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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4
Article 1. Findings

 
5    Section 1-1. Legislative findings.
6    (1) The House of Representatives adopted House Resolution
7110 on March 8, 2011, setting forth the estimates of general
8funds the House expects to be available during State fiscal
9year 2012.
10    (2) In determining the estimates of general funds expected
11to be available during State fiscal year 2012, the House
12Revenue & Finance Committee assumed that the State would not
13collect approximately $600,000,000 of income tax revenues due
14to the allowance of special bonus depreciation rules approved
15by the federal government.
16    (3) The House of Representatives adopted House Resolution
17158 on March 30, 2011, which provides that if the actual amount
18of funds from State sources that become available during State
19fiscal year 2012 exceeds the House's estimates set forth in
20House Resolution 110, then that excess shall first be used to
21reduce the backlog of unpaid State obligations to the extent
22authorized by law.
23    (4) These concepts are prudent and should be continued for

 

 

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1State fiscal year 2013 and beyond.
2    (5) As the House Revenue & Finance Committee develops the
3estimates of general funds expected to be available during
4State fiscal year 2013, an estimated $250,000,000 of income tax
5revenues in excess of the State fiscal year 2012 budgeted
6amount will become available due to the phasing out of the
7allowance of special bonus depreciation rules approved by the
8federal government.
9    (6) Therefore, the General Assembly finds that a tax
10incentive package that does not exceed $250,000,000 in State
11fiscal year 2013 can be approved without any negative impact to
12the State budget in State fiscal years 2012 and 2013 while
13providing tax relief to a large number of Illinois individual
14and business taxpayers.
 
15
Article 5. Illinois Independent Tax Tribunal Act

 
16    Section 5-1. Short title. This Article may be cited as the
17Illinois Independent Tax Tribunal Act.
 
18    Section 5-5. Independent Tax Tribunal Board; Department of
19Revenue.
20    (a) On and after July 1, 2013, the Department of Revenue,
21or any successor agency, shall no longer hear and act upon any
22protests of notices of tax liability or deficiencies for all
23taxes administered by the Department of Revenue.

 

 

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1    (b) Beginning July 1, 2013, an Independent Tax Tribunal
2Board shall assume, exercise, and administer all rights,
3powers, duties, and responsibilities pertaining to any
4protests of notices of tax liability or deficiencies for all
5taxes administered by the Department of Revenue. The
6Independent Tax Tribunal Board shall be created by law and no
7State agency shall assume the functions of the Board.
 
8
Article 10. Live Theater Production Tax Credit Act

 
9    Section 10-1. Short title. This Article may be cited as the
10Live Theater Production Tax Credit Act. References in this
11Article to "this Act" mean this Article.
 
12    Section 10-5. Purpose. The Illinois economy depends
13heavily on the commercial for-profit live theater industry and
14the pre-Broadway and long-run shows that are presented in
15Illinois. As a result of intense competition from other
16prominent theater cities in the United States and abroad in
17attracting pre-Broadway and long-run shows, Illinois must move
18aggressively with new business development investment tools so
19that Illinois is more competitive in site location decision
20making for show producers. In an increasingly global economy,
21Illinois' long-term development will benefit from the
22rational, strategic use of State resources in support of
23pre-Broadway live theater and long-run show development and

 

 

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1growth. It is the purpose of this Act to preserve and expand
2the existing work force used in live theater and enhance the
3marketing of the presentation of live theater in Illinois. It
4shall be the policy of this State to promote and encourage the
5training and hiring of Illinois residents who represent the
6diversity of the Illinois population through the creation and
7implementation of training, education, and recruitment
8programs organized in cooperation with Illinois colleges and
9universities, labor organizations, and the commercial
10for-profit live theater industry.
 
11    Section 10-10. Definitions. As used in this Act:
12    "Accredited theater production" means a for-profit live
13stage presentation in a qualified production facility, as
14defined in this Section, that is either (i) a pre-Broadway
15production or (ii) a long-run production for which the
16aggregate Illinois labor and marketing expenditures exceed
17$100,000.
18    "Pre-Broadway production" means a live stage production
19that, in its original or adaptive version, is performed in a
20qualified production facility having a presentation scheduled
21for Broadway's Theater District in New York City within 12
22months after its Illinois presentation.
23    "Long-run production" means a live stage production that is
24performed in a qualified production facility for longer than 8
25weeks, with at least 6 performances per week, and includes a

 

 

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1production that spans the end of one tax year and the
2commencement of a new tax year that, in combination, meets the
3criteria set forth in this definition making it a long-run
4production eligible for a theater tax credit award in each tax
5year or portion thereof.
6    "Accredited theater production certificate" means a
7certificate issued by the Department certifying that the
8production is an accredited theater production that meets the
9guidelines of this Act.
10    "Applicant" means a taxpayer that is a theater producer,
11owner, licensee, operator, or presenter that is presenting or
12has presented a live stage presentation located within the
13State of Illinois who:
14        (1) owns or licenses the theatrical rights of the stage
15    presentation for the Illinois production period; or
16        (2) has contracted or will contract directly with the
17    owner or licensee of the theatrical rights or a person
18    acting on behalf of the owner or licensee to provide live
19    performances of the production.
20    An applicant that directly or indirectly owns, controls, or
21operates multiple qualified production facilities shall be
22presumed to be and considered for the purposes of this Act to
23be a single applicant; provided, however, that as to each of
24the applicant's qualified production facilities, the applicant
25shall be eligible to separately and contemporaneously (i) apply
26for and obtain accredited theater production certificates,

 

 

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1(ii) stage accredited theater productions, and (iii) apply for
2and receive a tax credit award certificate for each of the
3applicant's accredited theater productions performed at each
4of the applicant's qualified production facilities.
5    "Department" means the Department of Commerce and Economic
6Opportunity.
7    "Director" means the Director of the Department.
8    "Illinois labor expenditure" means gross salary or wages
9including, but not limited to, taxes, benefits, and any other
10consideration incurred or paid to non-talent employees of the
11applicant for services rendered to and on behalf of the
12accredited theater production. To qualify as an Illinois labor
13expenditure, the expenditure must be:
14        (1) incurred or paid by the applicant on or after the
15    effective date of the Act for services related to any
16    portion of an accredited theater production from its
17    pre-production stages, including, but not limited to, the
18    writing of the script, casting, hiring of service
19    providers, purchases from vendors, marketing, advertising,
20    public relations, load in, rehearsals, performances, other
21    accredited theater production related activities, and load
22    out;
23        (2) directly attributable to the accredited theater
24    production;
25        (3) limited to the first $100,000 of wages incurred or
26    paid to each employee of an accredited theater production

 

 

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1    in each tax year;
2        (4) included in the federal income tax basis of the
3    property;
4        (5) paid in the tax year for which the applicant is
5    claiming the tax credit award, or no later than 60 days
6    after the end of the tax year;
7        (6) paid to persons residing in Illinois at the time
8    payments were made; and
9        (7) reasonable in the circumstances.
10    "Illinois production spending" means any and all expenses
11directly or indirectly incurred relating to an accredited
12theater production presented in any qualified production
13facility of the applicant, including, but not limited to,
14expenditures for:
15        (1) national marketing, public relations, and the
16    creation and placement of print, electronic, television,
17    billboard, and other forms of advertising; and
18        (2) the construction and fabrication of scenic
19    materials and elements; provided, however, that the
20    maximum amount of expenditures attributable to the
21    construction and fabrication of scenic materials and
22    elements eligible for a tax credit award shall not exceed
23    $500,000 per applicant per production in any single tax
24    year.
25    "Qualified production facility" means a facility located
26in the State in which live theatrical productions are, or are

 

 

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1intended to be, exclusively presented that contains at least
2one stage, a seating capacity of 1,200 or more seats, and
3dressing rooms, storage areas, and other ancillary amenities
4necessary for the accredited theater production.
5    "Tax credit award" means the issuance to a taxpayer by the
6Department of a tax credit award in conformance with Sections
710-40 and 10-45 of this Act.
8    "Tax year" means a calendar year for the period January 1
9to and including December 31.
 
10    Section 10-15. Powers of the Department. The Department, in
11addition to those powers granted under the Civil Administrative
12Code of Illinois, is granted and has all the powers necessary
13or convenient to carry out and effectuate the purposes and
14provisions of this Act, including, but not limited to, the
15power and authority to:
16        (1) adopt rules deemed necessary and appropriate for
17    the administration of the Tax Credit Award program;
18    establish forms for applications, notifications,
19    contracts, or any other agreements; and accept
20    applications at any time during the year;
21        (2) assist applicants pursuant to the provisions of
22    this Act to promote, foster, and support live theater
23    development and production and its related job creation or
24    retention within the State;
25        (3) gather information and conduct inquiries, in the

 

 

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1    manner and by the methods set forth in this Act, required
2    for the Department to comply with Section 10-40 and,
3    without limitation, obtain information with respect to
4    applicants for the purpose of making any designations or
5    certifications necessary or desirable to assist the
6    Department with any recommendation or guidance in the
7    furtherance of the purposes of this Act and relating to
8    applicants' participation in training, education, and
9    recruitment programs that are organized in cooperation
10    with Illinois colleges and universities or labor
11    organizations designed to promote and encourage the
12    training and hiring of Illinois residents who represent the
13    diversity of the Illinois population;
14        (4) provide for sufficient personnel to permit
15    administrative, staffing, operating, and related support
16    required to adequately discharge its duties and
17    responsibilities described in this Act from funds as may be
18    appropriated by the General Assembly for the
19    administration of this Act; and
20        (5) require that the applicant at all times keep proper
21    books and records of accounts relating to the tax credit
22    award, in accordance with generally accepted accounting
23    principles consistently applied, and make, upon reasonable
24    written request by the Department, those books and records
25    available for reasonable Department inspection and audit
26    during the applicant's normal business hours. Any

 

 

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1    documents or data made available to or received from the
2    applicant by any agent, employee, officer, or service
3    provider to the Department shall be deemed confidential and
4    shall not constitute public records to the extent that the
5    documents or data consist of commercial or financial
6    information regarding the operation by the applicant of any
7    theater or any accredited theater production, or any
8    recipient of any tax credit award under this Act.
 
9    Section 10-20. Tax credit award. Subject to the conditions
10set forth in this Act, an applicant is entitled to a tax credit
11award as approved by the Department for qualifying Illinois
12labor expenditures and Illinois production spending for each
13tax year in which the applicant is awarded an accredited
14theater production certificate issued by the Department. The
15amount of tax credits awarded pursuant to this Act shall not
16exceed $2,000,000 in any fiscal year. Credits shall be awarded
17on a first-come, first-served basis. Notwithstanding the
18foregoing, if the amount of credits applied for in any fiscal
19year exceeds the amount authorized to be awarded under this
20Section, the excess credit amount shall be awarded in the next
21fiscal year in which credits remain available for award and
22shall be treated as having been applied for on the first day of
23that fiscal year.
 
24    Section 10-25. Application for certification of accredited

 

 

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1theater production. Any applicant proposing an accredited
2theater production located or planned to be located in Illinois
3may request an accredited theater production certificate by
4application to the Department.
 
5    Section 10-30. Review of application for accredited
6theater production certificate.
7    (a) The Department shall issue an accredited theater
8production certificate to an applicant if it finds that by a
9preponderance the following conditions exist:
10        (1) the applicant intends to make the expenditure in
11    the State required for certification of the accredited
12    theater production;
13        (2) the applicant's accredited theater production is
14    economically sound and will benefit the people of the State
15    of Illinois by increasing opportunities for employment and
16    will strengthen the economy of Illinois;
17        (3) the following requirements related to the
18    implementation of a diversity plan have been met: (i) the
19    applicant has filed with the Department a diversity plan
20    outlining specific goals for hiring Illinois labor
21    expenditure eligible minority persons and females, as
22    defined in the Business Enterprise for Minorities,
23    Females, and Persons with Disabilities Act, and for using
24    vendors receiving certification under the Business
25    Enterprise for Minorities, Females, and Persons with

 

 

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1    Disabilities Act; (ii) the Department has approved the plan
2    as meeting the requirements established by the Department
3    and verified that the applicant has met or made good faith
4    efforts in achieving those goals; and (iii) the Department
5    has adopted any rules that are necessary to ensure
6    compliance with the provisions set forth in this paragraph
7    and necessary to require that the applicant's plan reflects
8    the diversity of the population of this State;
9        (4) the applicant's accredited theater production
10    application indicates whether the applicant intends to
11    participate in training, education, and recruitment
12    programs that are organized in cooperation with Illinois
13    colleges and universities, labor organizations, and the
14    holders of accredited theater production certificates and
15    are designed to promote and encourage the training and
16    hiring of Illinois residents who represent the diversity of
17    Illinois;
18        (5) if not for the tax credit award, the applicant's
19    accredited theater production would not occur in Illinois,
20    which may be demonstrated by any means, including, but not
21    limited to, evidence that: (i) the applicant, presenter,
22    owner, or licensee of the production rights has other state
23    or international location options at which to present the
24    production and could reasonably and efficiently locate
25    outside of the State, (ii) at least one other state or
26    nation could be considered for the production, (iii) the

 

 

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1    receipt of the tax award credit is a major factor in the
2    decision of the applicant, presenter, production owner or
3    licensee as to where the production will be presented and
4    that without the tax credit award the applicant likely
5    would not create or retain jobs in Illinois, or (iv)
6    receipt of the tax credit award is essential to the
7    applicant's decision to create or retain new jobs in the
8    State; and
9        (6) the tax credit award will result in an overall
10    positive impact to the State, as determined by the
11    Department using the best available data.
12    (b) If any of the provisions in this Section conflict with
13any existing collective bargaining agreements, the terms and
14conditions of those collective bargaining agreements shall
15control.
16    (c) The Department shall act expeditiously regarding
17approval of applications for accredited theater production
18certificates so as to accommodate the pre-production work,
19booking, commencement of ticket sales, determination of
20performance dates, load in, and other matters relating to the
21live theater productions for which approval is sought.
 
22    Section 10-35. Training programs for skills in critical
23demand. To accomplish the purposes of this Act, the Department
24may use the training programs provided under Section 605-800 of
25the Department of Commerce and Economic Opportunity Law of the

 

 

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1Civil Administrative Code of Illinois.
 
