated amusement and
24vending business if a use or occupation tax is paid on the
25gross receipts derived from the use of the commercial,
26coin-operated amusement and vending machines. This paragraph

 

 

09700SB0397ham006- 207 -LRB097 04209 HLH 60625 a

1is exempt from the provisions of Section 3-90.
2    (30) Beginning January 1, 2001 and through June 30, 2016
3June 30, 2011, food for human consumption that is to be
4consumed off the premises where it is sold (other than
5alcoholic beverages, soft drinks, and food that has been
6prepared for immediate consumption) and prescription and
7nonprescription medicines, drugs, medical appliances, and
8insulin, urine testing materials, syringes, and needles used by
9diabetics, for human use, when purchased for use by a person
10receiving medical assistance under Article V of the Illinois
11Public Aid Code who resides in a licensed long-term care
12facility, as defined in the Nursing Home Care Act, or in a
13licensed facility as defined in the ID/DD Community Care Act or
14the Specialized Mental Health Rehabilitation Act.
15    (31) Beginning on the effective date of this amendatory Act
16of the 92nd General Assembly, computers and communications
17equipment utilized for any hospital purpose and equipment used
18in the diagnosis, analysis, or treatment of hospital patients
19purchased by a lessor who leases the equipment, under a lease
20of one year or longer executed or in effect at the time the
21lessor would otherwise be subject to the tax imposed by this
22Act, to a hospital that has been issued an active tax exemption
23identification number by the Department under Section 1g of the
24Retailers' Occupation Tax Act. If the equipment is leased in a
25manner that does not qualify for this exemption or is used in
26any other nonexempt manner, the lessor shall be liable for the

 

 

09700SB0397ham006- 208 -LRB097 04209 HLH 60625 a

1tax imposed under this Act or the Service Use Tax Act, as the
2case may be, based on the fair market value of the property at
3the time the nonqualifying use occurs. No lessor shall collect
4or attempt to collect an amount (however designated) that
5purports to reimburse that lessor for the tax imposed by this
6Act or the Service Use Tax Act, as the case may be, if the tax
7has not been paid by the lessor. If a lessor improperly
8collects any such amount from the lessee, the lessee shall have
9a legal right to claim a refund of that amount from the lessor.
10If, however, that amount is not refunded to the lessee for any
11reason, the lessor is liable to pay that amount to the
12Department. This paragraph is exempt from the provisions of
13Section 3-90.
14    (32) Beginning on the effective date of this amendatory Act
15of the 92nd General Assembly, personal property purchased by a
16lessor who leases the property, under a lease of one year or
17longer executed or in effect at the time the lessor would
18otherwise be subject to the tax imposed by this Act, to a
19governmental body that has been issued an active sales tax
20exemption identification number by the Department under
21Section 1g of the Retailers' Occupation Tax Act. If the
22property is leased in a manner that does not qualify for this
23exemption or used in any other nonexempt manner, the lessor
24shall be liable for the tax imposed under this Act or the
25Service Use Tax Act, as the case may be, based on the fair
26market value of the property at the time the nonqualifying use

 

 

09700SB0397ham006- 209 -LRB097 04209 HLH 60625 a

1occurs. No lessor shall collect or attempt to collect an amount
2(however designated) that purports to reimburse that lessor for
3the tax imposed by this Act or the Service Use Tax Act, as the
4case may be, if the tax has not been paid by the lessor. If a
5lessor improperly collects any such amount from the lessee, the
6lessee shall have a legal right to claim a refund of that
7amount from the lessor. If, however, that amount is not
8refunded to the lessee for any reason, the lessor is liable to
9pay that amount to the Department. This paragraph is exempt
10from the provisions of Section 3-90.
11    (33) On and after July 1, 2003 and through June 30, 2004,
12the use in this State of motor vehicles of the second division
13with a gross vehicle weight in excess of 8,000 pounds and that
14are subject to the commercial distribution fee imposed under
15Section 3-815.1 of the Illinois Vehicle Code. Beginning on July
161, 2004 and through June 30, 2005, the use in this State of
17motor vehicles of the second division: (i) with a gross vehicle
18weight rating in excess of 8,000 pounds; (ii) that are subject
19to the commercial distribution fee imposed under Section
203-815.1 of the Illinois Vehicle Code; and (iii) that are
21primarily used for commercial purposes. Through June 30, 2005,
22this exemption applies to repair and replacement parts added
23after the initial purchase of such a motor vehicle if that
24motor vehicle is used in a manner that would qualify for the
25rolling stock exemption otherwise provided for in this Act. For
26purposes of this paragraph, the term "used for commercial

 

 

09700SB0397ham006- 210 -LRB097 04209 HLH 60625 a

1purposes" means the transportation of persons or property in
2furtherance of any commercial or industrial enterprise,
3whether for-hire or not.
4    (34) Beginning January 1, 2008, tangible personal property
5used in the construction or maintenance of a community water
6supply, as defined under Section 3.145 of the Environmental
7Protection Act, that is operated by a not-for-profit
8corporation that holds a valid water supply permit issued under
9Title IV of the Environmental Protection Act. This paragraph is
10exempt from the provisions of Section 3-90.
11    (35) Beginning January 1, 2010, materials, parts,
12equipment, components, and furnishings incorporated into or
13upon an aircraft as part of the modification, refurbishment,
14completion, replacement, repair, or maintenance of the
15aircraft. This exemption includes consumable supplies used in
16the modification, refurbishment, completion, replacement,
17repair, and maintenance of aircraft, but excludes any
18materials, parts, equipment, components, and consumable
19supplies used in the modification, replacement, repair, and
20maintenance of aircraft engines or power plants, whether such
21engines or power plants are installed or uninstalled upon any
22such aircraft. "Consumable supplies" include, but are not
23limited to, adhesive, tape, sandpaper, general purpose
24lubricants, cleaning solution, latex gloves, and protective
25films. This exemption applies only to those organizations that
26(i) hold an Air Agency Certificate and are empowered to operate

 

 

09700SB0397ham006- 211 -LRB097 04209 HLH 60625 a

1an approved repair station by the Federal Aviation
2Administration, (ii) have a Class IV Rating, and (iii) conduct
3operations in accordance with Part 145 of the Federal Aviation
4Regulations. The exemption does not include aircraft operated
5by a commercial air carrier providing scheduled passenger air
6service pursuant to authority issued under Part 121 or Part 129
7of the Federal Aviation Regulations.
8    (36) Tangible personal property purchased by a
9public-facilities corporation, as described in Section
1011-65-10 of the Illinois Municipal Code, for purposes of
11constructing or furnishing a municipal convention hall, but
12only if the legal title to the municipal convention hall is
13transferred to the municipality without any further
14consideration by or on behalf of the municipality at the time
15of the completion of the municipal convention hall or upon the
16retirement or redemption of any bonds or other debt instruments
17issued by the public-facilities corporation in connection with
18the development of the municipal convention hall. This
19exemption includes existing public-facilities corporations as
20provided in Section 11-65-25 of the Illinois Municipal Code.
21This paragraph is exempt from the provisions of Section 3-90.
22(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10;
2396-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff.
247-2-10; 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431, eff.
258-16-11; revised 9-12-11.)
 

 

 

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1    (35 ILCS 105/3-10)
2    Sec. 3-10. Rate of tax. Unless otherwise provided in this
3Section, the tax imposed by this Act is at the rate of 6.25% of
4either the selling price or the fair market value, if any, of
5the tangible personal property. In all cases where property
6functionally used or consumed is the same as the property that
7was purchased at retail, then the tax is imposed on the selling
8price of the property. In all cases where property functionally
9used or consumed is a by-product or waste product that has been
10refined, manufactured, or produced from property purchased at
11retail, then the tax is imposed on the lower of the fair market
12value, if any, of the specific property so used in this State
13or on the selling price of the property purchased at retail.
14For purposes of this Section "fair market value" means the
15price at which property would change hands between a willing
16buyer and a willing seller, neither being under any compulsion
17to buy or sell and both having reasonable knowledge of the
18relevant facts. The fair market value shall be established by
19Illinois sales by the taxpayer of the same property as that
20functionally used or consumed, or if there are no such sales by
21the taxpayer, then comparable sales or purchases of property of
22like kind and character in Illinois.
23    Beginning on July 1, 2000 and through December 31, 2000,
24with respect to motor fuel, as defined in Section 1.1 of the
25Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
26the Use Tax Act, the tax is imposed at the rate of 1.25%.

 

 

09700SB0397ham006- 213 -LRB097 04209 HLH 60625 a

1    Beginning on August 6, 2010 through August 15, 2010, with
2respect to sales tax holiday items as defined in Section 3-6 of
3this Act, the tax is imposed at the rate of 1.25%.
4    With respect to gasohol, the tax imposed by this Act
5applies to (i) 70% of the proceeds of sales made on or after
6January 1, 1990, and before July 1, 2003, (ii) 80% of the
7proceeds of sales made on or after July 1, 2003 and on or
8before December 31, 2018 2013, and (iii) 100% of the proceeds
9of sales made thereafter. If, at any time, however, the tax
10under this Act on sales of gasohol is imposed at the rate of
111.25%, then the tax imposed by this Act applies to 100% of the
12proceeds of sales of gasohol made during that time.
13    With respect to majority blended ethanol fuel, the tax
14imposed by this Act does not apply to the proceeds of sales
15made on or after July 1, 2003 and on or before December 31,
162018 2013 but applies to 100% of the proceeds of sales made
17thereafter.
18    With respect to biodiesel blends with no less than 1% and
19no more than 10% biodiesel, the tax imposed by this Act applies
20to (i) 80% of the proceeds of sales made on or after July 1,
212003 and on or before December 31, 2018 2013 and (ii) 100% of
22the proceeds of sales made thereafter. If, at any time,
23however, the tax under this Act on sales of biodiesel blends
24with no less than 1% and no more than 10% biodiesel is imposed
25at the rate of 1.25%, then the tax imposed by this Act applies
26to 100% of the proceeds of sales of biodiesel blends with no

 

 

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1less than 1% and no more than 10% biodiesel made during that
2time.
3    With respect to 100% biodiesel and biodiesel blends with
4more than 10% but no more than 99% biodiesel, the tax imposed
5by this Act does not apply to the proceeds of sales made on or
6after July 1, 2003 and on or before December 31, 2018 2013 but
7applies to 100% of the proceeds of sales made thereafter.
8    With respect to food for human consumption that is to be
9consumed off the premises where it is sold (other than
10alcoholic beverages, soft drinks, and food that has been
11prepared for immediate consumption) and prescription and
12nonprescription medicines, drugs, medical appliances,
13modifications to a motor vehicle for the purpose of rendering
14it usable by a disabled person, and insulin, urine testing
15materials, syringes, and needles used by diabetics, for human
16use, the tax is imposed at the rate of 1%. For the purposes of
17this Section, until September 1, 2009: the term "soft drinks"
18means any complete, finished, ready-to-use, non-alcoholic
19drink, whether carbonated or not, including but not limited to
20soda water, cola, fruit juice, vegetable juice, carbonated
21water, and all other preparations commonly known as soft drinks
22of whatever kind or description that are contained in any
23closed or sealed bottle, can, carton, or container, regardless
24of size; but "soft drinks" does not include coffee, tea,
25non-carbonated water, infant formula, milk or milk products as
26defined in the Grade A Pasteurized Milk and Milk Products Act,

 

 

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1or drinks containing 50% or more natural fruit or vegetable
2juice.
3    Notwithstanding any other provisions of this Act,
4beginning September 1, 2009, "soft drinks" means non-alcoholic
5beverages that contain natural or artificial sweeteners. "Soft
6drinks" do not include beverages that contain milk or milk
7products, soy, rice or similar milk substitutes, or greater
8than 50% of vegetable or fruit juice by volume.
9    Until August 1, 2009, and notwithstanding any other
10provisions of this Act, "food for human consumption that is to
11be consumed off the premises where it is sold" includes all
12food sold through a vending machine, except soft drinks and
13food products that are dispensed hot from a vending machine,
14regardless of the location of the vending machine. Beginning
15August 1, 2009, and notwithstanding any other provisions of
16this Act, "food for human consumption that is to be consumed
17off the premises where it is sold" includes all food sold
18through a vending machine, except soft drinks, candy, and food
19products that are dispensed hot from a vending machine,
20regardless of the location of the vending machine.
21    Notwithstanding any other provisions of this Act,
22beginning September 1, 2009, "food for human consumption that
23is to be consumed off the premises where it is sold" does not
24include candy. For purposes of this Section, "candy" means a
25preparation of sugar, honey, or other natural or artificial
26sweeteners in combination with chocolate, fruits, nuts or other

 

 

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1ingredients or flavorings in the form of bars, drops, or
2pieces. "Candy" does not include any preparation that contains
3flour or requires refrigeration.
4    Notwithstanding any other provisions of this Act,
5beginning September 1, 2009, "nonprescription medicines and
6drugs" does not include grooming and hygiene products. For
7purposes of this Section, "grooming and hygiene products"
8includes, but is not limited to, soaps and cleaning solutions,
9shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
10lotions and screens, unless those products are available by
11prescription only, regardless of whether the products meet the
12definition of "over-the-counter-drugs". For the purposes of
13this paragraph, "over-the-counter-drug" means a drug for human
14use that contains a label that identifies the product as a drug
15as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
16label includes:
17        (A) A "Drug Facts" panel; or
18        (B) A statement of the "active ingredient(s)" with a
19    list of those ingredients contained in the compound,
20    substance or preparation.
21    If the property that is purchased at retail from a retailer
22is acquired outside Illinois and used outside Illinois before
23being brought to Illinois for use here and is taxable under
24this Act, the "selling price" on which the tax is computed
25shall be reduced by an amount that represents a reasonable
26allowance for depreciation for the period of prior out-of-state

 

 

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1use.
2(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
3eff. 7-13-09; 96-1000, eff. 7-2-10; 96-1012, eff. 7-7-10.)
 
4    (35 ILCS 105/3-90)
5    Sec. 3-90. Sunset of exemptions, credits, and deductions.
6    (a) The application of every exemption, credit, and
7deduction against tax imposed by this Act that becomes law
8after the effective date of this amendatory Act of 1994 shall
9be limited by a reasonable and appropriate sunset date. A
10taxpayer is not entitled to take the exemption, credit, or
11deduction beginning on the sunset date and thereafter. Except
12as provided in subsection (b) of this Section, if If a
13reasonable and appropriate sunset date is not specified in the
14Public Act that creates the exemption, credit, or deduction, a
15taxpayer shall not be entitled to take the exemption, credit,
16or deduction beginning 5 years after the effective date of the
17Public Act creating the exemption, credit, or deduction and
18thereafter.
19    (b) Notwithstanding the provisions of subsection (a) of
20this Section, the sunset date of any exemption, credit, or
21deduction that is scheduled to expire in 2011, 2012, or 2013 by
22operation of this Section shall be extended by 5 years.
23(Source: P.A. 88-660, eff. 9-16-94; 89-235, eff. 8-4-95.)
 
24    Section 15-25. The Service Use Tax Act is amended by

 

 

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1changing Sections 3-5, 3-10, and 3-75 as follows:
 
2    (35 ILCS 110/3-5)
3    Sec. 3-5. Exemptions. Use of the following tangible
4personal property is exempt from the tax imposed by this Act:
5    (1) Personal property purchased from a corporation,
6society, association, foundation, institution, or
7organization, other than a limited liability company, that is
8organized and operated as a not-for-profit service enterprise
9for the benefit of persons 65 years of age or older if the
10personal property was not purchased by the enterprise for the
11purpose of resale by the enterprise.
12    (2) Personal property purchased by a non-profit Illinois
13county fair association for use in conducting, operating, or
14promoting the county fair.
15    (3) Personal property purchased by a not-for-profit arts or
16cultural organization that establishes, by proof required by
17the Department by rule, that it has received an exemption under
18Section 501(c)(3) of the Internal Revenue Code and that is
19organized and operated primarily for the presentation or
20support of arts or cultural programming, activities, or
21services. These organizations include, but are not limited to,
22music and dramatic arts organizations such as symphony
23orchestras and theatrical groups, arts and cultural service
24organizations, local arts councils, visual arts organizations,
25and media arts organizations. On and after the effective date

 

 

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1of this amendatory Act of the 92nd General Assembly, however,
2an entity otherwise eligible for this exemption shall not make
3tax-free purchases unless it has an active identification
4number issued by the Department.
5    (4) Legal tender, currency, medallions, or gold or silver
6coinage issued by the State of Illinois, the government of the
7United States of America, or the government of any foreign
8country, and bullion.
9    (5) Until July 1, 2003 and beginning again on September 1,
102004 through August 30, 2014, graphic arts machinery and
11equipment, including repair and replacement parts, both new and
12used, and including that manufactured on special order or
13purchased for lease, certified by the purchaser to be used
14primarily for graphic arts production. Equipment includes
15chemicals or chemicals acting as catalysts but only if the
16chemicals or chemicals acting as catalysts effect a direct and
17immediate change upon a graphic arts product.
18    (6) Personal property purchased from a teacher-sponsored
19student organization affiliated with an elementary or
20secondary school located in Illinois.
21    (7) Farm machinery and equipment, both new and used,
22including that manufactured on special order, certified by the
23purchaser to be used primarily for production agriculture or
24State or federal agricultural programs, including individual
25replacement parts for the machinery and equipment, including
26machinery and equipment purchased for lease, and including

 

 

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1implements of husbandry defined in Section 1-130 of the
2Illinois Vehicle Code, farm machinery and agricultural
3chemical and fertilizer spreaders, and nurse wagons required to
4be registered under Section 3-809 of the Illinois Vehicle Code,
5but excluding other motor vehicles required to be registered
6under the Illinois Vehicle Code. Horticultural polyhouses or
7hoop houses used for propagating, growing, or overwintering
8plants shall be considered farm machinery and equipment under
9this item (7). Agricultural chemical tender tanks and dry boxes
10shall include units sold separately from a motor vehicle
11required to be licensed and units sold mounted on a motor
12vehicle required to be licensed if the selling price of the
13tender is separately stated.
14    Farm machinery and equipment shall include precision
15farming equipment that is installed or purchased to be
16installed on farm machinery and equipment including, but not
17limited to, tractors, harvesters, sprayers, planters, seeders,
18or spreaders. Precision farming equipment includes, but is not
19limited to, soil testing sensors, computers, monitors,
20software, global positioning and mapping systems, and other
21such equipment.
22    Farm machinery and equipment also includes computers,
23sensors, software, and related equipment used primarily in the
24computer-assisted operation of production agriculture
25facilities, equipment, and activities such as, but not limited
26to, the collection, monitoring, and correlation of animal and

 

 

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1crop data for the purpose of formulating animal diets and
2agricultural chemicals. This item (7) is exempt from the
3provisions of Section 3-75.
4    (8) Fuel and petroleum products sold to or used by an air
5common carrier, certified by the carrier to be used for
6consumption, shipment, or storage in the conduct of its
7business as an air common carrier, for a flight destined for or
8returning from a location or locations outside the United
9States without regard to previous or subsequent domestic
10stopovers.
11    (9) Proceeds of mandatory service charges separately
12stated on customers' bills for the purchase and consumption of
13food and beverages acquired as an incident to the purchase of a
14service from a serviceman, to the extent that the proceeds of
15the service charge are in fact turned over as tips or as a
16substitute for tips to the employees who participate directly
17in preparing, serving, hosting or cleaning up the food or
18beverage function with respect to which the service charge is
19imposed.
20    (10) Until July 1, 2003, oil field exploration, drilling,
21and production equipment, including (i) rigs and parts of rigs,
22rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
23tubular goods, including casing and drill strings, (iii) pumps
24and pump-jack units, (iv) storage tanks and flow lines, (v) any
25individual replacement part for oil field exploration,
26drilling, and production equipment, and (vi) machinery and

 

 

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1equipment purchased for lease; but excluding motor vehicles
2required to be registered under the Illinois Vehicle Code.
3    (11) Proceeds from the sale of photoprocessing machinery
4and equipment, including repair and replacement parts, both new
5and used, including that manufactured on special order,
6certified by the purchaser to be used primarily for
7photoprocessing, and including photoprocessing machinery and
8equipment purchased for lease.
9    (12) Until July 1, 2003, coal exploration, mining,
10offhighway hauling, processing, maintenance, and reclamation
11equipment, including replacement parts and equipment, and
12including equipment purchased for lease, but excluding motor
13vehicles required to be registered under the Illinois Vehicle
14Code.
15    (13) Semen used for artificial insemination of livestock
16for direct agricultural production.
17    (14) Horses, or interests in horses, registered with and
18meeting the requirements of any of the Arabian Horse Club
19Registry of America, Appaloosa Horse Club, American Quarter
20Horse Association, United States Trotting Association, or
21Jockey Club, as appropriate, used for purposes of breeding or
22racing for prizes. This item (14) is exempt from the provisions
23of Section 3-75, and the exemption provided for under this item
24(14) applies for all periods beginning May 30, 1995, but no
25claim for credit or refund is allowed on or after the effective
26date of this amendatory Act of the 95th General Assembly for

 

 

09700SB0397ham006- 223 -LRB097 04209 HLH 60625 a

1such taxes paid during the period beginning May 30, 2000 and
2ending on the effective date of this amendatory Act of the 95th
3General Assembly.
4    (15) Computers and communications equipment utilized for
5any hospital purpose and equipment used in the diagnosis,
6analysis, or treatment of hospital patients purchased by a
7lessor who leases the equipment, under a lease of one year or
8longer executed or in effect at the time the lessor would
9otherwise be subject to the tax imposed by this Act, to a
10hospital that has been issued an active tax exemption
11identification number by the Department under Section 1g of the
12Retailers' Occupation Tax Act. If the equipment is leased in a
13manner that does not qualify for this exemption or is used in
14any other non-exempt manner, the lessor shall be liable for the
15tax imposed under this Act or the Use Tax Act, as the case may
16be, based on the fair market value of the property at the time
17the non-qualifying use occurs. No lessor shall collect or
18attempt to collect an amount (however designated) that purports
19to reimburse that lessor for the tax imposed by this Act or the
20Use Tax Act, as the case may be, if the tax has not been paid by
21the lessor. If a lessor improperly collects any such amount
22from the lessee, the lessee shall have a legal right to claim a
23refund of that amount from the lessor. If, however, that amount
24is not refunded to the lessee for any reason, the lessor is
25liable to pay that amount to the Department.
26    (16) Personal property purchased by a lessor who leases the

 

 

09700SB0397ham006- 224 -LRB097 04209 HLH 60625 a

1property, under a lease of one year or longer executed or in
2effect at the time the lessor would otherwise be subject to the
3tax imposed by this Act, to a governmental body that has been
4issued an active tax exemption identification number by the
5Department under Section 1g of the Retailers' Occupation Tax
6Act. If the property is leased in a manner that does not
7qualify for this exemption or is used in any other non-exempt
8manner, the lessor shall be liable for the tax imposed under
9this Act or the Use Tax Act, as the case may be, based on the
10fair market value of the property at the time the
11non-qualifying use occurs. No lessor shall collect or attempt
12to collect an amount (however designated) that purports to
13reimburse that lessor for the tax imposed by this Act or the
14Use Tax Act, as the case may be, if the tax has not been paid by
15the lessor. If a lessor improperly collects any such amount
16from the lessee, the lessee shall have a legal right to claim a
17refund of that amount from the lessor. If, however, that amount
18is not refunded to the lessee for any reason, the lessor is
19liable to pay that amount to the Department.
20    (17) Beginning with taxable years ending on or after
21December 31, 1995 and ending with taxable years ending on or
22before December 31, 2004, personal property that is donated for
23disaster relief to be used in a State or federally declared
24disaster area in Illinois or bordering Illinois by a
25manufacturer or retailer that is registered in this State to a
26corporation, society, association, foundation, or institution

 

 

09700SB0397ham006- 225 -LRB097 04209 HLH 60625 a

1that has been issued a sales tax exemption identification
2number by the Department that assists victims of the disaster
3who reside within the declared disaster area.
4    (18) Beginning with taxable years ending on or after
5December 31, 1995 and ending with taxable years ending on or
6before December 31, 2004, personal property that is used in the
7performance of infrastructure repairs in this State, including
8but not limited to municipal roads and streets, access roads,
9bridges, sidewalks, waste disposal systems, water and sewer
10line extensions, water distribution and purification
11facilities, storm water drainage and retention facilities, and
12sewage treatment facilities, resulting from a State or
13federally declared disaster in Illinois or bordering Illinois
14when such repairs are initiated on facilities located in the
15declared disaster area within 6 months after the disaster.
16    (19) Beginning July 1, 1999, game or game birds purchased
17at a "game breeding and hunting preserve area" as that term is
18used in the Wildlife Code. This paragraph is exempt from the
19provisions of Section 3-75.
20    (20) A motor vehicle, as that term is defined in Section
211-146 of the Illinois Vehicle Code, that is donated to a
22corporation, limited liability company, society, association,
23foundation, or institution that is determined by the Department
24to be organized and operated exclusively for educational
25purposes. For purposes of this exemption, "a corporation,
26limited liability company, society, association, foundation,

 

 

09700SB0397ham006- 226 -LRB097 04209 HLH 60625 a

1or institution organized and operated exclusively for
2educational purposes" means all tax-supported public schools,
3private schools that offer systematic instruction in useful
4branches of learning by methods common to public schools and
5that compare favorably in their scope and intensity with the
6course of study presented in tax-supported schools, and
7vocational or technical schools or institutes organized and
8operated exclusively to provide a course of study of not less
9than 6 weeks duration and designed to prepare individuals to
10follow a trade or to pursue a manual, technical, mechanical,
11industrial, business, or commercial occupation.
12    (21) Beginning January 1, 2000, personal property,
13including food, purchased through fundraising events for the
14benefit of a public or private elementary or secondary school,
15a group of those schools, or one or more school districts if
16the events are sponsored by an entity recognized by the school
17district that consists primarily of volunteers and includes
18parents and teachers of the school children. This paragraph
19does not apply to fundraising events (i) for the benefit of
20private home instruction or (ii) for which the fundraising
21entity purchases the personal property sold at the events from
22another individual or entity that sold the property for the
23purpose of resale by the fundraising entity and that profits
24from the sale to the fundraising entity. This paragraph is
25exempt from the provisions of Section 3-75.
26    (22) Beginning January 1, 2000 and through December 31,

 

 