2    Section 10-40. Issuance of Tax Credit Award Certificate.
3    (a) In order to qualify for a tax credit award under this
4Act, an applicant must file an application for each accredited
5theater production at each of the applicant's qualified
6production facilities, on forms prescribed by the Department,
7providing information necessary to calculate the tax credit
8award and any additional information as reasonably required by
9the Department.
10    (b) Upon satisfactory review of the application, the
11Department shall issue a tax credit award certificate stating
12the amount of the tax credit award to which the applicant is
13entitled for that tax year and shall contemporaneously notify
14the applicant and Illinois Department of Revenue in accordance
15with Section 222 of the Illinois Income Tax Act.
 
16    Section 10-45. Amount and payment of the tax credit award.
17The tax credit award shall be calculated each tax year based
18upon the filing by the applicant on forms prescribed by the
19Department containing information regarding qualifying and
20quantified Illinois labor expenditures, as defined in Section
2110-10, net of the limitation in that Section, and Illinois
22production spending, as defined in Section 10-10, net of the
23limitation in that Section. From the amount calculated, the
24applicant shall be entitled to receive a tax credit award of up

 

 

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1to:
2        (1) 20% of the Illinois labor expenditures for each tax
3    year; plus
4        (2) 20% of the Illinois production spending for each
5    tax year; plus
6        (3) 15% of the Illinois labor expenditures generated by
7    the employment of Illinois residents in geographic areas of
8    high poverty or high unemployment in each tax year, as
9    determined by the Department.
10    Following the Department's determination of the tax credit
11award, the Department shall issue the tax credit award to the
12applicant.
 
13    Section 10-50. Live theater tax credit award program
14evaluation and reports.
15    (a) The Department's live theater tax credit award
16evaluation must include:
17        (i) an assessment of the effectiveness of the program
18    in creating and retaining new jobs in Illinois;
19        (ii) an assessment of the revenue impact of the
20    program;
21        (iii) in the discretion of the Department, a review of
22    the practices and experiences of other states or nations
23    with similar programs; and
24        (iv) an assessment of the overall success of the
25    program. The Department may make a recommendation to

 

 

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1    extend, modify, or not extend the program based on the
2    evaluation.
3    (b) At the end of each fiscal quarter, the Department shall
4submit to the General Assembly a report that includes, without
5limitation:
6        (i) an assessment of the economic impact of the
7    program, including the number of jobs created and retained,
8    and whether the job positions are entry level, management,
9    vendor, or production related;
10        (ii) the amount of accredited theater production
11    spending brought to Illinois, including the amount of
12    spending and type of Illinois vendors hired in connection
13    with an accredited theater production; and
14        (iii) a determination of whether those receiving
15    qualifying Illinois labor expenditure salaries or wages
16    reflect the geographical, racial and ethnic, gender, and
17    income level diversity of the State of Illinois.
18    (c) At the end of each fiscal year, the Department shall
19submit to the General Assembly a report that includes, without
20limitation:
21        (i) the identification of each vendor that provided
22    goods or services that were included in an accredited
23    theater production's Illinois production spending;
24        (ii) a statement of the amount paid to each identified
25    vendor by the accredited theater production and whether the
26    vendor is a minority or female owned business as defined in

 

 

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1    Section 2 of the Business Enterprise for Minorities,
2    Females, and Persons with Disabilities Act; and
3        (iii) a description of the steps taken by the
4    Department to encourage accredited theater productions to
5    use vendors who are minority or female owned businesses.
 
6    Section 10-55. Program terms and conditions. Any
7documentary materials or data made available or received from
8an applicant by any agent or employee of the Department are
9confidential and are not public records to the extent that the
10materials or data consist of commercial or financial
11information regarding the operation of or the production of the
12applicant or recipient of any tax credit award under this Act.
 
13    Section 10-80. The Illinois Income Tax Act is amended by
14adding Section 222 as follows:
 
15    (35 ILCS 5/222 new)
16    Sec. 222. Live theater production credit.
17    (a) For tax years beginning on or after January 1, 2012, a
18taxpayer who has received a tax credit award under the Live
19Theater Production Tax Credit Act is entitled to a credit
20against the taxes imposed under subsections (a) and (b) of
21Section 201 of this Act in an amount determined under that Act
22by the Department of Commerce and Economic Opportunity.
23    (b) If the taxpayer is a partnership, limited liability

 

 

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1partnership, limited liability company, or Subchapter S
2corporation, the tax credit award is allowed to the partners,
3unit holders, or shareholders in accordance with the
4determination of income and distributive share of income under
5Sections 702 and 704 and Subchapter S of the Internal Revenue
6Code.
7    (c) A sale, assignment, or transfer of the tax credit award
8may be made by the taxpayer earning the credit within one year
9after the credit is awarded in accordance with rules adopted by
10the Department of Commerce and Economic Opportunity.
11    (d) The Department of Revenue, in cooperation with the
12Department of Commerce and Economic Opportunity, shall adopt
13rules to enforce and administer the provisions of this Section.
14    (e) The tax credit award may not be carried back. If the
15amount of the credit exceeds the tax liability for the year,
16the excess may be carried forward and applied to the tax
17liability of the 5 tax years following the excess credit year.
18The tax credit award shall be applied to the earliest year for
19which there is a tax liability. If there are credits from more
20than one tax year that are available to offset liability, the
21earlier credit shall be applied first. In no event may a credit
22under this Section reduce the taxpayer's liability to less than
23zero.
 
24
Article 15. Amendatory Provisions

 

 

 

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1    Section 15-5. The Economic Development Area Tax Increment
2Allocation Act is amended by changing Sections 3, 4, 5, 8, 9,
3and 11 and by adding Sections 4.5 and 4.7 as follows:
 
4    (20 ILCS 620/3)  (from Ch. 67 1/2, par. 1003)
5    Sec. 3. Definitions. In this Act, words or terms shall have
6the following meanings unless the context or usage clearly
7indicates that another meaning is intended.
8    (a) "Department" means the Department of Commerce and
9Economic Opportunity.
10    (b) "Economic development plan" means the written plan of a
11municipality which sets forth an economic development program
12for an economic development project area. Each economic
13development plan shall include but not be limited to (1)
14estimated economic development project costs, (2) the sources
15of funds to pay such costs, (3) the nature and term of any
16obligations to be issued by the municipality to pay such costs,
17(4) the most recent equalized assessed valuation of the
18economic development project area, (5) an estimate of the
19equalized assessed valuation of the economic development
20project area after completion of an economic development
21project, (6) the estimated date of completion of any economic
22development project proposed to be undertaken, (7) a general
23description of any proposed developer, user, or tenant of any
24property to be located or improved within the economic
25development project area, (8) a description of the type,

 

 

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1structure and general character of the facilities to be
2developed or improved in the economic development project area,
3(9) a description of the general land uses to apply in the
4economic development project area, (10) a description of the
5type, class and number of employees to be employed in the
6operation of the facilities to be developed or improved in the
7economic development project area, and (11) a commitment by the
8municipality to fair employment practices and an affirmative
9action plan with respect to any economic development program to
10be undertaken by the municipality.
11    (c) "Economic development project" means any development
12project in furtherance of the objectives of this Act.
13    (d) "Economic development project area" means any improved
14or vacant area which (1) is located within or partially within
15or partially without the territorial limits of a municipality,
16provided that no area without the territorial limits of a
17municipality shall be included in an economic development
18project area without the express consent of the Department,
19acting as agent for the State, (2) is contiguous, (3) is not
20less in the aggregate than three hundred twenty acres, (4) is
21suitable for siting by any commercial, manufacturing,
22industrial, research or transportation enterprise of
23facilities to include but not be limited to commercial
24businesses, offices, factories, mills, processing plants,
25assembly plants, packing plants, fabricating plants,
26industrial or commercial distribution centers, warehouses,

 

 

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1repair overhaul or service facilities, freight terminals,
2research facilities, test facilities or transportation
3facilities, whether or not such area has been used at any time
4for such facilities and whether or not the area has been used
5or is suitable for other uses, including commercial
6agricultural purposes, and (5) which has been approved and
7certified by the Department pursuant to this Act.
8    (e) "Economic development project costs" mean and include
9the sum total of all reasonable or necessary costs incurred by
10a municipality incidental to an economic development project,
11including, without limitation, the following:
12    (1) Costs of studies, surveys, development of plans and
13specifications, implementation and administration of an
14economic development plan, personnel and professional service
15costs for architectural, engineering, legal, marketing,
16financial, planning, police, fire, public works or other
17services, provided that no charges for professional services
18may be based on a percentage of incremental tax revenues;
19    (2) Property assembly costs within an economic development
20project area, including but not limited to acquisition of land
21and other real or personal property or rights or interests
22therein, and specifically including payments to developers or
23other nongovernmental persons as reimbursement for property
24assembly costs incurred by such developer or other
25nongovernmental person;
26    (3) Site preparation costs, including but not limited to

 

 

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1clearance of any area within an economic development project
2area by demolition or removal of any existing buildings,
3structures, fixtures, utilities and improvements and clearing
4and grading; and including installation, repair, construction,
5reconstruction, or relocation of public streets, public
6utilities, and other public site improvements within or without
7an economic development project area which are essential to the
8preparation of the economic development project area for use in
9accordance with an economic development plan; and specifically
10including payments to developers or other nongovernmental
11persons as reimbursement for site preparation costs incurred by
12such developer or nongovernmental person;
13    (4) Costs of renovation, rehabilitation, reconstruction,
14relocation, repair or remodeling of any existing buildings,
15improvements, and fixtures within an economic development
16project area, and specifically including payments to
17developers or other nongovernmental persons as reimbursement
18for such costs incurred by such developer or nongovernmental
19person;
20    (5) Costs of construction, acquisition, and operation
21within an economic development project area of public
22improvements, including but not limited to, publicly owned
23buildings, structures, works, utilities or fixtures; provided
24that no allocation made to the municipality pursuant to
25subparagraph (A) of paragraph (2) of subsection (g) of Section
264 of this Act or subparagraph (A) of paragraph (4) of

 

 

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1subsection (g) of Section 4 of this Act shall be used to
2operate a convention center or similar entertainment complex or
3venue;
4    (6) Financing costs, including but not limited to all
5necessary and incidental expenses related to the issuance of
6obligations, payment of any interest on any obligations issued
7hereunder which accrues during the estimated period of
8construction of any economic development project for which such
9obligations are issued and for not exceeding 36 months
10thereafter, and any reasonable reserves related to the issuance
11of such obligations;
12    (7) All or a portion of a taxing district's capital costs
13resulting from an economic development project necessarily
14incurred or estimated to be incurred by a taxing district in
15the furtherance of the objectives of an economic development
16project, to the extent that the municipality by written
17agreement accepts and approves such costs;
18    (8) Relocation costs to the extent that a municipality
19determines that relocation costs shall be paid or is required
20to make payment of relocation costs by federal or State law;
21    (9) The estimated tax revenues from real property in an
22economic development project area acquired by a municipality
23which, according to the economic development plan, is to be
24used for a private use and which any taxing district would have
25received had the municipality not adopted tax increment
26allocation financing for an economic development project area

 

 

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1and which would result from such taxing district's levies made
2after the time of the adoption by the municipality of tax
3increment allocation financing to the time the current
4equalized assessed value of real property in the economic
5development project area exceeds the total initial equalized
6value of real property in said area;
7    (10) Costs of job training, advanced vocational or career
8education, including but not limited to courses in
9occupational, semi-technical or technical fields leading
10directly to employment, incurred by one or more taxing
11districts, provided that such costs are related to the
12establishment and maintenance of additional job training,
13advanced vocational education or career education programs for
14persons employed or to be employed by employers located in an
15economic development project area, and further provided that
16when such costs are incurred by a taxing district or taxing
17districts other than the municipality they shall be set forth
18in a written agreement by or among the municipality and the
19taxing district or taxing districts, which agreement describes
20the program to be undertaken, including but not limited to the
21number of employees to be trained, a description of the
22training and services to be provided, the number and type of
23positions available or to be available, itemized costs of the
24program and sources of funds to pay the same, and the term of
25the agreement. Such costs include, specifically, the payment by
26community college districts of costs pursuant to Sections 3-37,

 

 

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13-38, 3-40 and 3-40.1 of the Public Community College Act and
2by school districts of costs pursuant to Sections 10-22.20a and
310-23.3a of The School Code;
4    (11) Private financing costs incurred by developers or
5other nongovernmental persons in connection with an economic
6development project, and specifically including payments to
7developers or other nongovernmental persons as reimbursement
8for such costs incurred by such developer or other
9nongovernmental person, provided that:
10    (A) private financing costs shall be paid or reimbursed by
11a municipality only pursuant to the prior official action of
12the municipality evidencing an intent to pay or reimburse such
13private financing costs;
14    (B) except as provided in subparagraph (D), the aggregate
15amount of such costs paid or reimbursed by a municipality in
16any one year shall not exceed 30% of such costs paid or
17incurred by the developer or other nongovernmental person in
18that year;
19    (C) private financing costs shall be paid or reimbursed by
20a municipality solely from the special tax allocation fund
21established pursuant to this Act and shall not be paid or
22reimbursed from the proceeds of any obligations issued by a
23municipality;
24    (D) if there are not sufficient funds available in the
25special tax allocation fund in any year to make such payment or
26reimbursement in full, any amount of such interest cost

 

 

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1remaining to be paid or reimbursed by a municipality shall
2accrue and be payable when funds are available in the special
3tax allocation fund to make such payment; and
4    (E) in connection with its approval and certification of an
5economic development project pursuant to Section 5 of this Act,
6the Department shall review any agreement authorizing the
7payment or reimbursement by a municipality of private financing
8costs in its consideration of the impact on the revenues of the
9municipality and the affected taxing districts of the use of
10tax increment allocation financing.
11    (f) "Municipality" means a city, village or incorporated
12town.
13    (g) "Obligations" means any instrument evidencing the
14obligation of a municipality to pay money, including without
15limitation, bonds, notes, installment or financing contracts,
16certificates, tax anticipation warrants or notes, vouchers,
17and any other evidence of indebtedness.
18    (h) "Taxing districts" means counties, townships,
19municipalities, and school, road, park, sanitary, mosquito
20abatement, forest preserve, public health, fire protection,
21river conservancy, tuberculosis sanitarium and any other
22municipal corporations or districts with the power to levy
23taxes upon property located within the economic development
24project area.
25(Source: P.A. 94-793, eff. 5-19-06.)
 