09700SB0397ham006- 227 -LRB097 04209 HLH 60625 a

12001, new or used automatic vending machines that prepare and
2serve hot food and beverages, including coffee, soup, and other
3items, and replacement parts for these machines. Beginning
4January 1, 2002 and through June 30, 2003, machines and parts
5for machines used in commercial, coin-operated amusement and
6vending business if a use or occupation tax is paid on the
7gross receipts derived from the use of the commercial,
8coin-operated amusement and vending machines. This paragraph
9is exempt from the provisions of Section 3-75.
10    (23) Beginning August 23, 2001 and through June 30, 2016
11June 30, 2011, food for human consumption that is to be
12consumed off the premises where it is sold (other than
13alcoholic beverages, soft drinks, and food that has been
14prepared for immediate consumption) and prescription and
15nonprescription medicines, drugs, medical appliances, and
16insulin, urine testing materials, syringes, and needles used by
17diabetics, for human use, when purchased for use by a person
18receiving medical assistance under Article V of the Illinois
19Public Aid Code who resides in a licensed long-term care
20facility, as defined in the Nursing Home Care Act, or in a
21licensed facility as defined in the ID/DD Community Care Act or
22the Specialized Mental Health Rehabilitation Act.
23    (24) Beginning on the effective date of this amendatory Act
24of the 92nd General Assembly, computers and communications
25equipment utilized for any hospital purpose and equipment used
26in the diagnosis, analysis, or treatment of hospital patients

 

 

09700SB0397ham006- 228 -LRB097 04209 HLH 60625 a

1purchased by a lessor who leases the equipment, under a lease
2of one year or longer executed or in effect at the time the
3lessor would otherwise be subject to the tax imposed by this
4Act, to a hospital that has been issued an active tax exemption
5identification number by the Department under Section 1g of the
6Retailers' Occupation Tax Act. If the equipment is leased in a
7manner that does not qualify for this exemption or is used in
8any other nonexempt manner, the lessor shall be liable for the
9tax imposed under this Act or the Use Tax Act, as the case may
10be, based on the fair market value of the property at the time
11the nonqualifying use occurs. No lessor shall collect or
12attempt to collect an amount (however designated) that purports
13to reimburse that lessor for the tax imposed by this Act or the
14Use Tax Act, as the case may be, if the tax has not been paid by
15the lessor. If a lessor improperly collects any such amount
16from the lessee, the lessee shall have a legal right to claim a
17refund of that amount from the lessor. If, however, that amount
18is not refunded to the lessee for any reason, the lessor is
19liable to pay that amount to the Department. This paragraph is
20exempt from the provisions of Section 3-75.
21    (25) Beginning on the effective date of this amendatory Act
22of the 92nd General Assembly, personal property purchased by a
23lessor who leases the property, under a lease of one year or
24longer executed or in effect at the time the lessor would
25otherwise be subject to the tax imposed by this Act, to a
26governmental body that has been issued an active tax exemption

 

 

09700SB0397ham006- 229 -LRB097 04209 HLH 60625 a

1identification number by the Department under Section 1g of the
2Retailers' Occupation Tax Act. If the property is leased in a
3manner that does not qualify for this exemption or is used in
4any other nonexempt manner, the lessor shall be liable for the
5tax imposed under this Act or the Use Tax Act, as the case may
6be, based on the fair market value of the property at the time
7the nonqualifying use occurs. No lessor shall collect or
8attempt to collect an amount (however designated) that purports
9to reimburse that lessor for the tax imposed by this Act or the
10Use Tax Act, as the case may be, if the tax has not been paid by
11the lessor. If a lessor improperly collects any such amount
12from the lessee, the lessee shall have a legal right to claim a
13refund of that amount from the lessor. If, however, that amount
14is not refunded to the lessee for any reason, the lessor is
15liable to pay that amount to the Department. This paragraph is
16exempt from the provisions of Section 3-75.
17    (26) Beginning January 1, 2008, tangible personal property
18used in the construction or maintenance of a community water
19supply, as defined under Section 3.145 of the Environmental
20Protection Act, that is operated by a not-for-profit
21corporation that holds a valid water supply permit issued under
22Title IV of the Environmental Protection Act. This paragraph is
23exempt from the provisions of Section 3-75.
24    (27) Beginning January 1, 2010, materials, parts,
25equipment, components, and furnishings incorporated into or
26upon an aircraft as part of the modification, refurbishment,

 

 

09700SB0397ham006- 230 -LRB097 04209 HLH 60625 a

1completion, replacement, repair, or maintenance of the
2aircraft. This exemption includes consumable supplies used in
3the modification, refurbishment, completion, replacement,
4repair, and maintenance of aircraft, but excludes any
5materials, parts, equipment, components, and consumable
6supplies used in the modification, replacement, repair, and
7maintenance of aircraft engines or power plants, whether such
8engines or power plants are installed or uninstalled upon any
9such aircraft. "Consumable supplies" include, but are not
10limited to, adhesive, tape, sandpaper, general purpose
11lubricants, cleaning solution, latex gloves, and protective
12films. This exemption applies only to those organizations that
13(i) hold an Air Agency Certificate and are empowered to operate
14an approved repair station by the Federal Aviation
15Administration, (ii) have a Class IV Rating, and (iii) conduct
16operations in accordance with Part 145 of the Federal Aviation
17Regulations. The exemption does not include aircraft operated
18by a commercial air carrier providing scheduled passenger air
19service pursuant to authority issued under Part 121 or Part 129
20of the Federal Aviation Regulations.
21    (28) Tangible personal property purchased by a
22public-facilities corporation, as described in Section
2311-65-10 of the Illinois Municipal Code, for purposes of
24constructing or furnishing a municipal convention hall, but
25only if the legal title to the municipal convention hall is
26transferred to the municipality without any further

 

 

09700SB0397ham006- 231 -LRB097 04209 HLH 60625 a

1consideration by or on behalf of the municipality at the time
2of the completion of the municipal convention hall or upon the
3retirement or redemption of any bonds or other debt instruments
4issued by the public-facilities corporation in connection with
5the development of the municipal convention hall. This
6exemption includes existing public-facilities corporations as
7provided in Section 11-65-25 of the Illinois Municipal Code.
8This paragraph is exempt from the provisions of Section 3-75.
9(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10;
1096-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff.
117-2-10; 97-38, eff. 6-28-11; 97-227, eff. 1-1-12; 97-431, eff.
128-16-11; revised 9-12-11.)
 
13    (35 ILCS 110/3-10)  (from Ch. 120, par. 439.33-10)
14    Sec. 3-10. Rate of tax. Unless otherwise provided in this
15Section, the tax imposed by this Act is at the rate of 6.25% of
16the selling price of tangible personal property transferred as
17an incident to the sale of service, but, for the purpose of
18computing this tax, in no event shall the selling price be less
19than the cost price of the property to the serviceman.
20    Beginning on July 1, 2000 and through December 31, 2000,
21with respect to motor fuel, as defined in Section 1.1 of the
22Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
23the Use Tax Act, the tax is imposed at the rate of 1.25%.
24    With respect to gasohol, as defined in the Use Tax Act, the
25tax imposed by this Act applies to (i) 70% of the selling price

 

 

09700SB0397ham006- 232 -LRB097 04209 HLH 60625 a

1of property transferred as an incident to the sale of service
2on or after January 1, 1990, and before July 1, 2003, (ii) 80%
3of the selling price of property transferred as an incident to
4the sale of service on or after July 1, 2003 and on or before
5December 31, 2018 2013, and (iii) 100% of the selling price
6thereafter. If, at any time, however, the tax under this Act on
7sales of gasohol, as defined in the Use Tax Act, is imposed at
8the rate of 1.25%, then the tax imposed by this Act applies to
9100% of the proceeds of sales of gasohol made during that time.
10    With respect to majority blended ethanol fuel, as defined
11in the Use Tax Act, the tax imposed by this Act does not apply
12to the selling price of property transferred as an incident to
13the sale of service on or after July 1, 2003 and on or before
14December 31, 2018 2013 but applies to 100% of the selling price
15thereafter.
16    With respect to biodiesel blends, as defined in the Use Tax
17Act, with no less than 1% and no more than 10% biodiesel, the
18tax imposed by this Act applies to (i) 80% of the selling price
19of property transferred as an incident to the sale of service
20on or after July 1, 2003 and on or before December 31, 2018
212013 and (ii) 100% of the proceeds of the selling price
22thereafter. If, at any time, however, the tax under this Act on
23sales of biodiesel blends, as defined in the Use Tax Act, with
24no less than 1% and no more than 10% biodiesel is imposed at
25the rate of 1.25%, then the tax imposed by this Act applies to
26100% of the proceeds of sales of biodiesel blends with no less

 

 

09700SB0397ham006- 233 -LRB097 04209 HLH 60625 a

1than 1% and no more than 10% biodiesel made during that time.
2    With respect to 100% biodiesel, as defined in the Use Tax
3Act, and biodiesel blends, as defined in the Use Tax Act, with
4more than 10% but no more than 99% biodiesel, the tax imposed
5by this Act does not apply to the proceeds of the selling price
6of property transferred as an incident to the sale of service
7on or after July 1, 2003 and on or before December 31, 2018
82013 but applies to 100% of the selling price thereafter.
9    At the election of any registered serviceman made for each
10fiscal year, sales of service in which the aggregate annual
11cost price of tangible personal property transferred as an
12incident to the sales of service is less than 35%, or 75% in
13the case of servicemen transferring prescription drugs or
14servicemen engaged in graphic arts production, of the aggregate
15annual total gross receipts from all sales of service, the tax
16imposed by this Act shall be based on the serviceman's cost
17price of the tangible personal property transferred as an
18incident to the sale of those services.
19    The tax shall be imposed at the rate of 1% on food prepared
20for immediate consumption and transferred incident to a sale of
21service subject to this Act or the Service Occupation Tax Act
22by an entity licensed under the Hospital Licensing Act, the
23Nursing Home Care Act, the ID/DD Community Care Act, the
24Specialized Mental Health Rehabilitation Act, or the Child Care
25Act of 1969. The tax shall also be imposed at the rate of 1% on
26food for human consumption that is to be consumed off the

 

 

09700SB0397ham006- 234 -LRB097 04209 HLH 60625 a

1premises where it is sold (other than alcoholic beverages, soft
2drinks, and food that has been prepared for immediate
3consumption and is not otherwise included in this paragraph)
4and prescription and nonprescription medicines, drugs, medical
5appliances, modifications to a motor vehicle for the purpose of
6rendering it usable by a disabled person, and insulin, urine
7testing materials, syringes, and needles used by diabetics, for
8human use. For the purposes of this Section, until September 1,
92009: the term "soft drinks" means any complete, finished,
10ready-to-use, non-alcoholic drink, whether carbonated or not,
11including but not limited to soda water, cola, fruit juice,
12vegetable juice, carbonated water, and all other preparations
13commonly known as soft drinks of whatever kind or description
14that are contained in any closed or sealed bottle, can, carton,
15or container, regardless of size; but "soft drinks" does not
16include coffee, tea, non-carbonated water, infant formula,
17milk or milk products as defined in the Grade A Pasteurized
18Milk and Milk Products Act, or drinks containing 50% or more
19natural fruit or vegetable juice.
20    Notwithstanding any other provisions of this Act,
21beginning September 1, 2009, "soft drinks" means non-alcoholic
22beverages that contain natural or artificial sweeteners. "Soft
23drinks" do not include beverages that contain milk or milk
24products, soy, rice or similar milk substitutes, or greater
25than 50% of vegetable or fruit juice by volume.
26    Until August 1, 2009, and notwithstanding any other

 

 

09700SB0397ham006- 235 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 236 -LRB097 04209 HLH 60625 a

1lotions and screens, unless those products are available by
2prescription only, regardless of whether the products meet the
3definition of "over-the-counter-drugs". For the purposes of
4this paragraph, "over-the-counter-drug" means a drug for human
5use that contains a label that identifies the product as a drug
6as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
7label includes:
8        (A) A "Drug Facts" panel; or
9        (B) A statement of the "active ingredient(s)" with a
10    list of those ingredients contained in the compound,
11    substance or preparation.
12    If the property that is acquired from a serviceman is
13acquired outside Illinois and used outside Illinois before
14being brought to Illinois for use here and is taxable under
15this Act, the "selling price" on which the tax is computed
16shall be reduced by an amount that represents a reasonable
17allowance for depreciation for the period of prior out-of-state
18use.
19(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
20eff. 7-13-09; 96-339, eff. 7-1-10; 96-1000, eff. 7-2-10; 97-38,
21eff. 6-28-11; 97-227, eff. 1-1-12; revised 9-12-11.)
 
22    (35 ILCS 110/3-75)
23    Sec. 3-75. Sunset of exemptions, credits, and deductions.
24    (a) The application of every exemption, credit, and
25deduction against tax imposed by this Act that becomes law

 

 

09700SB0397ham006- 237 -LRB097 04209 HLH 60625 a

1after the effective date of this amendatory Act of 1994 shall
2be limited by a reasonable and appropriate sunset date. A
3taxpayer is not entitled to take the exemption, credit, or
4deduction beginning on the sunset date and thereafter. Except
5as provided in subsection (b) of this Section, if If a
6reasonable and appropriate sunset date is not specified in the
7Public Act that creates the exemption, credit, or deduction, a
8taxpayer shall not be entitled to take the exemption, credit,
9or deduction beginning 5 years after the effective date of the
10Public Act creating the exemption, credit, or deduction and
11thereafter.
12    (b) Notwithstanding the provisions of subsection (a) of
13this Section, the sunset date of any exemption, credit, or
14deduction that is scheduled to expire in 2011, 2012, or 2013 by
15operation of this Section shall be extended by 5 years.
16(Source: P.A. 88-660, eff. 9-16-94; 89-235, eff. 8-4-95.)
 
17    Section 15-30. The Service Occupation Tax Act is amended by
18changing Sections 3-5, 3-10, and 3-55 as follows:
 
19    (35 ILCS 115/3-5)
20    Sec. 3-5. Exemptions. The following tangible personal
21property is exempt from the tax imposed by this Act:
22    (1) Personal property sold by a corporation, society,
23association, foundation, institution, or organization, other
24than a limited liability company, that is organized and

 

 

09700SB0397ham006- 238 -LRB097 04209 HLH 60625 a

1operated as a not-for-profit service enterprise for the benefit
2of persons 65 years of age or older if the personal property
3was not purchased by the enterprise for the purpose of resale
4by the enterprise.
5    (2) Personal property purchased by a not-for-profit
6Illinois county fair association for use in conducting,
7operating, or promoting the county fair.
8    (3) Personal property purchased by any not-for-profit arts
9or cultural organization that establishes, by proof required by
10the Department by rule, that it has received an exemption under
11Section 501(c)(3) of the Internal Revenue Code and that is
12organized and operated primarily for the presentation or
13support of arts or cultural programming, activities, or
14services. These organizations include, but are not limited to,
15music and dramatic arts organizations such as symphony
16orchestras and theatrical groups, arts and cultural service
17organizations, local arts councils, visual arts organizations,
18and media arts organizations. On and after the effective date
19of this amendatory Act of the 92nd General Assembly, however,
20an entity otherwise eligible for this exemption shall not make
21tax-free purchases unless it has an active identification
22number issued by the Department.
23    (4) Legal tender, currency, medallions, or gold or silver
24coinage issued by the State of Illinois, the government of the
25United States of America, or the government of any foreign
26country, and bullion.

 

 

09700SB0397ham006- 239 -LRB097 04209 HLH 60625 a

1    (5) Until July 1, 2003 and beginning again on September 1,
22004 through August 30, 2014, graphic arts machinery and
3equipment, including repair and replacement parts, both new and
4used, and including that manufactured on special order or
5purchased for lease, certified by the purchaser to be used
6primarily for graphic arts production. Equipment includes
7chemicals or chemicals acting as catalysts but only if the
8chemicals or chemicals acting as catalysts effect a direct and
9immediate change upon a graphic arts product.
10    (6) Personal property sold by a teacher-sponsored student
11organization affiliated with an elementary or secondary school
12located in Illinois.
13    (7) Farm machinery and equipment, both new and used,
14including that manufactured on special order, certified by the
15purchaser to be used primarily for production agriculture or
16State or federal agricultural programs, including individual
17replacement parts for the machinery and equipment, including
18machinery and equipment purchased for lease, and including
19implements of husbandry defined in Section 1-130 of the
20Illinois Vehicle Code, farm machinery and agricultural
21chemical and fertilizer spreaders, and nurse wagons required to
22be registered under Section 3-809 of the Illinois Vehicle Code,
23but excluding other motor vehicles required to be registered
24under the Illinois Vehicle Code. Horticultural polyhouses or
25hoop houses used for propagating, growing, or overwintering
26plants shall be considered farm machinery and equipment under

 

 

09700SB0397ham006- 240 -LRB097 04209 HLH 60625 a

1this item (7). Agricultural chemical tender tanks and dry boxes
2shall include units sold separately from a motor vehicle
3required to be licensed and units sold mounted on a motor
4vehicle required to be licensed if the selling price of the
5tender is separately stated.
6    Farm machinery and equipment shall include precision
7farming equipment that is installed or purchased to be
8installed on farm machinery and equipment including, but not
9limited to, tractors, harvesters, sprayers, planters, seeders,
10or spreaders. Precision farming equipment includes, but is not
11limited to, soil testing sensors, computers, monitors,
12software, global positioning and mapping systems, and other
13such equipment.
14    Farm machinery and equipment also includes computers,
15sensors, software, and related equipment used primarily in the
16computer-assisted operation of production agriculture
17facilities, equipment, and activities such as, but not limited
18to, the collection, monitoring, and correlation of animal and
19crop data for the purpose of formulating animal diets and
20agricultural chemicals. This item (7) is exempt from the
21provisions of Section 3-55.
22    (8) Fuel and petroleum products sold to or used by an air
23common carrier, certified by the carrier to be used for
24consumption, shipment, or storage in the conduct of its
25business as an air common carrier, for a flight destined for or
26returning from a location or locations outside the United

 

 

09700SB0397ham006- 241 -LRB097 04209 HLH 60625 a

1States without regard to previous or subsequent domestic
2stopovers.
3    (9) Proceeds of mandatory service charges separately
4stated on customers' bills for the purchase and consumption of
5food and beverages, to the extent that the proceeds of the
6service charge are in fact turned over as tips or as a
7substitute for tips to the employees who participate directly
8in preparing, serving, hosting or cleaning up the food or
9beverage function with respect to which the service charge is
10imposed.
11    (10) Until July 1, 2003, oil field exploration, drilling,
12and production equipment, including (i) rigs and parts of rigs,
13rotary rigs, cable tool rigs, and workover rigs, (ii) pipe and
14tubular goods, including casing and drill strings, (iii) pumps
15and pump-jack units, (iv) storage tanks and flow lines, (v) any
16individual replacement part for oil field exploration,
17drilling, and production equipment, and (vi) machinery and
18equipment purchased for lease; but excluding motor vehicles
19required to be registered under the Illinois Vehicle Code.
20    (11) Photoprocessing machinery and equipment, including
21repair and replacement parts, both new and used, including that
22manufactured on special order, certified by the purchaser to be
23used primarily for photoprocessing, and including
24photoprocessing machinery and equipment purchased for lease.
25    (12) Until July 1, 2003, coal exploration, mining,
26offhighway hauling, processing, maintenance, and reclamation

 

 

09700SB0397ham006- 242 -LRB097 04209 HLH 60625 a

1equipment, including replacement parts and equipment, and
2including equipment purchased for lease, but excluding motor
3vehicles required to be registered under the Illinois Vehicle
4Code.
5    (13) Beginning January 1, 1992 and through June 30, 2016
6June 30, 2011, food for human consumption that is to be
7consumed off the premises where it is sold (other than
8alcoholic beverages, soft drinks and food that has been
9prepared for immediate consumption) and prescription and
10non-prescription medicines, drugs, medical appliances, and
11insulin, urine testing materials, syringes, and needles used by
12diabetics, for human use, when purchased for use by a person
13receiving medical assistance under Article V of the Illinois
14Public Aid Code who resides in a licensed long-term care
15facility, as defined in the Nursing Home Care Act, or in a
16licensed facility as defined in the ID/DD Community Care Act or
17the Specialized Mental Health Rehabilitation Act.
18    (14) Semen used for artificial insemination of livestock
19for direct agricultural production.
20    (15) Horses, or interests in horses, registered with and
21meeting the requirements of any of the Arabian Horse Club
22Registry of America, Appaloosa Horse Club, American Quarter
23Horse Association, United States Trotting Association, or
24Jockey Club, as appropriate, used for purposes of breeding or
25racing for prizes. This item (15) is exempt from the provisions
26of Section 3-55, and the exemption provided for under this item

 

 

09700SB0397ham006- 243 -LRB097 04209 HLH 60625 a

1(15) applies for all periods beginning May 30, 1995, but no
2claim for credit or refund is allowed on or after January 1,
32008 (the effective date of Public Act 95-88) for such taxes
4paid during the period beginning May 30, 2000 and ending on
5January 1, 2008 (the effective date of Public Act 95-88).
6    (16) Computers and communications equipment utilized for
7any hospital purpose and equipment used in the diagnosis,
8analysis, or treatment of hospital patients sold to a lessor
9who leases the equipment, under a lease of one year or longer
10executed or in effect at the time of the purchase, to a
11hospital that has been issued an active tax exemption
12identification number by the Department under Section 1g of the
13Retailers' Occupation Tax Act.
14    (17) Personal property sold to a lessor who leases the
15property, under a lease of one year or longer executed or in
16effect at the time of the purchase, to a governmental body that
17has been issued an active tax exemption identification number
18by the Department under Section 1g of the Retailers' Occupation
19Tax Act.
20    (18) Beginning with taxable years ending on or after
21December 31, 1995 and ending with taxable years ending on or
22before December 31, 2004, personal property that is donated for
23disaster relief to be used in a State or federally declared
24disaster area in Illinois or bordering Illinois by a
25manufacturer or retailer that is registered in this State to a
26corporation, society, association, foundation, or institution

 

 

09700SB0397ham006- 244 -LRB097 04209 HLH 60625 a

1that has been issued a sales tax exemption identification
2number by the Department that assists victims of the disaster
3who reside within the declared disaster area.
4    (19) Beginning with taxable years ending on or after
5December 31, 1995 and ending with taxable years ending on or
6before December 31, 2004, personal property that is used in the
7performance of infrastructure repairs in this State, including
8but not limited to municipal roads and streets, access roads,
9bridges, sidewalks, waste disposal systems, water and sewer
10line extensions, water distribution and purification
11facilities, storm water drainage and retention facilities, and
12sewage treatment facilities, resulting from a State or
13federally declared disaster in Illinois or bordering Illinois
14when such repairs are initiated on facilities located in the
15declared disaster area within 6 months after the disaster.
16    (20) Beginning July 1, 1999, game or game birds sold at a
17"game breeding and hunting preserve area" as that term is used
18in the Wildlife Code. This paragraph is exempt from the
19provisions of Section 3-55.
20    (21) A motor vehicle, as that term is defined in Section
211-146 of the Illinois Vehicle Code, that is donated to a
22corporation, limited liability company, society, association,
23foundation, or institution that is determined by the Department
24to be organized and operated exclusively for educational
25purposes. For purposes of this exemption, "a corporation,
26limited liability company, society, association, foundation,

 

 

09700SB0397ham006- 245 -LRB097 04209 HLH 60625 a

1or institution organized and operated exclusively for
2educational purposes" means all tax-supported public schools,
3private schools that offer systematic instruction in useful
4branches of learning by methods common to public schools and
5that compare favorably in their scope and intensity with the
6course of study presented in tax-supported schools, and
7vocational or technical schools or institutes organized and
8operated exclusively to provide a course of study of not less
9than 6 weeks duration and designed to prepare individuals to
10follow a trade or to pursue a manual, technical, mechanical,
11industrial, business, or commercial occupation.
12    (22) Beginning January 1, 2000, personal property,
13including food, purchased through fundraising events for the
14benefit of a public or private elementary or secondary school,
15a group of those schools, or one or more school districts if
16the events are sponsored by an entity recognized by the school
17district that consists primarily of volunteers and includes
18parents and teachers of the school children. This paragraph
19does not apply to fundraising events (i) for the benefit of
20private home instruction or (ii) for which the fundraising
21entity purchases the personal property sold at the events from
22another individual or entity that sold the property for the
23purpose of resale by the fundraising entity and that profits
24from the sale to the fundraising entity. This paragraph is
25exempt from the provisions of Section 3-55.
26    (23) Beginning January 1, 2000 and through December 31,

 

 

09700SB0397ham006- 246 -LRB097 04209 HLH 60625 a

12001, new or used automatic vending machines that prepare and
2serve hot food and beverages, including coffee, soup, and other
3items, and replacement parts for these machines. Beginning
4January 1, 2002 and through June 30, 2003, machines and parts
5for machines used in commercial, coin-operated amusement and
6vending business if a use or occupation tax is paid on the
7gross receipts derived from the use of the commercial,
8coin-operated amusement and vending machines. This paragraph
9is exempt from the provisions of Section 3-55.
10    (24) Beginning on the effective date of this amendatory Act
11of the 92nd General Assembly, computers and communications
12equipment utilized for any hospital purpose and equipment used
13in the diagnosis, analysis, or treatment of hospital patients
14sold to a lessor who leases the equipment, under a lease of one
15year or longer executed or in effect at the time of the
16purchase, to a hospital that has been issued an active tax
17exemption identification number by the Department under
18Section 1g of the Retailers' Occupation Tax Act. This paragraph
19is exempt from the provisions of Section 3-55.
20    (25) Beginning on the effective date of this amendatory Act
21of the 92nd General Assembly, personal property sold to a
22lessor who leases the property, under a lease of one year or
23longer executed or in effect at the time of the purchase, to a
24governmental body that has been issued an active tax exemption
25identification number by the Department under Section 1g of the
26Retailers' Occupation Tax Act. This paragraph is exempt from

 

 

09700SB0397ham006- 247 -LRB097 04209 HLH 60625 a

1the provisions of Section 3-55.
2    (26) Beginning on January 1, 2002 and through June 30,
32016, tangible personal property purchased from an Illinois
4retailer by a taxpayer engaged in centralized purchasing
5activities in Illinois who will, upon receipt of the property
6in Illinois, temporarily store the property in Illinois (i) for
7the purpose of subsequently transporting it outside this State
8for use or consumption thereafter solely outside this State or
9(ii) for the purpose of being processed, fabricated, or
10manufactured into, attached to, or incorporated into other
11tangible personal property to be transported outside this State
12and thereafter used or consumed solely outside this State. The
13Director of Revenue shall, pursuant to rules adopted in
14accordance with the Illinois Administrative Procedure Act,
15issue a permit to any taxpayer in good standing with the
16Department who is eligible for the exemption under this
17paragraph (26). The permit issued under this paragraph (26)
18shall authorize the holder, to the extent and in the manner
19specified in the rules adopted under this Act, to purchase
20tangible personal property from a retailer exempt from the
21taxes imposed by this Act. Taxpayers shall maintain all
22necessary books and records to substantiate the use and
23consumption of all such tangible personal property outside of
24the State of Illinois.
25    (27) Beginning January 1, 2008, tangible personal property
26used in the construction or maintenance of a community water