 

 

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1    (20 ILCS 620/4)  (from Ch. 67 1/2, par. 1004)
2    Sec. 4. Establishment of economic development project
3areas; ordinance; notice; hearing; changes in economic
4development plan. Economic development project areas shall be
5established as follows:
6    (a) The corporate authorities of a municipality shall by
7ordinance propose the establishment of an economic development
8project area and fix a time and place for a public hearing, and
9shall submit a certified copy of the ordinance as adopted to
10the Department.
11    (b) (1) Notice of the public hearing shall be given by
12publication and mailing. Notice by publication shall be given
13by publication at least twice, the first publication to be not
14more than 30 nor less than 10 days prior to the hearing in a
15newspaper of general circulation within the taxing districts
16having property in the proposed economic development project
17area. Notice by mailing shall be given by depositing such
18notice together with a copy of the proposed economic
19development plan in the United States mails by certified mail
20addressed to the person or persons in whose name the general
21taxes for the last preceding year were paid on each lot, block,
22tract, or parcel of land lying within the economic development
23project area. The notice shall be mailed not less than 10 days
24prior to the date set for the public hearing. In the event
25taxes for the last preceding year were not paid, the notice
26shall also be sent to the persons last listed on the tax rolls

 

 

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1within the preceding 3 years as the owners of such property.
2    (2) The notices issued pursuant to this Section shall
3include the following:
4    (A) The time and place of public hearing;
5    (B) The boundaries of the proposed economic development
6project area by legal description and by street location where
7possible;
8    (C) A notification that all interested persons will be
9given an opportunity to be heard at the public hearing;
10    (D) An invitation for any person to submit alternative
11proposals or bids for any proposed conveyance, lease, mortgage
12or other disposition of land within the proposed economic
13development project area;
14    (E) A description of the economic development plan or
15economic development project if a plan or project is a subject
16matter of the hearing; and
17    (F) Such other matters as the municipality may deem
18appropriate.
19    (3) Not less than 30 days prior to the date set for
20hearing, the municipality shall give notice by mail as provided
21in this subsection (b) to all taxing districts, of which
22taxable property is included in the economic development
23project area, and to the Department. In addition to the other
24requirements under this subsection (b), the notice shall
25include an invitation to the Department and each taxing
26district to submit comments to the municipality concerning the

 

 

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1subject matter of the hearing prior to the date of hearing.
2    (c) At the public hearing any interested person, the
3Department or any affected taxing district may file written
4objections with the municipal clerk and may be heard orally
5with respect to any issues embodied in the notice. The
6municipality shall hear and determine all alternate proposals
7or bids for any proposed conveyance, lease, mortgage or other
8disposition of land and all protests and objections at the
9hearing, and the hearing may be adjourned to another date
10without further notice other than a motion to be entered upon
11the minutes fixing the time and place of the adjourned hearing.
12Public hearings with regard to an economic development plan,
13economic development project area, or economic development
14project may be held simultaneously.
15    (d) At the public hearing or at any time prior to the
16adoption by the municipality of an ordinance approving an
17economic development plan, the municipality may make changes in
18the economic development plan. Changes which (1) alter the
19exterior boundaries of the proposed economic development
20project area, (2) substantially affect the general land uses
21established in the proposed economic development plan, (3)
22substantially change the nature of the proposed economic
23development project, (4) change the general description of any
24proposed developer, user or tenant of any property to be
25located or improved within the economic development project
26area, or (5) change the description of the type, class and

 

 

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1number of employees to be employed in the operation of the
2facilities to be developed or improved within the economic
3development project area shall be made only after notice and
4hearing pursuant to the procedures set forth in this Section.
5Changes which do not (1) alter the exterior boundaries of a
6proposed economic development project area, (2) substantially
7affect the general land uses established in the proposed
8economic development plan, (3) substantially change the nature
9of the proposed economic development project, (4) change the
10general description of any proposed developer, user or tenant
11of any property to be located or improved within the economic
12development project area, or (5) change the description of the
13type, class and number of employees to be employed in the
14operation of the facilities to be developed or improved within
15the economic development project area may be made without
16further hearing, provided that the municipality shall give
17notice of its changes by mail to the Department and to each
18affected taxing district and by publication in a newspaper or
19newspapers of general circulation within the affected taxing
20districts. Such notice by mail and by publication shall each
21occur not later than 10 days following the adoption by
22ordinance of such changes.
23    (e) At any time within 30 days of the final adjournment of
24the public hearing, a municipality may, by ordinance, approve
25the economic development plan, establish the economic
26development project area, and authorize tax increment

 

 

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1allocation financing for such economic development project
2area. Any ordinance adopted which approves an economic
3development plan shall contain findings that the developer or
4any of its successor entities and its subsidiaries economic
5development project shall create or retain not less than 4,250
62,000 full-time equivalent jobs, that private investment in an
7amount not less than $100,000,000 shall occur in the economic
8development project area, that the economic development
9project will encourage the increase of commerce and industry
10within the State, thereby reducing the evils attendant upon
11unemployment and increasing opportunities for personal income,
12and that the economic development project will increase or
13maintain the property, sales and income tax bases of the
14municipality and of the State. Any ordinance adopted which
15establishes an economic development project area shall contain
16the boundaries of such area by legal description and, where
17possible, by street location. Any ordinance adopted which
18authorizes tax increment allocation financing shall provide
19that the ad valorem taxes, if any, arising from the levies upon
20taxable real property in such economic development project area
21by taxing districts and tax rates determined in the manner
22provided in subsection (b) of Section 6 of this Act each year
23after the effective date of the ordinance until economic
24development project costs and all municipal obligations
25financing economic development project costs incurred under
26this Act have been paid shall be divided as follows:

 

 

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1    (1) That portion of taxes levied upon each taxable lot,
2block, tract or parcel of real property which is attributable
3to the lower of the current equalized assessed value or the
4initial equalized assessed value of each such taxable lot,
5block, tract or parcel of real property in the economic
6development project area shall be allocated to and when
7collected shall be paid by the county collector to the
8respective affected taxing districts in the manner required by
9law in the absence of the adoption of tax increment allocation
10financing.
11    (2) That portion, if any, of such taxes which is
12attributable to the increase in the current equalized assessed
13valuation of each taxable lot, block, tract or parcel of real
14property in the economic development project area over and
15above the initial equalized assessed value of each property in
16the economic development project area shall be allocated to and
17when collected shall be paid to the municipal treasurer who
18shall deposit such taxes into a special fund called the special
19tax allocation fund of the municipality for the purpose of
20paying economic development project costs and obligations
21incurred in the payment thereof.
22    (f) After a municipality has by ordinance approved an
23economic development plan and established an economic
24development project area, the plan may be amended and the
25boundaries of the area may be altered only as herein provided.
26Amendments which (1) alter the exterior boundaries of an

 

 

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

 

 

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1Such notice by mail and by publication shall each occur not
2later than 10 days following the adoption by ordinance of any
3amendments.
4    (g) Extension of economic development project area;
5allocations; payment of outstanding claims; changes in
6equalized assessed valuation.
7    (1) Notwithstanding anything to the contrary set forth in
8this Act, upon the effective date of this amendatory Act of the
997th General Assembly, the duration of any existing economic
10development plan created pursuant to this Act is extended to
11the duration permitted under this subsection, up to a maximum
12duration of 15 years.
13    (2) For the purposes of this Section, real estate taxes
14paid on property within the economic development project area
15during calendar year 2013 and remitted to the developer and the
16taxing districts in 2014 shall be the "base amount". Beginning
17with real estate taxes remitted in 2014, for any economic
18development plan extended by operation of item (1) of this
19subsection (g), until such time as all existing obligations, as
20that term is defined in item (5) of this subsection (g), have
21been satisfied, the allocation of the special tax allocation
22fund shall be as follows:
23        (A) All receipts up to the first $350,000 shall be
24    maintained by the municipality in an escrow account to be
25    used solely for (i) expenses relating to the reports
26    required by Section 4.7 of this Act and (ii) legal expenses

 

 

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1    incurred in defense of any civil action brought against the
2    municipality relating to the economic development
3    agreement. The escrow account shall be within the scope of
4    the annual audit provided in Section 4.7 of this Act. Each
5    December 31 following a deposit into the escrow account,
6    any unobligated balance in the escrow account shall be
7    distributed to the taxing districts in the same manner and
8    proportion as the most recent distribution by the county
9    collector to the taxing districts in the economic
10    development project area.
11        (B) After the allocation required pursuant to
12    paragraph (A) of this item (2), the next $5,000,000 of the
13    receipts shall be allocated to the municipality.
14        (C) After the allocations required pursuant to
15    paragraphs (A) and (B) of this item (2), 55% of the
16    remaining receipts shall be allocated to the developer.
17        (D) After the allocations required pursuant to parts
18    (A) and (B) of this item (2), 45% of the remaining receipts
19    shall be allocated to the taxing districts located within
20    the economic development project area, excluding the
21    municipality.
22    (3) For real estate taxes paid in 2012 and remitted to the
23developer and the taxing districts in 2013 and prior years, the
24allocation formula contained in any economic development plan
25in effect immediately prior to the effective date of this
26amendatory Act of the 97th General Assembly shall apply.

 

 

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1    (4) Beginning with real estate taxes paid in 2014 and
2remitted to the developer and the taxing districts in 2015 and
3each year thereafter, if the taxes paid within the economic
4development project area change from the base amount, the
5allocation of the special tax allocation fund shall be as
6follows:
7        (A) If the amount of current year taxes paid is less
8    than the base amount, then the administrative escrow
9    account shall receive the first $350,000 of receipts, the
10    municipality shall receive the next $5,000,000 of
11    receipts, the developer shall receive 55% of receipts over
12    $5,350,000, and the remaining 45% of receipts over
13    $5,350,000 shall be distributed to the taxing districts
14    (excluding the municipality) in the same manner and
15    proportion as the most recent distribution by the county
16    collector to those taxing districts in the economic
17    development project area.
18        (B) If the amount of current year taxes paid is greater
19    than the base amount, then 75% of the increase in real
20    estate tax receipts shall be payable to the developer and
21    the remaining 25% of the increase in real estate tax
22    receipts shall be distributed to the taxing districts
23    (including the municipality) pursuant to the formula in
24    this subsection.
25    (5) After (i) all existing obligations and interest thereon
26have been satisfied, (ii) any excess moneys have been

 

 

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1distributed pursuant to this subsection, and (iii) final
2closing of the books and records of the economic development
3project area has occurred, the municipality shall adopt an
4ordinance dissolving the special tax allocation fund for the
5economic development project area and terminating the
6designation of the economic development project area as an
7economic development project area. All excess moneys in the
8special tax allocation fund shall be distributed to the taxing
9districts in the same manner and proportion as the most recent
10distribution by the county collector to those taxing districts
11in the economic development project area. For the purpose of
12this subsection (g), "existing obligations" means (i) the
13obligations of the developer that existed before the base year,
14as certified by a sworn affidavit of the principal financial
15officer of the developer attesting that the amounts set forth
16are true and correct, (ii) obligations of the municipality
17relating to the payment of the obligations of the developer,
18and (iii) any amounts payable by taxing districts to the
19developer for property taxes determined to have been overpaid,
20to the extent that those amounts payable have been carried
21forward as an interest bearing note due to the developer. All
22obligations of the developer due and payable shall be processed
23and paid in the order received, with the oldest notes to be
24processed and paid first. Beginning January 1, 2012, all
25outstanding interest bearing notes shall bear interest at the
26rate of 4% until paid.

 

 

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1    (h) Beginning on the effective date of this amendatory Act
2of the 97th General Assembly, the taxing districts shall meet
3annually 180 days after the close of the municipal fiscal year,
4or as soon as the economic development project audit for that
5fiscal year becomes available, to review the effectiveness and
6status of the economic development project area up to that
7date.
8(Source: P.A. 86-38.)
 
9    (20 ILCS 620/4.5 new)
10    Sec. 4.5. Recapture.
11    (a) In the event that the developer terminates all of its
12operations and vacates the redevelopment area within 60 months
13after the effective date of this amendatory Act of the 97th
14General Assembly, the developer shall be required to remit to
15the Department an amount equal to the payments disbursed to the
16developer in 2014 and subsequent years under the Agreement.
17Within 30 days after receipt, the Department shall remit such
18funds to the county collector. The county collector shall
19thereafter make distribution to the respective taxing
20districts in the same manner and proportion as the most recent
21distribution by the county collector to those taxing districts
22of real property taxes from real property in the economic
23development project area.
24    (b) In the event the developer fails to maintain 4,250 jobs
25at any time before the termination of the economic development

 

 

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

 

 

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1    (20 ILCS 620/4.7 new)
2    Sec. 4.7. Municipal reports. After the effective date of
3this amendatory Act of the 97th General Assembly, a
4municipality shall submit in an electronic format all of the
5following information for each economic development project
6area (i) to the State Comptroller and (ii) to all taxing
7districts overlapping the economic development project area no
8later than 180 days after the close of each municipal fiscal
9year or as soon thereafter as the audited financial statements
10become available:
11        (1) Any amendments to the economic development plan or
12    the economic development project area.
13        (2) Audited financial statements of the special tax
14    allocation fund once a cumulative total of $100,000 has
15    been deposited into the fund.
16        (3) Certification of the Chief Executive Officer of the
17    municipality that the municipality has complied with all of
18    the requirements of this Act during the preceding fiscal
19    year.
20        (4) An opinion of legal counsel that the municipality
21    is in compliance with this Act.
22        (5) An analysis of the special tax allocation fund that
23    sets forth:
24            (A) the balance in the special tax allocation fund
25        at the beginning of the fiscal year;
26            (B) all amounts deposited in the special tax

 

 

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1        allocation fund by source;
2            (C) an itemized list of all expenditures from the
3        special tax allocation fund by category of permissible
4        economic development project cost; and
5            (D) the balance in the special tax allocation fund
6        at the end of the fiscal year, including a breakdown of
7        that balance by source and a breakdown of that balance
8        identifying any portion of the balance that is
9        required, pledged, earmarked, or otherwise designated
10        for payment of or securing of obligations and
11        anticipated economic development project costs; any
12        portion of that ending balance that has not been
13        identified or is not identified as being required,
14        pledged, earmarked, or otherwise designated for
15        payment of or securing of obligations or anticipated
16        economic development project costs shall be designated
17        as surplus as set forth in Section 8 of this Act.
18        (6) A description of all property purchased by the
19    municipality within the economic development project area
20    including:
21            (A) street address;
22            (B) approximate size or description of property;
23            (C) purchase price; and
24            (D) the seller of the property.
25        (7) A statement setting forth all activities
26    undertaken in furtherance of the objectives of the economic