 

 

09700SB0397ham006- 248 -LRB097 04209 HLH 60625 a

1supply, as defined under Section 3.145 of the Environmental
2Protection Act, that is operated by a not-for-profit
3corporation that holds a valid water supply permit issued under
4Title IV of the Environmental Protection Act. This paragraph is
5exempt from the provisions of Section 3-55.
6    (28) Tangible personal property sold to a
7public-facilities corporation, as described in Section
811-65-10 of the Illinois Municipal Code, for purposes of
9constructing or furnishing a municipal convention hall, but
10only if the legal title to the municipal convention hall is
11transferred to the municipality without any further
12consideration by or on behalf of the municipality at the time
13of the completion of the municipal convention hall or upon the
14retirement or redemption of any bonds or other debt instruments
15issued by the public-facilities corporation in connection with
16the development of the municipal convention hall. This
17exemption includes existing public-facilities corporations as
18provided in Section 11-65-25 of the Illinois Municipal Code.
19This paragraph is exempt from the provisions of Section 3-55.
20    (29) Beginning January 1, 2010, materials, parts,
21equipment, components, and furnishings incorporated into or
22upon an aircraft as part of the modification, refurbishment,
23completion, replacement, repair, or maintenance of the
24aircraft. This exemption includes consumable supplies used in
25the modification, refurbishment, completion, replacement,
26repair, and maintenance of aircraft, but excludes any

 

 

09700SB0397ham006- 249 -LRB097 04209 HLH 60625 a

1materials, parts, equipment, components, and consumable
2supplies used in the modification, replacement, repair, and
3maintenance of aircraft engines or power plants, whether such
4engines or power plants are installed or uninstalled upon any
5such aircraft. "Consumable supplies" include, but are not
6limited to, adhesive, tape, sandpaper, general purpose
7lubricants, cleaning solution, latex gloves, and protective
8films. This exemption applies only to those organizations that
9(i) hold an Air Agency Certificate and are empowered to operate
10an approved repair station by the Federal Aviation
11Administration, (ii) have a Class IV Rating, and (iii) conduct
12operations in accordance with Part 145 of the Federal Aviation
13Regulations. The exemption does not include aircraft operated
14by a commercial air carrier providing scheduled passenger air
15service pursuant to authority issued under Part 121 or Part 129
16of the Federal Aviation Regulations.
17(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10;
1896-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff.
197-2-10; 97-38, eff. 6-28-11; 97-73, eff. 6-30-11; 97-227, eff.
201-1-12; 97-431, eff. 8-16-11; revised 9-12-11.)
 
21    (35 ILCS 115/3-10)  (from Ch. 120, par. 439.103-10)
22    Sec. 3-10. Rate of tax. Unless otherwise provided in this
23Section, the tax imposed by this Act is at the rate of 6.25% of
24the "selling price", as defined in Section 2 of the Service Use
25Tax Act, of the tangible personal property. For the purpose of

 

 

09700SB0397ham006- 250 -LRB097 04209 HLH 60625 a

1computing this tax, in no event shall the "selling price" be
2less than the cost price to the serviceman of the tangible
3personal property transferred. The selling price of each item
4of tangible personal property transferred as an incident of a
5sale of service may be shown as a distinct and separate item on
6the serviceman's billing to the service customer. If the
7selling price is not so shown, the selling price of the
8tangible personal property is deemed to be 50% of the
9serviceman's entire billing to the service customer. When,
10however, a serviceman contracts to design, develop, and produce
11special order machinery or equipment, the tax imposed by this
12Act shall be based on the serviceman's cost price of the
13tangible personal property transferred incident to the
14completion of the contract.
15    Beginning on July 1, 2000 and through December 31, 2000,
16with respect to motor fuel, as defined in Section 1.1 of the
17Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
18the Use Tax Act, the tax is imposed at the rate of 1.25%.
19    With respect to gasohol, as defined in the Use Tax Act, the
20tax imposed by this Act shall apply to (i) 70% of the cost
21price of property transferred as an incident to the sale of
22service on or after January 1, 1990, and before July 1, 2003,
23(ii) 80% of the selling price of property transferred as an
24incident to the sale of service on or after July 1, 2003 and on
25or before December 31, 2018 2013, and (iii) 100% of the cost
26price thereafter. If, at any time, however, the tax under this

 

 

09700SB0397ham006- 251 -LRB097 04209 HLH 60625 a

1Act on sales of gasohol, as defined in the Use Tax Act, is
2imposed at the rate of 1.25%, then the tax imposed by this Act
3applies to 100% of the proceeds of sales of gasohol made during
4that time.
5    With respect to majority blended ethanol fuel, as defined
6in the Use Tax Act, the tax imposed by this Act does not apply
7to the selling price of property transferred as an incident to
8the sale of service on or after July 1, 2003 and on or before
9December 31, 2018 2013 but applies to 100% of the selling price
10thereafter.
11    With respect to biodiesel blends, as defined in the Use Tax
12Act, with no less than 1% and no more than 10% biodiesel, the
13tax imposed by this Act applies to (i) 80% of the selling price
14of property transferred as an incident to the sale of service
15on or after July 1, 2003 and on or before December 31, 2018
162013 and (ii) 100% of the proceeds of the selling price
17thereafter. If, at any time, however, the tax under this Act on
18sales of biodiesel blends, as defined in the Use Tax Act, with
19no less than 1% and no more than 10% biodiesel is imposed at
20the rate of 1.25%, then the tax imposed by this Act applies to
21100% of the proceeds of sales of biodiesel blends with no less
22than 1% and no more than 10% biodiesel made during that time.
23    With respect to 100% biodiesel, as defined in the Use Tax
24Act, and biodiesel blends, as defined in the Use Tax Act, with
25more than 10% but no more than 99% biodiesel material, the tax
26imposed by this Act does not apply to the proceeds of the

 

 

09700SB0397ham006- 252 -LRB097 04209 HLH 60625 a

1selling price of property transferred as an incident to the
2sale of service on or after July 1, 2003 and on or before
3December 31, 2018 2013 but applies to 100% of the selling price
4thereafter.
5    At the election of any registered serviceman made for each
6fiscal year, sales of service in which the aggregate annual
7cost price of tangible personal property transferred as an
8incident to the sales of service is less than 35%, or 75% in
9the case of servicemen transferring prescription drugs or
10servicemen engaged in graphic arts production, of the aggregate
11annual total gross receipts from all sales of service, the tax
12imposed by this Act shall be based on the serviceman's cost
13price of the tangible personal property transferred incident to
14the sale of those services.
15    The tax shall be imposed at the rate of 1% on food prepared
16for immediate consumption and transferred incident to a sale of
17service subject to this Act or the Service Occupation Tax Act
18by an entity licensed under the Hospital Licensing Act, the
19Nursing Home Care Act, the ID/DD Community Care Act, the
20Specialized Mental Health Rehabilitation Act, or the Child Care
21Act of 1969. The tax shall also be imposed at the rate of 1% on
22food for human consumption that is to be consumed off the
23premises where it is sold (other than alcoholic beverages, soft
24drinks, and food that has been prepared for immediate
25consumption and is not otherwise included in this paragraph)
26and prescription and nonprescription medicines, drugs, medical

 

 

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1appliances, modifications to a motor vehicle for the purpose of
2rendering it usable by a disabled person, and insulin, urine
3testing materials, syringes, and needles used by diabetics, for
4human use. For the purposes of this Section, until September 1,
52009: the term "soft drinks" means any complete, finished,
6ready-to-use, non-alcoholic drink, whether carbonated or not,
7including but not limited to soda water, cola, fruit juice,
8vegetable juice, carbonated water, and all other preparations
9commonly known as soft drinks of whatever kind or description
10that are contained in any closed or sealed can, carton, or
11container, regardless of size; but "soft drinks" does not
12include coffee, tea, non-carbonated water, infant formula,
13milk or milk products as defined in the Grade A Pasteurized
14Milk and Milk Products Act, or drinks containing 50% or more
15natural fruit or vegetable juice.
16    Notwithstanding any other provisions of this Act,
17beginning September 1, 2009, "soft drinks" means non-alcoholic
18beverages that contain natural or artificial sweeteners. "Soft
19drinks" do not include beverages that contain milk or milk
20products, soy, rice or similar milk substitutes, or greater
21than 50% of vegetable or fruit juice by volume.
22    Until August 1, 2009, and notwithstanding any other
23provisions of this Act, "food for human consumption that is to
24be consumed off the premises where it is sold" includes all
25food sold through a vending machine, except soft drinks and
26food products that are dispensed hot from a vending machine,

 

 

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

 

 

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1use that contains a label that identifies the product as a drug
2as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
3label includes:
4        (A) A "Drug Facts" panel; or
5        (B) A statement of the "active ingredient(s)" with a
6    list of those ingredients contained in the compound,
7    substance or preparation.
8(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
9eff. 7-13-09; 96-339, eff. 7-1-10; 96-1000, eff. 7-2-10; 97-38,
10eff. 6-28-11; 97-227, eff. 1-1-12; revised 9-12-11.)
 
11    (35 ILCS 115/3-55)
12    Sec. 3-55. Sunset of exemptions, credits, and deductions.
13    (a) The application of every exemption, credit, and
14deduction against tax imposed by this Act that becomes law
15after the effective date of this amendatory Act of 1994 shall
16be limited by a reasonable and appropriate sunset date. A
17taxpayer is not entitled to take the exemption, credit, or
18deduction beginning on the sunset date and thereafter. Except
19as provided in subsection (b) of this Section, if If a
20reasonable and appropriate sunset date is not specified in the
21Public Act that creates the exemption, credit, or deduction, a
22taxpayer shall not be entitled to take the exemption, credit,
23or deduction beginning 5 years after the effective date of the
24Public Act creating the exemption, credit, or deduction and
25thereafter.

 

 

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1    (b) Notwithstanding the provisions of subsection (a) of
2this Section, the sunset date of any exemption, credit, or
3deduction that is scheduled to expire in 2011, 2012, or 2013 by
4operation of this Section shall be extended by 5 years.
5(Source: P.A. 88-660, eff. 9-16-94.)
 
6    Section 15-35. The Retailers' Occupation Tax Act is amended
7by changing Sections 2-5, 2-10, and 2-70 as follows:
 
8    (35 ILCS 120/2-5)
9    Sec. 2-5. Exemptions. Gross receipts from proceeds from the
10sale of the following tangible personal property are exempt
11from the tax imposed by this Act:
12    (1) Farm chemicals.
13    (2) Farm machinery and equipment, both new and used,
14including that manufactured on special order, certified by the
15purchaser to be used primarily for production agriculture or
16State or federal agricultural programs, including individual
17replacement parts for the machinery and equipment, including
18machinery and equipment purchased for lease, and including
19implements of husbandry defined in Section 1-130 of the
20Illinois Vehicle Code, farm machinery and agricultural
21chemical and fertilizer spreaders, and nurse wagons required to
22be registered under Section 3-809 of the Illinois Vehicle Code,
23but excluding other motor vehicles required to be registered
24under the Illinois Vehicle Code. Horticultural polyhouses or

 

 

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

 

 

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1production of ethyl alcohol that will be used for consumption
2as motor fuel or as a component of motor fuel for the personal
3use of the user, and not subject to sale or resale.
4    (4) Until July 1, 2003 and beginning again September 1,
52004 through August 30, 2014, graphic arts machinery and
6equipment, including repair and replacement parts, both new and
7used, and including that manufactured on special order or
8purchased for lease, certified by the purchaser to be used
9primarily for graphic arts production. Equipment includes
10chemicals or chemicals acting as catalysts but only if the
11chemicals or chemicals acting as catalysts effect a direct and
12immediate change upon a graphic arts product.
13    (5) A motor vehicle of the first division, a motor vehicle
14of the second division that is a self contained motor vehicle
15designed or permanently converted to provide living quarters
16for recreational, camping, or travel use, with direct walk
17through access to the living quarters from the driver's seat,
18or a motor vehicle of the second division that is of the van
19configuration designed for the transportation of not less than
207 nor more than 16 passengers, as defined in Section 1-146 of
21the Illinois Vehicle Code, that is used for automobile renting,
22as defined in the Automobile Renting Occupation and Use Tax
23Act. This paragraph is exempt from the provisions of Section
242-70.
25    (6) Personal property sold by a teacher-sponsored student
26organization affiliated with an elementary or secondary school

 

 

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1located in Illinois.
2    (7) Until July 1, 2003, proceeds of that portion of the
3selling price of a passenger car the sale of which is subject
4to the Replacement Vehicle Tax.
5    (8) Personal property sold to an Illinois county fair
6association for use in conducting, operating, or promoting the
7county fair.
8    (9) Personal property sold to a not-for-profit arts or
9cultural organization that establishes, by proof required by
10the Department by rule, that it has received an exemption under
11Section 501(c)(3) of the Internal Revenue Code and that is
12organized and operated primarily for the presentation or
13support of arts or cultural programming, activities, or
14services. These organizations include, but are not limited to,
15music and dramatic arts organizations such as symphony
16orchestras and theatrical groups, arts and cultural service
17organizations, local arts councils, visual arts organizations,
18and media arts organizations. On and after the effective date
19of this amendatory Act of the 92nd General Assembly, however,
20an entity otherwise eligible for this exemption shall not make
21tax-free purchases unless it has an active identification
22number issued by the Department.
23    (10) Personal property sold by a corporation, society,
24association, foundation, institution, or organization, other
25than a limited liability company, that is organized and
26operated as a not-for-profit service enterprise for the benefit

 

 

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1of persons 65 years of age or older if the personal property
2was not purchased by the enterprise for the purpose of resale
3by the enterprise.
4    (11) Personal property sold to a governmental body, to a
5corporation, society, association, foundation, or institution
6organized and operated exclusively for charitable, religious,
7or educational purposes, or to a not-for-profit corporation,
8society, association, foundation, institution, or organization
9that has no compensated officers or employees and that is
10organized and operated primarily for the recreation of persons
1155 years of age or older. A limited liability company may
12qualify for the exemption under this paragraph only if the
13limited liability company is organized and operated
14exclusively for educational purposes. On and after July 1,
151987, however, no entity otherwise eligible for this exemption
16shall make tax-free purchases unless it has an active
17identification number issued by the Department.
18    (12) Tangible personal property sold to interstate
19carriers for hire for use as rolling stock moving in interstate
20commerce or to lessors under leases of one year or longer
21executed or in effect at the time of purchase by interstate
22carriers for hire for use as rolling stock moving in interstate
23commerce and equipment operated by a telecommunications
24provider, licensed as a common carrier by the Federal
25Communications Commission, which is permanently installed in
26or affixed to aircraft moving in interstate commerce.