 

 

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1    development plan, including:
2            (A) any project implemented in the preceding
3        fiscal year;
4            (B) a description of the economic development
5        activities undertaken;
6            (C) a description of any agreements entered into by
7        the municipality with regard to the disposition or
8        redevelopment of any property within the economic
9        development project area;
10            (D) additional information on the use of all funds
11        received under this Act and steps taken by the
12        municipality to achieve the objectives of the economic
13        development plan;
14            (E) information regarding contracts that the
15        municipality's tax increment advisors or consultants
16        have entered into with entities or persons that have
17        received, or are receiving, payments financed by tax
18        increment revenues produced by the same economic
19        development project area; and
20            (F) a review of public and, to the extent possible,
21        private investment actually undertaken on or after the
22        effective date of this amendatory Act of the 97th
23        General Assembly and prior to the date of the report
24        and estimated to be undertaken during the following
25        fiscal year; this review shall, on a project by project
26        basis, set forth the estimated amounts of public and

 

 

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1        private investment incurred after the effective date
2        of this amendatory Act of the 97th General Assembly and
3        provide the ratio of private investment to public
4        investment to the date of the report and as estimated
5        to the completion of the economic development project.
6        (8) With regard to any obligations issued by the
7    municipality:
8            (A) copies of any official statements; and
9            (B) an analysis prepared by a financial advisor or
10        underwriter setting forth: (i) the nature and term of
11        those obligations; and (ii) projected debt service
12        including required reserves and debt coverage.
13        (9) For special tax allocation funds that have
14    experienced cumulative deposits of incremental tax
15    revenues of $100,000 or more, a certified audit report
16    reviewing compliance with this Act performed by an
17    independent certified public accountant licensed by the
18    authority of the State of Illinois. The financial portion
19    of the audit must be conducted in accordance with Standards
20    for Audits of Governmental Organizations, Programs,
21    Activities, and Functions adopted by the Comptroller
22    General of the United States (1981), as amended, or the
23    standards specified by Section 8-8-5 of the Illinois
24    Municipal Auditing Law of the Illinois Municipal Code. The
25    audit report shall contain a letter from the independent
26    certified public accountant indicating compliance or

 

 

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1    noncompliance with the requirements of subsection (e) of
2    Section 3 of this Act.
3        (10) A list of all intergovernmental agreements in
4    effect during the fiscal year to which the municipality is
5    a party and an accounting of any moneys transferred or
6    received by the municipality during that fiscal year
7    pursuant to those intergovernmental agreements.
 
8    (20 ILCS 620/5)  (from Ch. 67 1/2, par. 1005)
9    Sec. 5. Submission to Department; certification by
10Department; limitation on number of permissible economic
11development project areas. (a) The municipality shall submit
12certified copies of any ordinances adopted approving an
13economic development plan, establishing an economic
14development project area, and authorizing tax increment
15allocation financing for such economic development project
16area to the Department, together with (1) a map of the economic
17development project area, (2) a copy of the economic
18development plan as approved, (3) an analysis, and any
19supporting documents and statistics, demonstrating that the
20developer or any of its successor entities and its subsidiaries
21economic development project shall create or retain not less
22than 4,250 2,000 full-time equivalent jobs and that private
23investment in the amount of not less than $100,000,000 shall
24occur in the economic development project area, (4) an estimate
25of the economic impact of the economic development project and

 

 

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1the use of tax increment allocation financing upon the revenues
2of the municipality and the affected taxing districts, (5) a
3record of all public hearings had in connection with the
4establishment of the economic development project area, and (6)
5such other information as the Department by regulation may
6require.
7    (b) Upon receipt of an application from a municipality the
8Department shall review the application to determine whether
9the economic development project area qualifies as an economic
10development project area under this Act. At its discretion, the
11Department may accept or reject the application or may request
12such additional information as it deems necessary or advisable
13to aid its review. If any such area is found to be qualified to
14be an economic development project area, the Department shall
15approve and certify such economic development project area and
16shall provide written notice of its approval and certification
17to the municipality and to the county clerk. In determining
18whether an economic development project area shall be approved
19and certified, the Department shall consider (1) whether,
20without public intervention, the State would suffer
21substantial economic dislocation, such as relocation of a
22commercial business or industrial or manufacturing facility to
23another state, territory or country, or would not otherwise
24benefit from private investment offering substantial
25employment opportunities and economic growth, and (2) the
26impact on the revenues of the municipality and the affected

 

 

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1taxing districts of the use of tax increment allocation
2financing in connection with the economic development project.
3    (c) On or before the date which is 18 months following the
4date on which this Act becomes law, the Department shall submit
5to the General Assembly a report detailing the number of
6economic development project areas it has approved and
7certified, the number and type of jobs created or retained
8therein, the aggregate amount of private investment therein,
9the impact on the revenues of municipalities and affected
10taxing districts of the use of tax increment allocation
11financing therein, and such additional information as the
12Department may determine to be relevant. On or after the date
13which is 20 months following the date on which this Act becomes
14law the authority granted hereunder to municipalities to
15establish economic development project areas and to adopt tax
16increment allocation financing in connection therewith and to
17the Department to approve and certify economic development
18project areas shall expire unless the General Assembly shall
19have authorized municipalities and the Department to continue
20to exercise the powers granted to them hereunder.
21(Source: P.A. 86-38.)
 
22    (20 ILCS 620/8)  (from Ch. 67 1/2, par. 1008)
23    Sec. 8. Issuance of obligations for economic development
24project costs. Obligations secured by the special tax
25allocation fund provided for in Section 7 of this Act for an

 

 

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1economic development project area may be issued to provide for
2economic development project costs. Those obligations, when so
3issued, shall be retired in the manner provided in the
4ordinance authorizing the issuance of the obligations by the
5receipts of taxes levied as specified in Section 6 of this Act
6against the taxable property included in the economic
7development project area and by other revenue designated or
8pledged by the municipality. A municipality may in the
9ordinance pledge all or any part of the funds in and to be
10deposited in the special tax allocation fund created pursuant
11to Section 7 of this Act to the payment of the economic
12development project costs and obligations. Whenever a
13municipality pledges all of the funds to the credit of a
14special tax allocation fund to secure obligations issued or to
15be issued to pay economic development project costs, the
16municipality may specifically provide that funds remaining to
17the credit of such special tax allocation fund after the
18payment of such obligations shall be accounted for annually and
19shall be deemed to be "surplus" funds, and such "surplus" funds
20shall be distributed as hereinafter provided. Whenever a
21municipality pledges less than all of the monies to the credit
22of a special tax allocation fund to secure obligations issued
23or to be issued to pay economic development project costs, the
24municipality shall provide that monies to the credit of the
25special tax allocation fund and not subject to such pledge or
26otherwise encumbered or required for payment of contractual

 

 

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1obligations for specific economic development project costs
2shall be calculated annually and shall be deemed to be
3"surplus" funds, and such "surplus" funds shall be distributed
4as hereinafter provided. All funds to the credit of a special
5tax allocation fund which are deemed to be "surplus" funds
6shall be distributed annually within 180 days of the close of
7the municipality's fiscal year by being paid by the municipal
8treasurer to the county collector. The county collector shall
9thereafter make distribution to the respective taxing
10districts in the same manner and proportion as the most recent
11distribution by the county collector to those taxing districts
12of real property taxes from real property in the economic
13development project area.
14    Without limiting the foregoing in this Section the
15municipality may, in addition to obligations secured by the
16special tax allocation fund, pledge for a period not greater
17than the term of the obligations towards payment of those
18obligations any part or any combination of the following: (i)
19net revenues of all or part of any economic development
20project; (ii) taxes levied and collected on any or all property
21in the municipality, including, specifically, taxes levied or
22imposed by the municipality in a special service area pursuant
23to "An Act to provide the manner of levying or imposing taxes
24for the provision of special services to areas within the
25boundaries of home rule units and non-home rule municipalities
26and counties", approved September 21, 1973, as now or hereafter

 

 

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1amended; (iii) the full faith and credit of the municipality;
2(iv) a mortgage on part or all of the economic development
3project; or (v) any other taxes or anticipated receipts that
4the municipality may lawfully pledge.
5    Such obligations may be issued in one or more series
6bearing interest at such rate or rates as the corporate
7authorities of the municipality shall determine by ordinance,
8which rate or rates may be variable or fixed, without regard to
9any limitations contained in any law now in effect or hereafter
10adopted. Such obligations shall bear such date or dates, mature
11at such time or times not exceeding 38 20 years from their
12respective dates, but in no event exceeding 38 23 years from
13the date of establishment of the economic development project
14area, be in such denomination, be in such form, whether coupon,
15registered or book-entry, carry such registration, conversion
16and exchange privileges, be executed in such manner, be payable
17in such medium of payment at such place or places within or
18without the State of Illinois, contain such covenants, terms
19and conditions, be subject to redemption with or without
20premium, be subject to defeasance upon such terms, and have
21such rank or priority, as such ordinance shall provide.
22Obligations issued pursuant to this Act may be sold at public
23or private sale at such price as shall be determined by the
24corporate authorities of the municipalities. Such obligations
25may, but need not, be issued utilizing the provisions of any
26one or more of the omnibus bond Acts specified in Section 1.33

 

 

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1of "An Act to revise the law in relation to the construction of
2the statutes", approved March 5, 1874, as now or hereafter
3amended. No referendum approval of the electors shall be
4required as a condition to the issuance of obligations pursuant
5to this Act except as provided in this Section.
6    Whenever a municipality issues bonds for the purpose of
7financing economic development project costs, the municipality
8may provide by ordinance for the appointment of a trustee,
9which may be any trust company within the State, and for the
10establishment of the funds or accounts to be maintained by such
11trustee as the municipality shall deem necessary to provide for
12the security and payment of the bonds. If the municipality
13provides for the appointment of a trustee, the trustee shall be
14considered the assignee of any payments assigned by the
15municipality pursuant to the ordinance and this Section. Any
16amounts paid to the trustee as assignee shall be deposited in
17the funds or accounts established pursuant to the trust
18agreement, and shall be held by the trustee in trust for the
19benefit of the holders of the bonds, and the holders shall have
20a lien on and a security interest in those bonds or accounts so
21long as the bonds remain outstanding and unpaid. Upon
22retirement of the bonds, the trustee shall pay over any excess
23amounts held to the municipality for deposit in the special tax
24allocation fund.
25    In the event the municipality authorizes the issuance of
26obligations pursuant to the authority of this Act secured by

 

 

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1the full faith and credit of the municipality, or pledges ad
2valorem taxes pursuant to clause (ii) of the second paragraph
3of this Section, which obligations are other than obligations
4which may be issued under home rule powers provided by Article
5VII, Section 6 of the Illinois Constitution or which ad valorem
6taxes are other than ad valorem taxes which may be pledged
7under home rule powers provided by Article VII, Section 6 of
8the Illinois Constitution or which are levied in a special
9service area pursuant to "An Act to provide the manner of
10levying or imposing taxes for the provision of special services
11to areas within the boundaries of home rule units and non-home
12rule municipalities and counties", approved September 21,
131973, as now or hereafter amended, the ordinance authorizing
14the issuance of those obligations or pledging those taxes shall
15be published within 10 days after the ordinance has been
16adopted, in one or more newspapers having a general circulation
17within the municipality. The publication of the ordinance shall
18be accompanied by a notice of (1) the specific number of voters
19required to sign a petition requesting the question of the
20issuance of the obligations or pledging such ad valorem taxes
21to be submitted to the electors; (2) the time within which the
22petition must be filed; and (3) the date of the prospective
23referendum. The municipal clerk shall provide a petition form
24to any individual requesting one.
25    If no petition is filed with the municipal clerk, as
26hereinafter provided in this Section, within 21 days after the

 

 

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1publication of the ordinance, the ordinance shall be in effect.
2However, if within that 21 day period a petition is filed with
3the municipal clerk, signed by electors numbering not less than
415% of the number of electors voting for the mayor or president
5at the last general municipal election, asking that the
6question of issuing obligations using full faith and credit of
7the municipality as security for the cost of paying for
8economic development project costs, or of pledging such ad
9valorem taxes for the payment of those obligations, or both, be
10submitted to the electors of the municipality, the municipality
11shall not be authorized to issue obligations of the
12municipality using the full faith and credit of the
13municipality as security or pledging such ad valorem taxes for
14the payment of those obligations, or both, until the
15proposition has been submitted to and approved by a majority of
16the voters voting on the proposition at a regularly scheduled
17election. The municipality shall certify the proposition to the
18proper election authorities for submission in accordance with
19the general election law.
20    The ordinance authorizing the obligations may provide that
21the obligations shall contain a recital that they are issued
22pursuant to this Act, which recital shall be conclusive
23evidence of their validity and of the regularity of their
24issuance.
25    In the event the municipality authorizes issuance of
26obligations pursuant to this Act secured by the full faith and

 

 

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1credit of the municipality, the ordinance authorizing the
2obligations may provide for the levy and collection of a direct
3annual tax upon all taxable property within the municipality
4sufficient to pay the principal thereof and interest thereon as
5it matures, which levy may be in addition to and exclusive of
6the maximum of all other taxes authorized to be levied by the
7municipality, which levy, however, shall be abated to the
8extent that monies from other sources are available for payment
9of the obligations and the municipality certifies the amount of
10those monies available to the county clerk.
11    A certified copy of the ordinance shall be filed with the
12county clerk of each county in which any portion of the
13municipality is situated, and shall constitute the authority
14for the extension and collection of the taxes to be deposited
15in the special tax allocation fund.
16    A municipality may also issue its obligations to refund, in
17whole or in part, obligations theretofore issued by the
18municipality under the authority of this Act, whether at or
19prior to maturity. However, the last maturity of the refunding
20obligations shall not be expressed to mature later than 38 23
21years from the date of the ordinance establishing the economic
22development project area.
23    In the event a municipality issues obligations under home
24rule powers or other legislative authority, the proceeds of
25which are pledged to pay for economic development project
26costs, the municipality may, if it has followed the procedures

 

 

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1in conformance with this Act, retire those obligations from
2funds in the special tax allocation fund in amounts and in such
3manner as if those obligations had been issued pursuant to the
4provisions of this Act.
5    No obligations issued pursuant to this Act shall be
6regarded as indebtedness of the municipality issuing those
7obligations or any other taxing district for the purpose of any
8limitation imposed by law.
9    Obligations issued pursuant to this Act shall not be
10subject to the provisions of "An Act to authorize public
11corporations to issue bonds, other evidences of indebtedness
12and tax anticipation warrants subject to interest rate
13limitations set forth therein", approved May 26, 1970, as
14amended.
15(Source: P.A. 86-38.)
 
16    (20 ILCS 620/9)  (from Ch. 67 1/2, par. 1009)
17    Sec. 9. Powers of municipalities. In addition to powers
18which it may now have, any municipality has the power under
19this Act:
20    (a) To make and enter into all contracts necessary or
21incidental to the implementation and furtherance of an economic
22development plan.
23    (b) Within an economic development project area, to acquire
24by purchase, donation, lease or eminent domain, and to own,
25convey, lease, mortgage or dispose of land and other real or

 

 

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1personal property or rights or interests therein; and to grant
2or acquire licenses, easements and options with respect
3thereto, all in the manner and at such price the municipality
4determines is reasonably necessary to achieve the objectives of
5the economic development project. No conveyance, lease,
6mortgage, disposition of land or other property acquired by the
7municipality, or agreement relating to the development of
8property, shall be made or executed except pursuant to prior
9official action of the municipality. No conveyance, lease,
10mortgage or other disposition of land, and no agreement
11relating to the development of property, shall be made without
12making public disclosure of the terms and disposition of all
13bids and proposals submitted to the municipality in connection
14therewith.
15    (c) To clear any area within an economic development
16project area by demolition or removal of any existing
17buildings, structures, fixtures, utilities or improvements,
18and to clear and grade land.
19    (d) To install, repair, construct, reconstruct or relocate
20public streets, public utilities, and other public site
21improvements within or without an economic development project
22area which are essential to the preparation of an economic
23development project area for use in accordance with an economic
24development plan.
25    (e) To renovate, rehabilitate, reconstruct, relocate,
26repair or remodel any existing buildings, improvements, and

 

 

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1fixtures within an economic development project area.
2    (f) To construct, acquire, and operate public
3improvements, including but not limited to, publicly owned
4buildings, structures, works, utilities or fixtures within any
5economic development project area, subject to the restrictions
6of item (5) of subsection (e) of Section 3 of this Act.
7    (g) To issue obligations as provided in this Act provided.
8    (h) To fix, charge and collect fees, rents and charges for
9the use of any building, facility or property or any portion
10thereof owned or leased by the municipality within an economic
11development project area.
12    (i) To accept grants, guarantees, donations of property or
13labor, or any other thing of value for use in connection with
14an economic development project.
15    (j) To pay or cause to be paid economic development project
16costs. Any payments to be made by the municipality to
17developers or other nongovernmental persons for economic
18development project costs incurred by such developer or other
19nongovernmental person shall be made only pursuant to the prior
20official action of the municipality evidencing an intent to pay
21or cause to be paid such economic development project costs. A
22municipality is not required to obtain any right, title or
23interest in any real or personal property in order to pay
24economic development project costs associated with such
25property. The municipality shall adopt such accounting
26procedures as may be necessary to determine that such economic

 

 

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1development project costs are properly paid.
2    (k) To exercise any and all other powers necessary to
3effectuate the purposes of this Act.
4    (l) To create a commission of not less than 5 or more than
515 persons to be appointed by the mayor or president of the
6municipality with the consent of the majority of the corporate
7authorities of the municipality. Members of a commission shall
8be appointed for initial terms of 1, 2, 3, 4, and 5 years,
9respectively, in such numbers as to provide that the terms of
10not more than 1/3 of all such members shall expire in any one
11year. Their successors shall be appointed for a term of 5
12years. The commission, subject to approval of the corporate
13authorities, may exercise the powers enumerated in this
14Section. The commission shall also have the power to hold the
15public hearings required by this Act and make recommendations
16to the corporate authorities concerning the approval of
17economic development plans, the establishment of economic
18development project areas, and the adoption of tax increment
19allocation financing for economic development project areas.
20(Source: P.A. 91-357, eff. 7-29-99.)
 
21    (20 ILCS 620/11)  (from Ch. 67 1/2, par. 1011)
22    Sec. 11. Payment of project costs; revenues from
23governmental municipal property. Revenues received by a taxing
24district municipality from any property, building or facility
25owned, leased or operated by the taxing district municipality

 

 

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1or any agency or authority established by the taxing district
2municipality may be used to pay economic development project
3costs, or reduce outstanding obligations of the taxing district
4municipality incurred under this Act for economic development
5project costs. The taxing district municipality may place those
6revenues in the special tax allocation fund which shall be held
7by the municipal treasurer of the taxing district or other
8person designated by the taxing district municipality. Revenue
9received by a taxing district the municipality from the sale or
10other disposition of real or personal property or rights or
11interests therein acquired by a taxing district the
12municipality with the proceeds of obligations funded by tax
13increment allocation financing may be used to acquire and
14operate other governmental property that is within the economic
15development project area or that provides services within the
16economic development project area, subject to the restrictions
17of item (5) of subsection (e) of Section 3 of this Act. shall
18be deposited by the municipality in the special tax allocation
19fund.
20(Source: P.A. 86-38.)
 
21    Section 15-7. The New Markets Development Program Act is
22amended by changing Section 50 as follows:
 
23    (20 ILCS 663/50)
24    Sec. 50. Sunset. For fiscal years following fiscal year

 

 

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12017 2012, qualified equity investments shall not be made under
2this Act unless reauthorization is made pursuant to this
3Section. For all fiscal years following fiscal year 2017 2012,
4unless the General Assembly adopts a joint resolution granting
5authority to the Department to approve qualified equity
6investments for the Illinois new markets development program
7and clearly describing the amount of tax credits available for
8the next fiscal year, or otherwise complies with the provisions
9of this Section, no qualified equity investments may be
10permitted to be made under this Act. The amount of available
11tax credits contained in such a resolution shall not exceed the
12limitation provided under Section 20. Nothing in this Section
13precludes a taxpayer who makes a qualified equity investment
14prior to the expiration of authority to make qualified equity
15investments from claiming tax credits relating to that
16qualified equity investment for each applicable credit
17allowance date.
18(Source: P.A. 95-1024, eff. 12-31-08.)
 
19    Section 15-10. The Illinois Income Tax Act is amended by
20changing Sections 201, 207, 250, 304, 804, and 1501 as follows:
 
21    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
22    Sec. 201. Tax Imposed.
23    (a) In general. A tax measured by net income is hereby
24imposed on every individual, corporation, trust and estate for

 

 

SB0397 Enrolled- 60 -LRB097 04209 HLH 44248 b

1each taxable year ending after July 31, 1969 on the privilege
2of earning or receiving income in or as a resident of this
3State. Such tax shall be in addition to all other occupation or
4privilege taxes imposed by this State or by any municipal
5corporation or political subdivision thereof.
6    (b) Rates. The tax imposed by subsection (a) of this
7Section shall be determined as follows, except as adjusted by
8subsection (d-1):
9        (1) In the case of an individual, trust or estate, for
10    taxable years ending prior to July 1, 1989, an amount equal
11    to 2 1/2% of the taxpayer's net income for the taxable
12    year.
13        (2) In the case of an individual, trust or estate, for
14    taxable years beginning prior to July 1, 1989 and ending
15    after June 30, 1989, an amount equal to the sum of (i) 2
16    1/2% of the taxpayer's net income for the period prior to
17    July 1, 1989, as calculated under Section 202.3, and (ii)
18    3% of the taxpayer's net income for the period after June
19    30, 1989, as calculated under Section 202.3.
20        (3) In the case of an individual, trust or estate, for
21    taxable years beginning after June 30, 1989, and ending
22    prior to January 1, 2011, an amount equal to 3% of the
23    taxpayer's net income for the taxable year.
24        (4) In the case of an individual, trust, or estate, for
25    taxable years beginning prior to January 1, 2011, and
26    ending after December 31, 2010, an amount equal to the sum

 

 

SB0397 Enrolled- 61 -LRB097 04209 HLH 44248 b

1    of (i) 3% of the taxpayer's net income for the period prior
2    to January 1, 2011, as calculated under Section 202.5, and
3    (ii) 5% of the taxpayer's net income for the period after
4    December 31, 2010, as calculated under Section 202.5.
5        (5) In the case of an individual, trust, or estate, for
6    taxable years beginning on or after January 1, 2011, and
7    ending prior to January 1, 2015, an amount equal to 5% of
8    the taxpayer's net income for the taxable year.
9        (5.1) In the case of an individual, trust, or estate,
10    for taxable years beginning prior to January 1, 2015, and
11    ending after December 31, 2014, an amount equal to the sum
12    of (i) 5% of the taxpayer's net income for the period prior
13    to January 1, 2015, as calculated under Section 202.5, and
14    (ii) 3.75% of the taxpayer's net income for the period
15    after December 31, 2014, as calculated under Section 202.5.
16        (5.2) In the case of an individual, trust, or estate,
17    for taxable years beginning on or after January 1, 2015,
18    and ending prior to January 1, 2025, an amount equal to
19    3.75% of the taxpayer's net income for the taxable year.
20        (5.3) In the case of an individual, trust, or estate,
21    for taxable years beginning prior to January 1, 2025, and
22    ending after December 31, 2024, an amount equal to the sum
23    of (i) 3.75% of the taxpayer's net income for the period
24    prior to January 1, 2025, as calculated under Section
25    202.5, and (ii) 3.25% of the taxpayer's net income for the
26    period after December 31, 2024, as calculated under Section

 

 

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1    202.5.
2        (5.4) In the case of an individual, trust, or estate,
3    for taxable years beginning on or after January 1, 2025, an
4    amount equal to 3.25% of the taxpayer's net income for the
5    taxable year.
6        (6) In the case of a corporation, for taxable years
7    ending prior to July 1, 1989, an amount equal to 4% of the
8    taxpayer's net income for the taxable year.
9        (7) In the case of a corporation, for taxable years
10    beginning prior to July 1, 1989 and ending after June 30,
11    1989, an amount equal to the sum of (i) 4% of the
12    taxpayer's net income for the period prior to July 1, 1989,
13    as calculated under Section 202.3, and (ii) 4.8% of the
14    taxpayer's net income for the period after June 30, 1989,
15    as calculated under Section 202.3.
16        (8) In the case of a corporation, for taxable years
17    beginning after June 30, 1989, and ending prior to January
18    1, 2011, an amount equal to 4.8% of the taxpayer's net
19    income for the taxable year.
20        (9) In the case of a corporation, for taxable years
21    beginning prior to January 1, 2011, and ending after
22    December 31, 2010, an amount equal to the sum of (i) 4.8%
23    of the taxpayer's net income for the period prior to
24    January 1, 2011, as calculated under Section 202.5, and
25    (ii) 7% of the taxpayer's net income for the period after
26    December 31, 2010, as calculated under Section 202.5.

 

 

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1        (10) In the case of a corporation, for taxable years
2    beginning on or after January 1, 2011, and ending prior to
3    January 1, 2015, an amount equal to 7% of the taxpayer's
4    net income for the taxable year.
5        (11) In the case of a corporation, for taxable years
6    beginning prior to January 1, 2015, and ending after
7    December 31, 2014, an amount equal to the sum of (i) 7% of
8    the taxpayer's net income for the period prior to January
9    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
10    of the taxpayer's net income for the period after December
11    31, 2014, as calculated under Section 202.5.
12        (12) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2015, and ending prior to
14    January 1, 2025, an amount equal to 5.25% of the taxpayer's
15    net income for the taxable year.
16        (13) In the case of a corporation, for taxable years
17    beginning prior to January 1, 2025, and ending after
18    December 31, 2024, an amount equal to the sum of (i) 5.25%
19    of the taxpayer's net income for the period prior to
20    January 1, 2025, as calculated under Section 202.5, and
21    (ii) 4.8% of the taxpayer's net income for the period after
22    December 31, 2024, as calculated under Section 202.5.
23        (14) In the case of a corporation, for taxable years
24    beginning on or after January 1, 2025, an amount equal to
25    4.8% of the taxpayer's net income for the taxable year.
26    The rates under this subsection (b) are subject to the

 

 

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1provisions of Section 201.5.
2    (c) Personal Property Tax Replacement Income Tax.
3Beginning on July 1, 1979 and thereafter, in addition to such
4income tax, there is also hereby imposed the Personal Property
5Tax Replacement Income Tax measured by net income on every
6corporation (including Subchapter S corporations), partnership
7and trust, for each taxable year ending after June 30, 1979.
8Such taxes are imposed on the privilege of earning or receiving
9income in or as a resident of this State. The Personal Property
10Tax Replacement Income Tax shall be in addition to the income
11tax imposed by subsections (a) and (b) of this Section and in
12addition to all other occupation or privilege taxes imposed by
13this State or by any municipal corporation or political
14subdivision thereof.
15    (d) Additional Personal Property Tax Replacement Income
16Tax Rates. The personal property tax replacement income tax
17imposed by this subsection and subsection (c) of this Section
18in the case of a corporation, other than a Subchapter S
19corporation and except as adjusted by subsection (d-1), shall
20be an additional amount equal to 2.85% of such taxpayer's net
21income for the taxable year, except that beginning on January
221, 1981, and thereafter, the rate of 2.85% specified in this
23subsection shall be reduced to 2.5%, and in the case of a
24partnership, trust or a Subchapter S corporation shall be an
25additional amount equal to 1.5% of such taxpayer's net income
26for the taxable year.