 

 

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1    (12-5) On and after July 1, 2003 and through June 30, 2004,
2motor vehicles of the second division with a gross vehicle
3weight in excess of 8,000 pounds that are subject to the
4commercial distribution fee imposed under Section 3-815.1 of
5the Illinois Vehicle Code. Beginning on July 1, 2004 and
6through June 30, 2005, the use in this State of motor vehicles
7of the second division: (i) with a gross vehicle weight rating
8in excess of 8,000 pounds; (ii) that are subject to the
9commercial distribution fee imposed under Section 3-815.1 of
10the Illinois Vehicle Code; and (iii) that are primarily used
11for commercial purposes. Through June 30, 2005, this exemption
12applies to repair and replacement parts added after the initial
13purchase of such a motor vehicle if that motor vehicle is used
14in a manner that would qualify for the rolling stock exemption
15otherwise provided for in this Act. For purposes of this
16paragraph, "used for commercial purposes" means the
17transportation of persons or property in furtherance of any
18commercial or industrial enterprise whether for-hire or not.
19    (13) Proceeds from sales to owners, lessors, or shippers of
20tangible personal property that is utilized by interstate
21carriers for hire for use as rolling stock moving in interstate
22commerce and equipment operated by a telecommunications
23provider, licensed as a common carrier by the Federal
24Communications Commission, which is permanently installed in
25or affixed to aircraft moving in interstate commerce.
26    (14) Machinery and equipment that will be used by the

 

 

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1purchaser, or a lessee of the purchaser, primarily in the
2process of manufacturing or assembling tangible personal
3property for wholesale or retail sale or lease, whether the
4sale or lease is made directly by the manufacturer or by some
5other person, whether the materials used in the process are
6owned by the manufacturer or some other person, or whether the
7sale or lease is made apart from or as an incident to the
8seller's engaging in the service occupation of producing
9machines, tools, dies, jigs, patterns, gauges, or other similar
10items of no commercial value on special order for a particular
11purchaser.
12    (15) Proceeds of mandatory service charges separately
13stated on customers' bills for purchase and consumption of food
14and beverages, to the extent that the proceeds of the service
15charge are in fact turned over as tips or as a substitute for
16tips to the employees who participate directly in preparing,
17serving, hosting or cleaning up the food or beverage function
18with respect to which the service charge is imposed.
19    (16) Petroleum products sold to a purchaser if the seller
20is prohibited by federal law from charging tax to the
21purchaser.
22    (17) Tangible personal property sold to a common carrier by
23rail or motor that receives the physical possession of the
24property in Illinois and that transports the property, or
25shares with another common carrier in the transportation of the
26property, out of Illinois on a standard uniform bill of lading

 

 

09700SB0397ham006- 263 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 264 -LRB097 04209 HLH 60625 a

1Code.
2    (22) Fuel and petroleum products sold to or used by an air
3carrier, certified by the carrier to be used for consumption,
4shipment, or storage in the conduct of its business as an air
5common carrier, for a flight destined for or returning from a
6location or locations outside the United States without regard
7to previous or subsequent domestic stopovers.
8    (23) A transaction in which the purchase order is received
9by a florist who is located outside Illinois, but who has a
10florist located in Illinois deliver the property to the
11purchaser or the purchaser's donee in Illinois.
12    (24) Fuel consumed or used in the operation of ships,
13barges, or vessels that are used primarily in or for the
14transportation of property or the conveyance of persons for
15hire on rivers bordering on this State if the fuel is delivered
16by the seller to the purchaser's barge, ship, or vessel while
17it is afloat upon that bordering river.
18    (25) Except as provided in item (25-5) of this Section, a
19motor vehicle sold in this State to a nonresident even though
20the motor vehicle is delivered to the nonresident in this
21State, if the motor vehicle is not to be titled in this State,
22and if a drive-away permit is issued to the motor vehicle as
23provided in Section 3-603 of the Illinois Vehicle Code or if
24the nonresident purchaser has vehicle registration plates to
25transfer to the motor vehicle upon returning to his or her home
26state. The issuance of the drive-away permit or having the

 

 

09700SB0397ham006- 265 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 266 -LRB097 04209 HLH 60625 a

1titles the vehicle in his or her state of residence within 30
2days after the date of sale. The tax collected under this Act
3in accordance with this item (25-5) shall be proportionately
4distributed as if the tax were collected at the 6.25% general
5rate imposed under this Act.
6    (25-7) Beginning on July 1, 2007, no tax is imposed under
7this Act on the sale of an aircraft, as defined in Section 3 of
8the Illinois Aeronautics Act, if all of the following
9conditions are met:
10        (1) the aircraft leaves this State within 15 days after
11    the later of either the issuance of the final billing for
12    the sale of the aircraft, or the authorized approval for
13    return to service, completion of the maintenance record
14    entry, and completion of the test flight and ground test
15    for inspection, as required by 14 C.F.R. 91.407;
16        (2) the aircraft is not based or registered in this
17    State after the sale of the aircraft; and
18        (3) the seller retains in his or her books and records
19    and provides to the Department a signed and dated
20    certification from the purchaser, on a form prescribed by
21    the Department, certifying that the requirements of this
22    item (25-7) are met. The certificate must also include the
23    name and address of the purchaser, the address of the
24    location where the aircraft is to be titled or registered,
25    the address of the primary physical location of the
26    aircraft, and other information that the Department may

 

 

09700SB0397ham006- 267 -LRB097 04209 HLH 60625 a

1    reasonably require.
2    For purposes of this item (25-7):
3    "Based in this State" means hangared, stored, or otherwise
4used, excluding post-sale customizations as defined in this
5Section, for 10 or more days in each 12-month period
6immediately following the date of the sale of the aircraft.
7    "Registered in this State" means an aircraft registered
8with the Department of Transportation, Aeronautics Division,
9or titled or registered with the Federal Aviation
10Administration to an address located in this State.
11    This paragraph (25-7) is exempt from the provisions of
12Section 2-70.
13    (26) Semen used for artificial insemination of livestock
14for direct agricultural production.
15    (27) Horses, or interests in horses, registered with and
16meeting the requirements of any of the Arabian Horse Club
17Registry of America, Appaloosa Horse Club, American Quarter
18Horse Association, United States Trotting Association, or
19Jockey Club, as appropriate, used for purposes of breeding or
20racing for prizes. This item (27) is exempt from the provisions
21of Section 2-70, and the exemption provided for under this item
22(27) applies for all periods beginning May 30, 1995, but no
23claim for credit or refund is allowed on or after January 1,
242008 (the effective date of Public Act 95-88) for such taxes
25paid during the period beginning May 30, 2000 and ending on
26January 1, 2008 (the effective date of Public Act 95-88).

 

 

09700SB0397ham006- 268 -LRB097 04209 HLH 60625 a

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

 

 

09700SB0397ham006- 269 -LRB097 04209 HLH 60625 a

1performance of infrastructure repairs in this State, including
2but not limited to municipal roads and streets, access roads,
3bridges, sidewalks, waste disposal systems, water and sewer
4line extensions, water distribution and purification
5facilities, storm water drainage and retention facilities, and
6sewage treatment facilities, resulting from a State or
7federally declared disaster in Illinois or bordering Illinois
8when such repairs are initiated on facilities located in the
9declared disaster area within 6 months after the disaster.
10    (32) Beginning July 1, 1999, game or game birds sold at a
11"game breeding and hunting preserve area" as that term is used
12in the Wildlife Code. This paragraph is exempt from the
13provisions of Section 2-70.
14    (33) A motor vehicle, as that term is defined in Section
151-146 of the Illinois Vehicle Code, that is donated to a
16corporation, limited liability company, society, association,
17foundation, or institution that is determined by the Department
18to be organized and operated exclusively for educational
19purposes. For purposes of this exemption, "a corporation,
20limited liability company, society, association, foundation,
21or institution organized and operated exclusively for
22educational purposes" means all tax-supported public schools,
23private schools that offer systematic instruction in useful
24branches of learning by methods common to public schools and
25that compare favorably in their scope and intensity with the
26course of study presented in tax-supported schools, and

 

 

09700SB0397ham006- 270 -LRB097 04209 HLH 60625 a

1vocational or technical schools or institutes organized and
2operated exclusively to provide a course of study of not less
3than 6 weeks duration and designed to prepare individuals to
4follow a trade or to pursue a manual, technical, mechanical,
5industrial, business, or commercial occupation.
6    (34) Beginning January 1, 2000, personal property,
7including food, purchased through fundraising events for the
8benefit of a public or private elementary or secondary school,
9a group of those schools, or one or more school districts if
10the events are sponsored by an entity recognized by the school
11district that consists primarily of volunteers and includes
12parents and teachers of the school children. This paragraph
13does not apply to fundraising events (i) for the benefit of
14private home instruction or (ii) for which the fundraising
15entity purchases the personal property sold at the events from
16another individual or entity that sold the property for the
17purpose of resale by the fundraising entity and that profits
18from the sale to the fundraising entity. This paragraph is
19exempt from the provisions of Section 2-70.
20    (35) Beginning January 1, 2000 and through December 31,
212001, new or used automatic vending machines that prepare and
22serve hot food and beverages, including coffee, soup, and other
23items, and replacement parts for these machines. Beginning
24January 1, 2002 and through June 30, 2003, machines and parts
25for machines used in commercial, coin-operated amusement and
26vending business if a use or occupation tax is paid on the

 

 

09700SB0397ham006- 271 -LRB097 04209 HLH 60625 a

1gross receipts derived from the use of the commercial,
2coin-operated amusement and vending machines. This paragraph
3is exempt from the provisions of Section 2-70.
4    (35-5) Beginning August 23, 2001 and through June 30, 2016
5June 30, 2011, food for human consumption that is to be
6consumed off the premises where it is sold (other than
7alcoholic beverages, soft drinks, and food that has been
8prepared for immediate consumption) and prescription and
9nonprescription medicines, drugs, medical appliances, and
10insulin, urine testing materials, syringes, and needles used by
11diabetics, for human use, when purchased for use by a person
12receiving medical assistance under Article V of the Illinois
13Public Aid Code who resides in a licensed long-term care
14facility, as defined in the Nursing Home Care Act, or a
15licensed facility as defined in the ID/DD Community Care Act or
16the Specialized Mental Health Rehabilitation Act.
17    (36) Beginning August 2, 2001, computers and
18communications equipment utilized for any hospital purpose and
19equipment used in the diagnosis, analysis, or treatment of
20hospital patients sold to a lessor who leases the equipment,
21under a lease of one year or longer executed or in effect at
22the time of the purchase, to a hospital that has been issued an
23active tax exemption identification number by the Department
24under Section 1g of this Act. This paragraph is exempt from the
25provisions of Section 2-70.
26    (37) Beginning August 2, 2001, personal property sold to a

 

 

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1lessor who leases the property, under a lease of one year or
2longer executed or in effect at the time of the purchase, to a
3governmental body that has been issued an active tax exemption
4identification number by the Department under Section 1g of
5this Act. This paragraph is exempt from the provisions of
6Section 2-70.
7    (38) Beginning on January 1, 2002 and through June 30,
82016, tangible personal property purchased from an Illinois
9retailer by a taxpayer engaged in centralized purchasing
10activities in Illinois who will, upon receipt of the property
11in Illinois, temporarily store the property in Illinois (i) for
12the purpose of subsequently transporting it outside this State
13for use or consumption thereafter solely outside this State or
14(ii) for the purpose of being processed, fabricated, or
15manufactured into, attached to, or incorporated into other
16tangible personal property to be transported outside this State
17and thereafter used or consumed solely outside this State. The
18Director of Revenue shall, pursuant to rules adopted in
19accordance with the Illinois Administrative Procedure Act,
20issue a permit to any taxpayer in good standing with the
21Department who is eligible for the exemption under this
22paragraph (38). The permit issued under this paragraph (38)
23shall authorize the holder, to the extent and in the manner
24specified in the rules adopted under this Act, to purchase
25tangible personal property from a retailer exempt from the
26taxes imposed by this Act. Taxpayers shall maintain all