 

 

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

 

 

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1    (b) and (d) be reduced below the rate at which the sum of:
2            (A) the total amount of tax imposed on such foreign
3        insurer under this Act for a taxable year, net of all
4        credits allowed under this Act, plus
5            (B) the privilege tax imposed by Section 409 of the
6        Illinois Insurance Code, the fire insurance company
7        tax imposed by Section 12 of the Fire Investigation
8        Act, and the fire department taxes imposed under
9        Section 11-10-1 of the Illinois Municipal Code,
10    equals 1.25% for taxable years ending prior to December 31,
11    2003, or 1.75% for taxable years ending on or after
12    December 31, 2003, of the net taxable premiums written for
13    the taxable year, as described by subsection (1) of Section
14    409 of the Illinois Insurance Code. This paragraph will in
15    no event increase the rates imposed under subsections (b)
16    and (d).
17        (2) Any reduction in the rates of tax imposed by this
18    subsection shall be applied first against the rates imposed
19    by subsection (b) and only after the tax imposed by
20    subsection (a) net of all credits allowed under this
21    Section other than the credit allowed under subsection (i)
22    has been reduced to zero, against the rates imposed by
23    subsection (d).
24    This subsection (d-1) is exempt from the provisions of
25Section 250.
26    (e) Investment credit. A taxpayer shall be allowed a credit

 

 

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

 

 

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1    taxpayer's liability in any tax year below zero, nor may
2    any credit for qualified property be allowed for any year
3    other than the year in which the property was placed in
4    service in Illinois. For tax years ending on or after
5    December 31, 1987, and on or before December 31, 1988, the
6    credit shall be allowed for the tax year in which the
7    property is placed in service, or, if the amount of the
8    credit exceeds the tax liability for that year, whether it
9    exceeds the original liability or the liability as later
10    amended, such excess may be carried forward and applied to
11    the tax liability of the 5 taxable years following the
12    excess credit years if the taxpayer (i) makes investments
13    which cause the creation of a minimum of 2,000 full-time
14    equivalent jobs in Illinois, (ii) is located in an
15    enterprise zone established pursuant to the Illinois
16    Enterprise Zone Act and (iii) is certified by the
17    Department of Commerce and Community Affairs (now
18    Department of Commerce and Economic Opportunity) as
19    complying with the requirements specified in clause (i) and
20    (ii) by July 1, 1986. The Department of Commerce and
21    Community Affairs (now Department of Commerce and Economic
22    Opportunity) shall notify the Department of Revenue of all
23    such certifications immediately. For tax years ending
24    after December 31, 1988, the credit shall be allowed for
25    the tax year in which the property is placed in service,
26    or, if the amount of the credit exceeds the tax liability

 

 

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

 

 

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1        or fluorite, or in retailing, or was placed in service
2        on or after July 1, 2006 in a River Edge Redevelopment
3        Zone established pursuant to the River Edge
4        Redevelopment Zone Act; and
5            (E) has not previously been used in Illinois in
6        such a manner and by such a person as would qualify for
7        the credit provided by this subsection (e) or
8        subsection (f).
9        (3) For purposes of this subsection (e),
10    "manufacturing" means the material staging and production
11    of tangible personal property by procedures commonly
12    regarded as manufacturing, processing, fabrication, or
13    assembling which changes some existing material into new
14    shapes, new qualities, or new combinations. For purposes of
15    this subsection (e) the term "mining" shall have the same
16    meaning as the term "mining" in Section 613(c) of the
17    Internal Revenue Code. For purposes of this subsection (e),
18    the term "retailing" means the sale of tangible personal
19    property for use or consumption and not for resale, or
20    services rendered in conjunction with the sale of tangible
21    personal property for use or consumption and not for
22    resale. For purposes of this subsection (e), "tangible
23    personal property" has the same meaning as when that term
24    is used in the Retailers' Occupation Tax Act, and, for
25    taxable years ending after December 31, 2008, does not
26    include the generation, transmission, or distribution of

 

 

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

 

 

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1    property to the extent of such reduction.
2        (8) Unless the investment credit is extended by law,
3    the basis of qualified property shall not include costs
4    incurred after December 31, 2018 2013, except for costs
5    incurred pursuant to a binding contract entered into on or
6    before December 31, 2018 2013.
7        (9) Each taxable year ending before December 31, 2000,
8    a partnership may elect to pass through to its partners the
9    credits to which the partnership is entitled under this
10    subsection (e) for the taxable year. A partner may use the
11    credit allocated to him or her under this paragraph only
12    against the tax imposed in subsections (c) and (d) of this
13    Section. If the partnership makes that election, those
14    credits shall be allocated among the partners in the
15    partnership in accordance with the rules set forth in
16    Section 704(b) of the Internal Revenue Code, and the rules
17    promulgated under that Section, and the allocated amount of
18    the credits shall be allowed to the partners for that
19    taxable year. The partnership shall make this election on
20    its Personal Property Tax Replacement Income Tax return for
21    that taxable year. The election to pass through the credits
22    shall be irrevocable.
23        For taxable years ending on or after December 31, 2000,
24    a partner that qualifies its partnership for a subtraction
25    under subparagraph (I) of paragraph (2) of subsection (d)
26    of Section 203 or a shareholder that qualifies a Subchapter

 

 

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

 

 

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1    and Subchapter S of the Internal Revenue Code. The credit
2    shall be .5% of the basis for such property. The credit
3    shall be available only in the taxable year in which the
4    property is placed in service in the Enterprise Zone or
5    River Edge Redevelopment Zone and shall not be allowed to
6    the extent that it would reduce a taxpayer's liability for
7    the tax imposed by subsections (a) and (b) of this Section
8    to below zero. For tax years ending on or after December
9    31, 1985, the credit shall be allowed for the tax year in
10    which the property is placed in service, or, if the amount
11    of the credit exceeds the tax liability for that year,
12    whether it exceeds the original liability or the liability
13    as later amended, such excess may be carried forward and
14    applied to the tax liability of the 5 taxable years
15    following the excess credit year. The credit shall be
16    applied to the earliest year for which there is a
17    liability. If there is credit from more than one tax year
18    that is available to offset a liability, the credit
19    accruing first in time shall be applied first.
20        (2) The term qualified property means property which:
21            (A) is tangible, whether new or used, including
22        buildings and structural components of buildings;
23            (B) is depreciable pursuant to Section 167 of the
24        Internal Revenue Code, except that "3-year property"
25        as defined in Section 168(c)(2)(A) of that Code is not
26        eligible for the credit provided by this subsection

 

 

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1        (f);
2            (C) is acquired by purchase as defined in Section
3        179(d) of the Internal Revenue Code;
4            (D) is used in the Enterprise Zone or River Edge
5        Redevelopment Zone by the taxpayer; and
6            (E) has not been previously used in Illinois in
7        such a manner and by such a person as would qualify for
8        the credit provided by this subsection (f) or
9        subsection (e).
10        (3) The basis of qualified property shall be the basis
11    used to compute the depreciation deduction for federal
12    income tax purposes.
13        (4) If the basis of the property for federal income tax
14    depreciation purposes is increased after it has been placed
15    in service in the Enterprise Zone or River Edge
16    Redevelopment Zone 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        (5) The term "placed in service" shall have the same
20    meaning as under Section 46 of the Internal Revenue Code.
21        (6) 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 the Enterprise Zone
25    or River Edge Redevelopment Zone within 48 months after
26    being placed in service, the tax imposed under subsections

 

 

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

 

 

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

 

 

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

 

 

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

 

 

SB0397 Enrolled- 80 -LRB097 04209 HLH 44248 b

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

 

 

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

 

 

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

 

 

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

 

 

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1(a) and (b) of the 5 taxable years following the excess credit
2year, provided that no credit may be carried forward to any
3year ending on or after December 31, 2003. This credit shall be
4applied first to the earliest year for which there is a
5liability. If there is a credit under this subsection from more
6than one tax year that is available to offset a liability the
7earliest credit arising under this subsection shall be applied
8first.
9    If, during any taxable year ending on or after December 31,
101986, the tax imposed by subsections (c) and (d) of this
11Section for which a taxpayer has claimed a credit under this
12subsection (i) is reduced, the amount of credit for such tax
13shall also be reduced. Such reduction shall be determined by
14recomputing the credit to take into account the reduced tax
15imposed by subsections (c) and (d). If any portion of the
16reduced amount of credit has been carried to a different
17taxable year, an amended return shall be filed for such taxable
18year to reduce the amount of credit claimed.
19    (j) Training expense credit. Beginning with tax years
20ending on or after December 31, 1986 and prior to December 31,
212003, a taxpayer shall be allowed a credit against the tax
22imposed by subsections (a) and (b) under this Section for all
23amounts paid or accrued, on behalf of all persons employed by
24the taxpayer in Illinois or Illinois residents employed outside
25of Illinois by a taxpayer, for educational or vocational
26training in semi-technical or technical fields or semi-skilled

 

 

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1or skilled fields, which were deducted from gross income in the
2computation of taxable income. The credit against the tax
3imposed by subsections (a) and (b) shall be 1.6% of such
4training expenses. For partners, shareholders of subchapter S
5corporations, and owners of limited liability companies, if the
6liability company is treated as a partnership for purposes of
7federal and State income taxation, there shall be allowed a
8credit under this subsection (j) to be determined in accordance
9with the determination of income and distributive share of
10income under Sections 702 and 704 and subchapter S of the
11Internal Revenue Code.
12    Any credit allowed under this subsection which is unused in
13the year the credit is earned may be carried forward to each of
14the 5 taxable years following the year for which the credit is
15first computed until it is used. This credit shall be applied
16first to the earliest year for which there is a liability. If
17there is a credit under this subsection from more than one tax
18year that is available to offset a liability the earliest
19credit arising under this subsection shall be applied first. No
20carryforward credit may be claimed in any tax year ending on or
21after December 31, 2003.
22    (k) Research and development credit.
23    For tax years ending after July 1, 1990 and prior to
24December 31, 2003, and beginning again for tax years ending on
25or after December 31, 2004, and ending prior to January 1, 2016
26January 1, 2011, a taxpayer shall be allowed a credit against

 

 

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

 

 

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1    Any credit in excess of the tax liability for the taxable
2year may be carried forward. A taxpayer may elect to have the
3unused credit shown on its final completed return carried over
4as a credit against the tax liability for the following 5
5taxable years or until it has been fully used, whichever occurs
6first; provided that no credit earned in a tax year ending
7prior to December 31, 2003 may be carried forward to any year
8ending on or after December 31, 2003, and no credit may be
9carried forward to any taxable year ending on or after January
101, 2011.
11    If an unused credit is carried forward to a given year from
122 or more earlier years, that credit arising in the earliest
13year will be applied first against the tax liability for the
14given year. If a tax liability for the given year still
15remains, the credit from the next earliest year will then be
16applied, and so on, until all credits have been used or no tax
17liability for the given year remains. Any remaining unused
18credit or credits then will be carried forward to the next
19following year in which a tax liability is incurred, except
20that no credit can be carried forward to a year which is more
21than 5 years after the year in which the expense for which the
22credit is given was incurred.
23    No inference shall be drawn from this amendatory Act of the
2491st General Assembly in construing this Section for taxable
25years beginning before January 1, 1999.
26    (l) Environmental Remediation Tax Credit.

 

 

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

 

 

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

 

 

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1    unreimbursed eligible remediation costs in excess of the
2    maximum credit per site authorized under paragraph (i).
3    This credit shall be applied first to the earliest year for
4    which there is a liability. If there is a credit under this
5    subsection from more than one tax year that is available to
6    offset a liability, the earliest credit arising under this
7    subsection shall be applied first. A credit allowed under
8    this subsection may be sold to a buyer as part of a sale of
9    all or part of the remediation site for which the credit
10    was granted. The purchaser of a remediation site and the
11    tax credit shall succeed to the unused credit and remaining
12    carry-forward period of the seller. To perfect the
13    transfer, the assignor shall record the transfer in the
14    chain of title for the site and provide written notice to
15    the Director of the Illinois Department of Revenue of the
16    assignor's intent to sell the remediation site and the
17    amount of the tax credit to be transferred as a portion of
18    the sale. In no event may a credit be transferred to any
19    taxpayer if the taxpayer or a related party would not be
20    eligible under the provisions of subsection (i).
21        (iii) For purposes of this Section, the term "site"
22    shall have the same meaning as under Section 58.2 of the
23    Environmental Protection Act.
24    (m) Education expense credit. Beginning with tax years
25ending after December 31, 1999, a taxpayer who is the custodian
26of one or more qualifying pupils shall be allowed a credit

 

 

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1against the tax imposed by subsections (a) and (b) of this
2Section for qualified education expenses incurred on behalf of
3the qualifying pupils. The credit shall be equal to 25% of
4qualified education expenses, but in no event may the total
5credit under this subsection claimed by a family that is the
6custodian of qualifying pupils exceed $500. In no event shall a
7credit under this subsection reduce the taxpayer's liability
8under this Act to less than zero. This subsection is exempt
9from the provisions of Section 250 of this Act.
10    For purposes of this subsection:
11    "Qualifying pupils" means individuals who (i) are
12residents of the State of Illinois, (ii) are under the age of
1321 at the close of the school year for which a credit is
14sought, and (iii) during the school year for which a credit is
15sought were full-time pupils enrolled in a kindergarten through
16twelfth grade education program at any school, as defined in
17this subsection.
18    "Qualified education expense" means the amount incurred on
19behalf of a qualifying pupil in excess of $250 for tuition,
20book fees, and lab fees at the school in which the pupil is
21enrolled during the regular school year.
22    "School" means any public or nonpublic elementary or
23secondary school in Illinois that is in compliance with Title
24VI of the Civil Rights Act of 1964 and attendance at which
25satisfies the requirements of Section 26-1 of the School Code,
26except that nothing shall be construed to require a child to

 

 

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1attend any particular public or nonpublic school to qualify for
2the credit under this Section.
3    "Custodian" means, with respect to qualifying pupils, an
4Illinois resident who is a parent, the parents, a legal
5guardian, or the legal guardians of the qualifying pupils.
6    (n) River Edge Redevelopment Zone site remediation tax
7credit.
8        (i) For tax years ending on or after December 31, 2006,
9    a taxpayer shall be allowed a credit against the tax
10    imposed by subsections (a) and (b) of this Section for
11    certain amounts paid for unreimbursed eligible remediation
12    costs, as specified in this subsection. For purposes of
13    this Section, "unreimbursed eligible remediation costs"
14    means costs approved by the Illinois Environmental
15    Protection Agency ("Agency") under Section 58.14a of the
16    Environmental Protection Act that were paid in performing
17    environmental remediation at a site within a River Edge
18    Redevelopment Zone for which a No Further Remediation
19    Letter was issued by the Agency and recorded under Section
20    58.10 of the Environmental Protection Act. The credit must
21    be claimed for the taxable year in which Agency approval of
22    the eligible remediation costs is granted. The credit is
23    not available to any taxpayer if the taxpayer or any
24    related party caused or contributed to, in any material
25    respect, a release of regulated substances on, in, or under
26    the site that was identified and addressed by the remedial

 

 

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

 

 

SB0397 Enrolled- 94 -LRB097 04209 HLH 44248 b

1    this subsection may be sold to a buyer as part of a sale of
2    all or part of the remediation site for which the credit
3    was granted. The purchaser of a remediation site and the
4    tax credit shall succeed to the unused credit and remaining
5    carry-forward period of the seller. To perfect the
6    transfer, the assignor shall record the transfer in the
7    chain of title for the site and provide written notice to
8    the Director of the Illinois Department of Revenue of the
9    assignor's intent to sell the remediation site and the
10    amount of the tax credit to be transferred as a portion of
11    the sale. In no event may a credit be transferred to any
12    taxpayer if the taxpayer or a related party would not be
13    eligible under the provisions of subsection (i).
14        (iii) For purposes of this Section, the term "site"
15    shall have the same meaning as under Section 58.2 of the
16    Environmental Protection Act.
17(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1896-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
191-13-11; 97-2, eff. 5-6-11.)
 
20    (35 ILCS 5/207)  (from Ch. 120, par. 2-207)
21    Sec. 207. Net Losses.
22    (a) If after applying all of the (i) modifications provided
23for in paragraph (2) of Section 203(b), paragraph (2) of
24Section 203(c) and paragraph (2) of Section 203(d) and (ii) the
25allocation and apportionment provisions of Article 3 of this

 

 

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1Act and subsection (c) of this Section, the taxpayer's net
2income results in a loss;
3        (1) for any taxable year ending prior to December 31,
4    1999, such loss shall be allowed as a carryover or
5    carryback deduction in the manner allowed under Section 172
6    of the Internal Revenue Code;
7        (2) for any taxable year ending on or after December
8    31, 1999 and prior to December 31, 2003, such loss shall be
9    allowed as a carryback to each of the 2 taxable years
10    preceding the taxable year of such loss and shall be a net
11    operating loss carryover to each of the 20 taxable years
12    following the taxable year of such loss; and
13        (3) for any taxable year ending on or after December
14    31, 2003, such loss shall be allowed as a net operating
15    loss carryover to each of the 12 taxable years following
16    the taxable year of such loss, except as provided in
17    subsection (d).
18    (a-5) Election to relinquish carryback and order of
19application of losses.
20            (A) For losses incurred in tax years ending prior
21        to December 31, 2003, the taxpayer may elect to
22        relinquish the entire carryback period with respect to
23        such loss. Such election shall be made in the form and
24        manner prescribed by the Department and shall be made
25        by the due date (including extensions of time) for
26        filing the taxpayer's return for the taxable year in

 

 

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1        which such loss is incurred, and such election, once
2        made, shall be irrevocable.
3            (B) The entire amount of such loss shall be carried
4        to the earliest taxable year to which such loss may be
5        carried. The amount of such loss which shall be carried
6        to each of the other taxable years shall be the excess,
7        if any, of the amount of such loss over the sum of the
8        deductions for carryback or carryover of such loss
9        allowable for each of the prior taxable years to which
10        such loss may be carried.
11    (b) Any loss determined under subsection (a) of this
12Section must be carried back or carried forward in the same
13manner for purposes of subsections (a) and (b) of Section 201
14of this Act as for purposes of subsections (c) and (d) of
15Section 201 of this Act.
16    (c) Notwithstanding any other provision of this Act, for
17each taxable year ending on or after December 31, 2008, for
18purposes of computing the loss for the taxable year under
19subsection (a) of this Section and the deduction taken into
20account for the taxable year for a net operating loss carryover
21under paragraphs (1), (2), and (3) of subsection (a) of this
22Section, the loss and net operating loss carryover shall be
23reduced in an amount equal to the reduction to the net
24operating loss and net operating loss carryover to the taxable
25year, respectively, required under Section 108(b)(2)(A) of the
26Internal Revenue Code, multiplied by a fraction, the numerator

 

 

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1of which is the amount of discharge of indebtedness income that
2is excluded from gross income for the taxable year (but only if
3the taxable year ends on or after December 31, 2008) under
4Section 108(a) of the Internal Revenue Code and that would have
5been allocated and apportioned to this State under Article 3 of
6this Act but for that exclusion, and the denominator of which
7is the total amount of discharge of indebtedness income
8excluded from gross income under Section 108(a) of the Internal
9Revenue Code for the taxable year. The reduction required under
10this subsection (c) shall be made after the determination of
11Illinois net income for the taxable year in which the
12indebtedness is discharged.
13    (d) In the case of a corporation (other than a Subchapter S
14corporation), no carryover deduction shall be allowed under
15this Section for any taxable year ending after December 31,
162010 and prior to December 31, 2012, and no carryover deduction
17shall exceed $100,000 for any taxable year ending on or after
18December 31, 2012 and prior to December 31, 2014; provided
19that, for purposes of determining the taxable years to which a
20net loss may be carried under subsection (a) of this Section,
21no taxable year for which a deduction is disallowed under this
22subsection, or for which the deduction would exceed $100,000 if
23not for this subsection, shall be counted.
24    (e) In the case of a residual interest holder in a real
25estate mortgage investment conduit subject to Section 860E of
26the Internal Revenue Code, the net loss in subsection (a) shall

 

 

SB0397 Enrolled- 98 -LRB097 04209 HLH 44248 b

1be equal to:
2        (1) the amount computed under subsection (a), without
3    regard to this subsection (e), or if that amount is
4    positive, zero;
5        (2) minus an amount equal to the amount computed under
6    subsection (a), without regard to this subsection (e),
7    minus the amount that would be computed under subsection
8    (a) if the taxpayer's federal taxable income were computed
9    without regard to Section 860E of the Internal Revenue Code
10    and without regard to this subsection (e).
11    The modification in this subsection (e) is exempt from the
12provisions of Section 250.
13(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11.)
 
14    (35 ILCS 5/250)
15    Sec. 250. Sunset of exemptions, credits, and deductions.
16    (a) The application of every exemption, credit, and
17deduction against tax imposed by this Act that becomes law
18after the effective date of this amendatory Act of 1994 shall
19be limited by a reasonable and appropriate sunset date. A
20taxpayer is not entitled to take the exemption, credit, or
21deduction for tax years beginning on or after the sunset date.
22Except as provided in subsection (b) of this Section, if If a
23reasonable and appropriate sunset date is not specified in the
24Public Act that creates the exemption, credit, or deduction, a
25taxpayer shall not be entitled to take the exemption, credit,

 

 

SB0397 Enrolled- 99 -LRB097 04209 HLH 44248 b

1or deduction for tax years beginning on or after 5 years after
2the effective date of the Public Act creating the exemption,
3credit, or deduction and thereafter; provided, however, that in
4the case of any Public Act authorizing the issuance of
5tax-exempt obligations that does not specify a sunset date for
6the exemption or deduction of income derived from the
7obligations, the exemption or deduction shall not terminate
8until after the obligations have been paid by the issuer.
9    (b) Notwithstanding the provisions of subsection (a) of
10this Section, the sunset date of any exemption, credit, or
11deduction that is scheduled to expire in 2011, 2012, or 2013 by
12operation of this Section shall be extended by 5 years.
13(Source: P.A. 88-660, eff. 9-16-94; 89-460, eff. 5-24-96.)
 
14    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
15    Sec. 304. Business income of persons other than residents.
16    (a) In general. The business income of a person other than
17a resident shall be allocated to this State if such person's
18business income is derived solely from this State. If a person
19other than a resident derives business income from this State
20and one or more other states, then, for tax years ending on or
21before December 30, 1998, and except as otherwise provided by
22this Section, such person's business income shall be
23apportioned to this State by multiplying the income by a
24fraction, the numerator of which is the sum of the property
25factor (if any), the payroll factor (if any) and 200% of the

 

 

SB0397 Enrolled- 100 -LRB097 04209 HLH 44248 b

1sales factor (if any), and the denominator of which is 4
2reduced by the number of factors other than the sales factor
3which have a denominator of zero and by an additional 2 if the
4sales factor has a denominator of zero. For tax years ending on
5or after December 31, 1998, and except as otherwise provided by
6this Section, persons other than residents who derive business
7income from this State and one or more other states shall
8compute their apportionment factor by weighting their
9property, payroll, and sales factors as provided in subsection
10(h) of this Section.
11    (1) Property factor.
12        (A) The property factor is a fraction, the numerator of
13    which is the average value of the person's real and
14    tangible personal property owned or rented and used in the
15    trade or business in this State during the taxable year and
16    the denominator of which is the average value of all the
17    person's real and tangible personal property owned or
18    rented and used in the trade or business during the taxable
19    year.
20        (B) Property owned by the person is valued at its
21    original cost. Property rented by the person is valued at 8
22    times the net annual rental rate. Net annual rental rate is
23    the annual rental rate paid by the person less any annual
24    rental rate received by the person from sub-rentals.
25        (C) The average value of property shall be determined
26    by averaging the values at the beginning and ending of the

 

 

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1    taxable year but the Director may require the averaging of
2    monthly values during the taxable year if reasonably
3    required to reflect properly the average value of the
4    person's property.
5    (2) Payroll factor.
6        (A) The payroll factor is a fraction, the numerator of
7    which is the total amount paid in this State during the
8    taxable year by the person for compensation, and the
9    denominator of which is the total compensation paid
10    everywhere during the taxable year.
11        (B) Compensation is paid in this State if:
12            (i) The individual's service is performed entirely
13        within this State;
14            (ii) The individual's service is performed both
15        within and without this State, but the service
16        performed without this State is incidental to the
17        individual's service performed within this State; or
18            (iii) Some of the service is performed within this
19        State and either the base of operations, or if there is
20        no base of operations, the place from which the service
21        is directed or controlled is within this State, or the
22        base of operations or the place from which the service
23        is directed or controlled is not in any state in which
24        some part of the service is performed, but the
25        individual's residence is in this State.
26            (iv) Compensation paid to nonresident professional

 

 

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1        athletes.
2            (a) General. The Illinois source income of a
3        nonresident individual who is a member of a
4        professional athletic team includes the portion of the
5        individual's total compensation for services performed
6        as a member of a professional athletic team during the
7        taxable year which the number of duty days spent within
8        this State performing services for the team in any
9        manner during the taxable year bears to the total
10        number of duty days spent both within and without this
11        State during the taxable year.
12            (b) Travel days. Travel days that do not involve
13        either a game, practice, team meeting, or other similar
14        team event are not considered duty days spent in this
15        State. However, such travel days are considered in the
16        total duty days spent both within and without this
17        State.
18            (c) Definitions. For purposes of this subpart
19        (iv):
20                (1) The term "professional athletic team"
21            includes, but is not limited to, any professional
22            baseball, basketball, football, soccer, or hockey
23            team.
24                (2) The term "member of a professional
25            athletic team" includes those employees who are
26            active players, players on the disabled list, and

 

 

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1            any other persons required to travel and who travel
2            with and perform services on behalf of a
3            professional athletic team on a regular basis.
4            This includes, but is not limited to, coaches,
5            managers, and trainers.
6                (3) Except as provided in items (C) and (D) of
7            this subpart (3), the term "duty days" means all
8            days during the taxable year from the beginning of
9            the professional athletic team's official
10            pre-season training period through the last game
11            in which the team competes or is scheduled to
12            compete. Duty days shall be counted for the year in
13            which they occur, including where a team's
14            official pre-season training period through the
15            last game in which the team competes or is
16            scheduled to compete, occurs during more than one
17            tax year.
18                    (A) Duty days shall also include days on
19                which a member of a professional athletic team
20                performs service for a team on a date that does
21                not fall within the foregoing period (e.g.,
22                participation in instructional leagues, the
23                "All Star Game", or promotional "caravans").
24                Performing a service for a professional
25                athletic team includes conducting training and
26                rehabilitation activities, when such

 

 

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1                activities are conducted at team facilities.
2                    (B) Also included in duty days are game
3                days, practice days, days spent at team
4                meetings, promotional caravans, preseason
5                training camps, and days served with the team
6                through all post-season games in which the team
7                competes or is scheduled to compete.
8                    (C) Duty days for any person who joins a
9                team during the period from the beginning of
10                the professional athletic team's official
11                pre-season training period through the last
12                game in which the team competes, or is
13                scheduled to compete, shall begin on the day
14                that person joins the team. Conversely, duty
15                days for any person who leaves a team during
16                this period shall end on the day that person
17                leaves the team. Where a person switches teams
18                during a taxable year, a separate duty-day
19                calculation shall be made for the period the
20                person was with each team.
21                    (D) Days for which a member of a
22                professional athletic team is not compensated
23                and is not performing services for the team in
24                any manner, including days when such member of
25                a professional athletic team has been
26                suspended without pay and prohibited from

 

 

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1                performing any services for the team, shall not
2                be treated as duty days.
3                    (E) Days for which a member of a
4                professional athletic team is on the disabled
5                list and does not conduct rehabilitation
6                activities at facilities of the team, and is
7                not otherwise performing services for the team
8                in Illinois, shall not be considered duty days
9                spent in this State. All days on the disabled
10                list, however, are considered to be included in
11                total duty days spent both within and without
12                this State.
13                (4) The term "total compensation for services
14            performed as a member of a professional athletic
15            team" means the total compensation received during
16            the taxable year for services performed:
17                    (A) from the beginning of the official
18                pre-season training period through the last
19                game in which the team competes or is scheduled
20                to compete during that taxable year; and
21                    (B) during the taxable year on a date which
22                does not fall within the foregoing period
23                (e.g., participation in instructional leagues,
24                the "All Star Game", or promotional caravans).
25                This compensation shall include, but is not
26            limited to, salaries, wages, bonuses as described

 

 

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1            in this subpart, and any other type of compensation
2            paid during the taxable year to a member of a
3            professional athletic team for services performed
4            in that year. This compensation does not include
5            strike benefits, severance pay, termination pay,
6            contract or option year buy-out payments,
7            expansion or relocation payments, or any other
8            payments not related to services performed for the
9            team.
10                For purposes of this subparagraph, "bonuses"
11            included in "total compensation for services
12            performed as a member of a professional athletic
13            team" subject to the allocation described in
14            Section 302(c)(1) are: bonuses earned as a result
15            of play (i.e., performance bonuses) during the
16            season, including bonuses paid for championship,
17            playoff or "bowl" games played by a team, or for
18            selection to all-star league or other honorary
19            positions; and bonuses paid for signing a
20            contract, unless the payment of the signing bonus
21            is not conditional upon the signee playing any
22            games for the team or performing any subsequent
23            services for the team or even making the team, the
24            signing bonus is payable separately from the
25            salary and any other compensation, and the signing
26            bonus is nonrefundable.