 

 

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1necessary books and records to substantiate the use and
2consumption of all such tangible personal property outside of
3the State of Illinois.
4    (39) Beginning January 1, 2008, tangible personal property
5used in the construction or maintenance of a community water
6supply, as defined under Section 3.145 of the Environmental
7Protection Act, that is operated by a not-for-profit
8corporation that holds a valid water supply permit issued under
9Title IV of the Environmental Protection Act. This paragraph is
10exempt from the provisions of Section 2-70.
11    (40) Beginning January 1, 2010, materials, parts,
12equipment, components, and furnishings incorporated into or
13upon an aircraft as part of the modification, refurbishment,
14completion, replacement, repair, or maintenance of the
15aircraft. This exemption includes consumable supplies used in
16the modification, refurbishment, completion, replacement,
17repair, and maintenance of aircraft, but excludes any
18materials, parts, equipment, components, and consumable
19supplies used in the modification, replacement, repair, and
20maintenance of aircraft engines or power plants, whether such
21engines or power plants are installed or uninstalled upon any
22such aircraft. "Consumable supplies" include, but are not
23limited to, adhesive, tape, sandpaper, general purpose
24lubricants, cleaning solution, latex gloves, and protective
25films. This exemption applies only to those organizations that
26(i) hold an Air Agency Certificate and are empowered to operate

 

 

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1an approved repair station by the Federal Aviation
2Administration, (ii) have a Class IV Rating, and (iii) conduct
3operations in accordance with Part 145 of the Federal Aviation
4Regulations. The exemption does not include aircraft operated
5by a commercial air carrier providing scheduled passenger air
6service pursuant to authority issued under Part 121 or Part 129
7of the Federal Aviation Regulations.
8    (41) Tangible personal property sold to a
9public-facilities corporation, as described in Section
1011-65-10 of the Illinois Municipal Code, for purposes of
11constructing or furnishing a municipal convention hall, but
12only if the legal title to the municipal convention hall is
13transferred to the municipality without any further
14consideration by or on behalf of the municipality at the time
15of the completion of the municipal convention hall or upon the
16retirement or redemption of any bonds or other debt instruments
17issued by the public-facilities corporation in connection with
18the development of the municipal convention hall. This
19exemption includes existing public-facilities corporations as
20provided in Section 11-65-25 of the Illinois Municipal Code.
21This paragraph is exempt from the provisions of Section 2-70.
22(Source: P.A. 96-116, eff. 7-31-09; 96-339, eff. 7-1-10;
2396-532, eff. 8-14-09; 96-759, eff. 1-1-10; 96-1000, eff.
247-2-10; 97-38, eff. 6-28-11; 97-73, eff. 6-30-11; 97-227, eff.
251-1-12; 97-431, eff. 8-16-11; revised 9-12-11.)
 

 

 

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1    (35 ILCS 120/2-10)
2    Sec. 2-10. Rate of tax. Unless otherwise provided in this
3Section, the tax imposed by this Act is at the rate of 6.25% of
4gross receipts from sales of tangible personal property made in
5the course of business.
6    Beginning on July 1, 2000 and through December 31, 2000,
7with respect to motor fuel, as defined in Section 1.1 of the
8Motor Fuel Tax Law, and gasohol, as defined in Section 3-40 of
9the Use Tax Act, the tax is imposed at the rate of 1.25%.
10    Beginning on August 6, 2010 through August 15, 2010, with
11respect to sales tax holiday items as defined in Section 2-8 of
12this Act, the tax is imposed at the rate of 1.25%.
13    Within 14 days after the effective date of this amendatory
14Act of the 91st General Assembly, each retailer of motor fuel
15and gasohol shall cause the following notice to be posted in a
16prominently visible place on each retail dispensing device that
17is used to dispense motor fuel or gasohol in the State of
18Illinois: "As of July 1, 2000, the State of Illinois has
19eliminated the State's share of sales tax on motor fuel and
20gasohol through December 31, 2000. The price on this pump
21should reflect the elimination of the tax." The notice shall be
22printed in bold print on a sign that is no smaller than 4
23inches by 8 inches. The sign shall be clearly visible to
24customers. Any retailer who fails to post or maintain a
25required sign through December 31, 2000 is guilty of a petty
26offense for which the fine shall be $500 per day per each

 

 

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1retail premises where a violation occurs.
2    With respect to gasohol, as defined in the Use Tax Act, the
3tax imposed by this Act applies to (i) 70% of the proceeds of
4sales made on or after January 1, 1990, and before July 1,
52003, (ii) 80% of the proceeds of sales made on or after July
61, 2003 and on or before December 31, 2018 2013, and (iii) 100%
7of the proceeds of sales made thereafter. If, at any time,
8however, the tax under this Act on sales of gasohol, as defined
9in the Use Tax Act, is imposed at the rate of 1.25%, then the
10tax imposed by this Act applies to 100% of the proceeds of
11sales of gasohol made during that time.
12    With respect to majority blended ethanol fuel, as defined
13in the Use Tax Act, the tax imposed by this Act does not apply
14to the proceeds of sales made on or after July 1, 2003 and on or
15before December 31, 2018 2013 but applies to 100% of the
16proceeds of sales made thereafter.
17    With respect to biodiesel blends, as defined in the Use Tax
18Act, with no less than 1% and no more than 10% biodiesel, the
19tax imposed by this Act applies to (i) 80% of the proceeds of
20sales made on or after July 1, 2003 and on or before December
2131, 2018 2013 and (ii) 100% of the proceeds of sales made
22thereafter. If, at any time, however, the tax under this Act on
23sales of biodiesel blends, as defined in the Use Tax Act, with
24no less than 1% and no more than 10% biodiesel is imposed at
25the rate of 1.25%, then the tax imposed by this Act applies to
26100% of the proceeds of sales of biodiesel blends with no less

 

 

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1than 1% and no more than 10% biodiesel made during that time.
2    With respect to 100% biodiesel, as defined in the Use Tax
3Act, and biodiesel blends, as defined in the Use Tax Act, with
4more than 10% but no more than 99% biodiesel, the tax imposed
5by this Act does not apply to the proceeds of sales made on or
6after July 1, 2003 and on or before December 31, 2018 2013 but
7applies to 100% of the proceeds of sales made thereafter.
8    With respect to food for human consumption that is to be
9consumed off the premises where it is sold (other than
10alcoholic beverages, soft drinks, and food that has been
11prepared for immediate consumption) and prescription and
12nonprescription medicines, drugs, medical appliances,
13modifications to a motor vehicle for the purpose of rendering
14it usable by a disabled person, and insulin, urine testing
15materials, syringes, and needles used by diabetics, for human
16use, the tax is imposed at the rate of 1%. For the purposes of
17this Section, until September 1, 2009: the term "soft drinks"
18means any complete, finished, ready-to-use, non-alcoholic
19drink, whether carbonated or not, including but not limited to
20soda water, cola, fruit juice, vegetable juice, carbonated
21water, and all other preparations commonly known as soft drinks
22of whatever kind or description that are contained in any
23closed or sealed bottle, can, carton, or container, regardless
24of size; but "soft drinks" does not include coffee, tea,
25non-carbonated water, infant formula, milk or milk products as
26defined in the Grade A Pasteurized Milk and Milk Products Act,

 

 

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1or drinks containing 50% or more natural fruit or vegetable
2juice.
3    Notwithstanding any other provisions of this Act,
4beginning September 1, 2009, "soft drinks" means non-alcoholic
5beverages that contain natural or artificial sweeteners. "Soft
6drinks" do not include beverages that contain milk or milk
7products, soy, rice or similar milk substitutes, or greater
8than 50% of vegetable or fruit juice by volume.
9    Until August 1, 2009, and notwithstanding any other
10provisions of this Act, "food for human consumption that is to
11be consumed off the premises where it is sold" includes all
12food sold through a vending machine, except soft drinks and
13food products that are dispensed hot from a vending machine,
14regardless of the location of the vending machine. Beginning
15August 1, 2009, and notwithstanding any other provisions of
16this Act, "food for human consumption that is to be consumed
17off the premises where it is sold" includes all food sold
18through a vending machine, except soft drinks, candy, and food
19products that are dispensed hot from a vending machine,
20regardless of the location of the vending machine.
21    Notwithstanding any other provisions of this Act,
22beginning September 1, 2009, "food for human consumption that
23is to be consumed off the premises where it is sold" does not
24include candy. For purposes of this Section, "candy" means a
25preparation of sugar, honey, or other natural or artificial
26sweeteners in combination with chocolate, fruits, nuts or other

 

 

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1ingredients or flavorings in the form of bars, drops, or
2pieces. "Candy" does not include any preparation that contains
3flour or requires refrigeration.
4    Notwithstanding any other provisions of this Act,
5beginning September 1, 2009, "nonprescription medicines and
6drugs" does not include grooming and hygiene products. For
7purposes of this Section, "grooming and hygiene products"
8includes, but is not limited to, soaps and cleaning solutions,
9shampoo, toothpaste, mouthwash, antiperspirants, and sun tan
10lotions and screens, unless those products are available by
11prescription only, regardless of whether the products meet the
12definition of "over-the-counter-drugs". For the purposes of
13this paragraph, "over-the-counter-drug" means a drug for human
14use that contains a label that identifies the product as a drug
15as required by 21 C.F.R. § 201.66. The "over-the-counter-drug"
16label includes:
17        (A) A "Drug Facts" panel; or
18        (B) A statement of the "active ingredient(s)" with a
19    list of those ingredients contained in the compound,
20    substance or preparation.
21(Source: P.A. 96-34, eff. 7-13-09; 96-37, eff. 7-13-09; 96-38,
22eff. 7-13-09; 96-1000, eff. 7-2-10; 96-1012, eff. 7-7-10.)
 
23    (35 ILCS 120/2-70)
24    Sec. 2-70. Sunset of exemptions, credits, and deductions.
25    (a) The application of every exemption, credit, and

 

 

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1deduction against tax imposed by this Act that becomes law
2after the effective date of this amendatory Act of 1994 shall
3be limited by a reasonable and appropriate sunset date. A
4taxpayer is not entitled to take the exemption, credit, or
5deduction beginning on the sunset date and thereafter. Except
6as provided in subsection (b) of this Section, if If a
7reasonable and appropriate sunset date is not specified in the
8Public Act that creates the exemption, credit, or deduction, a
9taxpayer shall not be entitled to take the exemption, credit,
10or deduction beginning 5 years after the effective date of the
11Public Act creating the exemption, credit, or deduction and
12thereafter.
13    (b) Notwithstanding the provisions of subsection (a) of
14this Section, the sunset date of any exemption, credit, or
15deduction that is scheduled to expire in 2011, 2012, or 2013 by
16operation of this Section shall be extended by 5 years.
17(Source: P.A. 88-660, eff. 9-16-94.)
 
18    Section 15-37. The Property Tax Code is amended by changing
19Section 18-165 as follows:
 
20    (35 ILCS 200/18-165)
21    Sec. 18-165. Abatement of taxes.
22    (a) Any taxing district, upon a majority vote of its
23governing authority, may, after the determination of the
24assessed valuation of its property, order the clerk of that

 

 

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1county to abate any portion of its taxes on the following types
2of property:
3        (1) Commercial and industrial.
4            (A) The property of any commercial or industrial
5        firm, including but not limited to the property of (i)
6        any firm that is used for collecting, separating,
7        storing, or processing recyclable materials, locating
8        within the taxing district during the immediately
9        preceding year from another state, territory, or
10        country, or having been newly created within this State
11        during the immediately preceding year, or expanding an
12        existing facility, or (ii) any firm that is used for
13        the generation and transmission of electricity
14        locating within the taxing district during the
15        immediately preceding year or expanding its presence
16        within the taxing district during the immediately
17        preceding year by construction of a new electric
18        generating facility that uses natural gas as its fuel,
19        or any firm that is used for production operations at a
20        new, expanded, or reopened coal mine within the taxing
21        district, that has been certified as a High Impact
22        Business by the Illinois Department of Commerce and
23        Economic Opportunity. The property of any firm used for
24        the generation and transmission of electricity shall
25        include all property of the firm used for transmission
26        facilities as defined in Section 5.5 of the Illinois

 

 

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1        Enterprise Zone Act. The abatement shall not exceed a
2        period of 10 years and the aggregate amount of abated
3        taxes for all taxing districts combined shall not
4        exceed $4,000,000.
5            (A-5) Any property in the taxing district of a new
6        electric generating facility, as defined in Section
7        605-332 of the Department of Commerce and Economic
8        Opportunity Law of the Civil Administrative Code of
9        Illinois. The abatement shall not exceed a period of 10
10        years. The abatement shall be subject to the following
11        limitations:
12                (i) if the equalized assessed valuation of the
13            new electric generating facility is equal to or
14            greater than $25,000,000 but less than
15            $50,000,000, then the abatement may not exceed (i)
16            over the entire term of the abatement, 5% of the
17            taxing district's aggregate taxes from the new
18            electric generating facility and (ii) in any one
19            year of abatement, 20% of the taxing district's
20            taxes from the new electric generating facility;
21                (ii) if the equalized assessed valuation of
22            the new electric generating facility is equal to or
23            greater than $50,000,000 but less than
24            $75,000,000, then the abatement may not exceed (i)
25            over the entire term of the abatement, 10% of the
26            taxing district's aggregate taxes from the new

 

 

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1            electric generating facility and (ii) in any one
2            year of abatement, 35% of the taxing district's
3            taxes from the new electric generating facility;
4                (iii) if the equalized assessed valuation of
5            the new electric generating facility is equal to or
6            greater than $75,000,000 but less than
7            $100,000,000, then the abatement may not exceed
8            (i) over the entire term of the abatement, 20% of
9            the taxing district's aggregate taxes from the new
10            electric generating facility and (ii) in any one
11            year of abatement, 50% of the taxing district's
12            taxes from the new electric generating facility;
13                (iv) if the equalized assessed valuation of
14            the new electric generating facility is equal to or
15            greater than $100,000,000 but less than
16            $125,000,000, then the abatement may not exceed
17            (i) over the entire term of the abatement, 30% of
18            the taxing district's aggregate taxes from the new
19            electric generating facility and (ii) in any one
20            year of abatement, 60% of the taxing district's
21            taxes from the new electric generating facility;
22                (v) if the equalized assessed valuation of the
23            new electric generating facility is equal to or
24            greater than $125,000,000 but less than
25            $150,000,000, then the abatement may not exceed
26            (i) over the entire term of the abatement, 40% of

 

 

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1            the taxing district's aggregate taxes from the new
2            electric generating facility and (ii) in any one
3            year of abatement, 60% of the taxing district's
4            taxes from the new electric generating facility;
5                (vi) if the equalized assessed valuation of
6            the new electric generating facility is equal to or
7            greater than $150,000,000, then the abatement may
8            not exceed (i) over the entire term of the
9            abatement, 50% of the taxing district's aggregate
10            taxes from the new electric generating facility
11            and (ii) in any one year of abatement, 60% of the
12            taxing district's taxes from the new electric
13            generating facility.
14            The abatement is not effective unless the owner of
15        the new electric generating facility agrees to repay to
16        the taxing district all amounts previously abated,
17        together with interest computed at the rate and in the
18        manner provided for delinquent taxes, in the event that
19        the owner of the new electric generating facility
20        closes the new electric generating facility before the
21        expiration of the entire term of the abatement.
22            The authorization of taxing districts to abate
23        taxes under this subdivision (a)(1)(A-5) expires on
24        January 1, 2010.
25            (B) The property of any commercial or industrial
26        development of at least 500 acres having been created

 

 

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1        within the taxing district. The abatement shall not
2        exceed a period of 20 years and the aggregate amount of
3        abated taxes for all taxing districts combined shall
4        not exceed $12,000,000.
5            (C) The property of any commercial or industrial
6        firm currently located in the taxing district that
7        expands a facility or its number of employees. The
8        abatement shall not exceed a period of 10 years and the
9        aggregate amount of abated taxes for all taxing
10        districts combined shall not exceed $4,000,000. The
11        abatement period may be renewed at the option of the
12        taxing districts.
13        (2) Horse racing. Any property in the taxing district
14    which is used for the racing of horses and upon which
15    capital improvements consisting of expansion, improvement
16    or replacement of existing facilities have been made since
17    July 1, 1987. The combined abatements for such property
18    from all taxing districts in any county shall not exceed
19    $5,000,000 annually and shall not exceed a period of 10
20    years.
21        (3) Auto racing. Any property designed exclusively for
22    the racing of motor vehicles. Such abatement shall not
23    exceed a period of 10 years.
24        (4) Academic or research institute. The property of any
25    academic or research institute in the taxing district that
26    (i) is an exempt organization under paragraph (3) of

 

 

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1    Section 501(c) of the Internal Revenue Code, (ii) operates
2    for the benefit of the public by actually and exclusively
3    performing scientific research and making the results of
4    the research available to the interested public on a
5    non-discriminatory basis, and (iii) employs more than 100
6    employees. An abatement granted under this paragraph shall
7    be for at least 15 years and the aggregate amount of abated
8    taxes for all taxing districts combined shall not exceed
9    $5,000,000.
10        (5) Housing for older persons. Any property in the
11    taxing district that is devoted exclusively to affordable
12    housing for older households. For purposes of this
13    paragraph, "older households" means those households (i)
14    living in housing provided under any State or federal
15    program that the Department of Human Rights determines is
16    specifically designed and operated to assist elderly
17    persons and is solely occupied by persons 55 years of age
18    or older and (ii) whose annual income does not exceed 80%
19    of the area gross median income, adjusted for family size,
20    as such gross income and median income are determined from
21    time to time by the United States Department of Housing and
22    Urban Development. The abatement shall not exceed a period
23    of 15 years, and the aggregate amount of abated taxes for
24    all taxing districts shall not exceed $3,000,000.
25        (6) Historical society. For assessment years 1998
26    through 2018 2013, the property of an historical society

 

 

09700SB0397ham006- 287 -LRB097 04209 HLH 60625 a

1    qualifying as an exempt organization under Section
2    501(c)(3) of the federal Internal Revenue Code.
3        (7) Recreational facilities. Any property in the
4    taxing district (i) that is used for a municipal airport,
5    (ii) that is subject to a leasehold assessment under
6    Section 9-195 of this Code and (iii) which is sublet from a
7    park district that is leasing the property from a
8    municipality, but only if the property is used exclusively
9    for recreational facilities or for parking lots used
10    exclusively for those facilities. The abatement shall not
11    exceed a period of 10 years.
12        (8) Relocated corporate headquarters. If approval
13    occurs within 5 years after the effective date of this
14    amendatory Act of the 92nd General Assembly, any property
15    or a portion of any property in a taxing district that is
16    used by an eligible business for a corporate headquarters
17    as defined in the Corporate Headquarters Relocation Act.
18    Instead of an abatement under this paragraph (8), a taxing
19    district may enter into an agreement with an eligible
20    business to make annual payments to that eligible business
21    in an amount not to exceed the property taxes paid directly
22    or indirectly by that eligible business to the taxing
23    district and any other taxing districts for premises
24    occupied pursuant to a written lease and may make those
25    payments without the need for an annual appropriation. No
26    school district, however, may enter into an agreement with,

 

 

09700SB0397ham006- 288 -LRB097 04209 HLH 60625 a

1    or abate taxes for, an eligible business unless the
2    municipality in which the corporate headquarters is
3    located agrees to provide funding to the school district in
4    an amount equal to the amount abated or paid by the school
5    district as provided in this paragraph (8). Any abatement
6    ordered or agreement entered into under this paragraph (8)
7    may be effective for the entire term specified by the
8    taxing district, except the term of the abatement or annual
9    payments may not exceed 20 years.
10        (9) United States Military Public/Private Residential
11    Developments. Each building, structure, or other
12    improvement designed, financed, constructed, renovated,
13    managed, operated, or maintained after January 1, 2006
14    under a "PPV Lease", as set forth under Division 14 of
15    Article 10, and any such PPV Lease.
16        (10) Property located in a business corridor that
17    qualifies for an abatement under Section 18-184.10.
18    (b) Upon a majority vote of its governing authority, any
19municipality may, after the determination of the assessed
20valuation of its property, order the county clerk to abate any
21portion of its taxes on any property that is located within the
22corporate limits of the municipality in accordance with Section
238-3-18 of the Illinois Municipal Code.
24(Source: P.A. 96-1136, eff. 7-21-10; 97-577, eff. 1-1-12.)
 
25    Section 15-40. The Illinois Estate and Generation-Skipping

 

 

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1Transfer Tax Act is amended by changing Section 2 as follows:
 
2    (35 ILCS 405/2)  (from Ch. 120, par. 405A-2)
3    Sec. 2. Definitions.
4    "Federal estate tax" means the tax due to the United States
5with respect to a taxable transfer under Chapter 11 of the
6Internal Revenue Code.
7    "Federal generation-skipping transfer tax" means the tax
8due to the United States with respect to a taxable transfer
9under Chapter 13 of the Internal Revenue Code.
10    "Federal return" means the federal estate tax return with
11respect to the federal estate tax and means the federal
12generation-skipping transfer tax return with respect to the
13federal generation-skipping transfer tax.
14    "Federal transfer tax" means the federal estate tax or the
15federal generation-skipping transfer tax.
16    "Illinois estate tax" means the tax due to this State with
17respect to a taxable transfer.
18    "Illinois generation-skipping transfer tax" means the tax
19due to this State with respect to a taxable transfer that gives
20rise to a federal generation-skipping transfer tax.
21    "Illinois transfer tax" means the Illinois estate tax or
22the Illinois generation-skipping transfer tax.
23    "Internal Revenue Code" means, unless otherwise provided,
24the Internal Revenue Code of 1986, as amended from time to
25time.

 

 

09700SB0397ham006- 290 -LRB097 04209 HLH 60625 a

1    "Non-resident trust" means a trust that is not a resident
2of this State for purposes of the Illinois Income Tax Act, as
3amended from time to time.
4    "Person" means and includes any individual, trust, estate,
5partnership, association, company or corporation.
6    "Qualified heir" means a qualified heir as defined in
7Section 2032A(e)(1) of the Internal Revenue Code.
8    "Resident trust" means a trust that is a resident of this
9State for purposes of the Illinois Income Tax Act, as amended
10from time to time.
11    "State" means any state, territory or possession of the
12United States and the District of Columbia.
13    "State tax credit" means:
14    (a) For persons dying on or after January 1, 2003 and
15through December 31, 2005, an amount equal to the full credit
16calculable under Section 2011 or Section 2604 of the Internal
17Revenue Code as the credit would have been computed and allowed
18under the Internal Revenue Code as in effect on December 31,
192001, without the reduction in the State Death Tax Credit as
20provided in Section 2011(b)(2) or the termination of the State
21Death Tax Credit as provided in Section 2011(f) as enacted by
22the Economic Growth and Tax Relief Reconciliation Act of 2001,
23but recognizing the increased applicable exclusion amount
24through December 31, 2005.
25    (b) For persons dying after December 31, 2005 and on or
26before December 31, 2009, and for persons dying after December

 

 

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131, 2010, an amount equal to the full credit calculable under
2Section 2011 or 2604 of the Internal Revenue Code as the credit
3would have been computed and allowed under the Internal Revenue
4Code as in effect on December 31, 2001, without the reduction
5in the State Death Tax Credit as provided in Section 2011(b)(2)
6or the termination of the State Death Tax Credit as provided in
7Section 2011(f) as enacted by the Economic Growth and Tax
8Relief Reconciliation Act of 2001, but recognizing the
9exclusion amount of only (i) $2,000,000 for persons dying prior
10to January 1, 2012, (ii) $3,000,000 for persons dying on or
11after January 1, 2012 and prior to January 1, 2013, and (iii)
12$4,000,000 for persons dying on or after January 1, 2013, and
13with reduction to the adjusted taxable estate for any qualified
14terminable interest property election as defined in subsection
15(b-1) of this Section.
16    (b-1) The person required to file the Illinois return may
17elect on a timely filed Illinois return a marital deduction for
18qualified terminable interest property under Section
192056(b)(7) of the Internal Revenue Code for purposes of the
20Illinois estate tax that is separate and independent of any
21qualified terminable interest property election for federal
22estate tax purposes. For purposes of the Illinois estate tax,
23the inclusion of property in the gross estate of a surviving
24spouse is the same as under Section 2044 of the Internal
25Revenue Code.
26    In the case of any trust for which a State or federal

 

 

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1qualified terminable interest property election is made, the
2trustee may not retain non-income producing assets for more
3than a reasonable amount of time without the consent of the
4surviving spouse.
5    "Taxable transfer" means an event that gives rise to a
6state tax credit, including any credit as a result of the
7imposition of an additional tax under Section 2032A(c) of the
8Internal Revenue Code.
9    "Transferee" means a transferee within the meaning of
10Section 2603(a)(1) and Section 6901(h) of the Internal Revenue
11Code.
12    "Transferred property" means:
13        (1) With respect to a taxable transfer occurring at the
14    death of an individual, the deceased individual's gross
15    estate as defined in Section 2031 of the Internal Revenue
16    Code.
17        (2) With respect to a taxable transfer occurring as a
18    result of a taxable termination as defined in Section
19    2612(a) of the Internal Revenue Code, the taxable amount
20    determined under Section 2622(a) of the Internal Revenue
21    Code.
22        (3) With respect to a taxable transfer occurring as a
23    result of a taxable distribution as defined in Section
24    2612(b) of the Internal Revenue Code, the taxable amount
25    determined under Section 2621(a) of the Internal Revenue
26    Code.

 

 

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1        (4) With respect to an event which causes the
2    imposition of an additional estate tax under Section
3    2032A(c) of the Internal Revenue Code, the qualified real
4    property that was disposed of or which ceased to be used
5    for the qualified use, within the meaning of Section
6    2032A(c)(1) of the Internal Revenue Code.
7    "Trust" includes a trust as defined in Section 2652(b)(1)
8of the Internal Revenue Code.
9(Source: P.A. 96-789, eff. 9-8-09; 96-1496, eff. 1-13-11.)".