 

 

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1    (3) Sales factor.
2        (A) The sales factor is a fraction, the numerator of
3    which is the total sales of the person in this State during
4    the taxable year, and the denominator of which is the total
5    sales of the person everywhere during the taxable year.
6        (B) Sales of tangible personal property are in this
7    State if:
8            (i) The property is delivered or shipped to a
9        purchaser, other than the United States government,
10        within this State regardless of the f. o. b. point or
11        other conditions of the sale; or
12            (ii) The property is shipped from an office, store,
13        warehouse, factory or other place of storage in this
14        State and either the purchaser is the United States
15        government or the person is not taxable in the state of
16        the purchaser; provided, however, that premises owned
17        or leased by a person who has independently contracted
18        with the seller for the printing of newspapers,
19        periodicals or books shall not be deemed to be an
20        office, store, warehouse, factory or other place of
21        storage for purposes of this Section. Sales of tangible
22        personal property are not in this State if the seller
23        and purchaser would be members of the same unitary
24        business group but for the fact that either the seller
25        or purchaser is a person with 80% or more of total
26        business activity outside of the United States and the

 

 

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1        property is purchased for resale.
2        (B-1) Patents, copyrights, trademarks, and similar
3    items of intangible personal property.
4            (i) Gross receipts from the licensing, sale, or
5        other disposition of a patent, copyright, trademark,
6        or similar item of intangible personal property, other
7        than gross receipts governed by paragraph (B-7) of this
8        item (3), are in this State to the extent the item is
9        utilized in this State during the year the gross
10        receipts are included in gross income.
11            (ii) Place of utilization.
12                (I) A patent is utilized in a state to the
13            extent that it is employed in production,
14            fabrication, manufacturing, or other processing in
15            the state or to the extent that a patented product
16            is produced in the state. If a patent is utilized
17            in more than one state, the extent to which it is
18            utilized in any one state shall be a fraction equal
19            to the gross receipts of the licensee or purchaser
20            from sales or leases of items produced,
21            fabricated, manufactured, or processed within that
22            state using the patent and of patented items
23            produced within that state, divided by the total of
24            such gross receipts for all states in which the
25            patent is utilized.
26                (II) A copyright is utilized in a state to the

 

 

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1            extent that printing or other publication
2            originates in the state. If a copyright is utilized
3            in more than one state, the extent to which it is
4            utilized in any one state shall be a fraction equal
5            to the gross receipts from sales or licenses of
6            materials printed or published in that state
7            divided by the total of such gross receipts for all
8            states in which the copyright is utilized.
9                (III) Trademarks and other items of intangible
10            personal property governed by this paragraph (B-1)
11            are utilized in the state in which the commercial
12            domicile of the licensee or purchaser is located.
13            (iii) If the state of utilization of an item of
14        property governed by this paragraph (B-1) cannot be
15        determined from the taxpayer's books and records or
16        from the books and records of any person related to the
17        taxpayer within the meaning of Section 267(b) of the
18        Internal Revenue Code, 26 U.S.C. 267, the gross
19        receipts attributable to that item shall be excluded
20        from both the numerator and the denominator of the
21        sales factor.
22        (B-2) Gross receipts from the license, sale, or other
23    disposition of patents, copyrights, trademarks, and
24    similar items of intangible personal property, other than
25    gross receipts governed by paragraph (B-7) of this item
26    (3), may be included in the numerator or denominator of the

 

 

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1    sales factor only if gross receipts from licenses, sales,
2    or other disposition of such items comprise more than 50%
3    of the taxpayer's total gross receipts included in gross
4    income during the tax year and during each of the 2
5    immediately preceding tax years; provided that, when a
6    taxpayer is a member of a unitary business group, such
7    determination shall be made on the basis of the gross
8    receipts of the entire unitary business group.
9        (B-5) For taxable years ending on or after December 31,
10    2008, except as provided in subsections (ii) through (vii),
11    receipts from the sale of telecommunications service or
12    mobile telecommunications service are in this State if the
13    customer's service address is in this State.
14            (i) For purposes of this subparagraph (B-5), the
15        following terms have the following meanings:
16            "Ancillary services" means services that are
17        associated with or incidental to the provision of
18        "telecommunications services", including but not
19        limited to "detailed telecommunications billing",
20        "directory assistance", "vertical service", and "voice
21        mail services".
22            "Air-to-Ground Radiotelephone service" means a
23        radio service, as that term is defined in 47 CFR 22.99,
24        in which common carriers are authorized to offer and
25        provide radio telecommunications service for hire to
26        subscribers in aircraft.

 

 

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1            "Call-by-call Basis" means any method of charging
2        for telecommunications services where the price is
3        measured by individual calls.
4            "Communications Channel" means a physical or
5        virtual path of communications over which signals are
6        transmitted between or among customer channel
7        termination points.
8            "Conference bridging service" means an "ancillary
9        service" that links two or more participants of an
10        audio or video conference call and may include the
11        provision of a telephone number. "Conference bridging
12        service" does not include the "telecommunications
13        services" used to reach the conference bridge.
14            "Customer Channel Termination Point" means the
15        location where the customer either inputs or receives
16        the communications.
17            "Detailed telecommunications billing service"
18        means an "ancillary service" of separately stating
19        information pertaining to individual calls on a
20        customer's billing statement.
21            "Directory assistance" means an "ancillary
22        service" of providing telephone number information,
23        and/or address information.
24            "Home service provider" means the facilities based
25        carrier or reseller with which the customer contracts
26        for the provision of mobile telecommunications

 

 

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1        services.
2            "Mobile telecommunications service" means
3        commercial mobile radio service, as defined in Section
4        20.3 of Title 47 of the Code of Federal Regulations as
5        in effect on June 1, 1999.
6            "Place of primary use" means the street address
7        representative of where the customer's use of the
8        telecommunications service primarily occurs, which
9        must be the residential street address or the primary
10        business street address of the customer. In the case of
11        mobile telecommunications services, "place of primary
12        use" must be within the licensed service area of the
13        home service provider.
14            "Post-paid telecommunication service" means the
15        telecommunications service obtained by making a
16        payment on a call-by-call basis either through the use
17        of a credit card or payment mechanism such as a bank
18        card, travel card, credit card, or debit card, or by
19        charge made to a telephone number which is not
20        associated with the origination or termination of the
21        telecommunications service. A post-paid calling
22        service includes telecommunications service, except a
23        prepaid wireless calling service, that would be a
24        prepaid calling service except it is not exclusively a
25        telecommunication service.
26            "Prepaid telecommunication service" means the

 

 

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1        right to access exclusively telecommunications
2        services, which must be paid for in advance and which
3        enables the origination of calls using an access number
4        or authorization code, whether manually or
5        electronically dialed, and that is sold in
6        predetermined units or dollars of which the number
7        declines with use in a known amount.
8            "Prepaid Mobile telecommunication service" means a
9        telecommunications service that provides the right to
10        utilize mobile wireless service as well as other
11        non-telecommunication services, including but not
12        limited to ancillary services, which must be paid for
13        in advance that is sold in predetermined units or
14        dollars of which the number declines with use in a
15        known amount.
16            "Private communication service" means a
17        telecommunication service that entitles the customer
18        to exclusive or priority use of a communications
19        channel or group of channels between or among
20        termination points, regardless of the manner in which
21        such channel or channels are connected, and includes
22        switching capacity, extension lines, stations, and any
23        other associated services that are provided in
24        connection with the use of such channel or channels.
25            "Service address" means:
26                (a) The location of the telecommunications

 

 

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1            equipment to which a customer's call is charged and
2            from which the call originates or terminates,
3            regardless of where the call is billed or paid;
4                (b) If the location in line (a) is not known,
5            service address means the origination point of the
6            signal of the telecommunications services first
7            identified by either the seller's
8            telecommunications system or in information
9            received by the seller from its service provider
10            where the system used to transport such signals is
11            not that of the seller; and
12                (c) If the locations in line (a) and line (b)
13            are not known, the service address means the
14            location of the customer's place of primary use.
15            "Telecommunications service" means the electronic
16        transmission, conveyance, or routing of voice, data,
17        audio, video, or any other information or signals to a
18        point, or between or among points. The term
19        "telecommunications service" includes such
20        transmission, conveyance, or routing in which computer
21        processing applications are used to act on the form,
22        code or protocol of the content for purposes of
23        transmission, conveyance or routing without regard to
24        whether such service is referred to as voice over
25        Internet protocol services or is classified by the
26        Federal Communications Commission as enhanced or value

 

 

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1        added. "Telecommunications service" does not include:
2                (a) Data processing and information services
3            that allow data to be generated, acquired, stored,
4            processed, or retrieved and delivered by an
5            electronic transmission to a purchaser when such
6            purchaser's primary purpose for the underlying
7            transaction is the processed data or information;
8                (b) Installation or maintenance of wiring or
9            equipment on a customer's premises;
10                (c) Tangible personal property;
11                (d) Advertising, including but not limited to
12            directory advertising.
13                (e) Billing and collection services provided
14            to third parties;
15                (f) Internet access service;
16                (g) Radio and television audio and video
17            programming services, regardless of the medium,
18            including the furnishing of transmission,
19            conveyance and routing of such services by the
20            programming service provider. Radio and television
21            audio and video programming services shall include
22            but not be limited to cable service as defined in
23            47 USC 522(6) and audio and video programming
24            services delivered by commercial mobile radio
25            service providers, as defined in 47 CFR 20.3;
26                (h) "Ancillary services"; or

 

 

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1                (i) Digital products "delivered
2            electronically", including but not limited to
3            software, music, video, reading materials or ring
4            tones.
5            "Vertical service" means an "ancillary service"
6        that is offered in connection with one or more
7        "telecommunications services", which offers advanced
8        calling features that allow customers to identify
9        callers and to manage multiple calls and call
10        connections, including "conference bridging services".
11            "Voice mail service" means an "ancillary service"
12        that enables the customer to store, send or receive
13        recorded messages. "Voice mail service" does not
14        include any "vertical services" that the customer may
15        be required to have in order to utilize the "voice mail
16        service".
17            (ii) Receipts from the sale of telecommunications
18        service sold on an individual call-by-call basis are in
19        this State if either of the following applies:
20                (a) The call both originates and terminates in
21            this State.
22                (b) The call either originates or terminates
23            in this State and the service address is located in
24            this State.
25            (iii) Receipts from the sale of postpaid
26        telecommunications service at retail are in this State

 

 

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1        if the origination point of the telecommunication
2        signal, as first identified by the service provider's
3        telecommunication system or as identified by
4        information received by the seller from its service
5        provider if the system used to transport
6        telecommunication signals is not the seller's, is
7        located in this State.
8            (iv) Receipts from the sale of prepaid
9        telecommunications service or prepaid mobile
10        telecommunications service at retail are in this State
11        if the purchaser obtains the prepaid card or similar
12        means of conveyance at a location in this State.
13        Receipts from recharging a prepaid telecommunications
14        service or mobile telecommunications service is in
15        this State if the purchaser's billing information
16        indicates a location in this State.
17            (v) Receipts from the sale of private
18        communication services are in this State as follows:
19                (a) 100% of receipts from charges imposed at
20            each channel termination point in this State.
21                (b) 100% of receipts from charges for the total
22            channel mileage between each channel termination
23            point in this State.
24                (c) 50% of the total receipts from charges for
25            service segments when those segments are between 2
26            customer channel termination points, 1 of which is

 

 

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

 

 

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1            service that both originates and terminates in
2            this State.
3                (b) 50% of the receipts from access fees
4            attributable to interstate telecommunications
5            service if the interstate call either originates
6            or terminates in this State.
7                (c) 100% of the receipts from interstate end
8            user access line charges, if the customer's
9            service address is in this State. As used in this
10            subdivision, "interstate end user access line
11            charges" includes, but is not limited to, the
12            surcharge approved by the federal communications
13            commission and levied pursuant to 47 CFR 69.
14                (d) Gross receipts from sales of
15            telecommunication services or from ancillary
16            services for telecommunications services sold to
17            other telecommunication service providers for
18            resale shall be sourced to this State using the
19            apportionment concepts used for non-resale
20            receipts of telecommunications services if the
21            information is readily available to make that
22            determination. If the information is not readily
23            available, then the taxpayer may use any other
24            reasonable and consistent method.
25        (B-7) For taxable years ending on or after December 31,
26    2008, receipts from the sale of broadcasting services are

 

 

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1    in this State if the broadcasting services are received in
2    this State. For purposes of this paragraph (B-7), the
3    following terms have the following meanings:
4            "Advertising revenue" means consideration received
5        by the taxpayer in exchange for broadcasting services
6        or allowing the broadcasting of commercials or
7        announcements in connection with the broadcasting of
8        film or radio programming, from sponsorships of the
9        programming, or from product placements in the
10        programming.
11            "Audience factor" means the ratio that the
12        audience or subscribers located in this State of a
13        station, a network, or a cable system bears to the
14        total audience or total subscribers for that station,
15        network, or cable system. The audience factor for film
16        or radio programming shall be determined by reference
17        to the books and records of the taxpayer or by
18        reference to published rating statistics provided the
19        method used by the taxpayer is consistently used from
20        year to year for this purpose and fairly represents the
21        taxpayer's activity in this State.
22            "Broadcast" or "broadcasting" or "broadcasting
23        services" means the transmission or provision of film
24        or radio programming, whether through the public
25        airwaves, by cable, by direct or indirect satellite
26        transmission, or by any other means of communication,

 

 

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1        either through a station, a network, or a cable system.
2            "Film" or "film programming" means the broadcast
3        on television of any and all performances, events, or
4        productions, including but not limited to news,
5        sporting events, plays, stories, or other literary,
6        commercial, educational, or artistic works, either
7        live or through the use of video tape, disc, or any
8        other type of format or medium. Each episode of a
9        series of films produced for television shall
10        constitute separate "film" notwithstanding that the
11        series relates to the same principal subject and is
12        produced during one or more tax periods.
13            "Radio" or "radio programming" means the broadcast
14        on radio of any and all performances, events, or
15        productions, including but not limited to news,
16        sporting events, plays, stories, or other literary,
17        commercial, educational, or artistic works, either
18        live or through the use of an audio tape, disc, or any
19        other format or medium. Each episode in a series of
20        radio programming produced for radio broadcast shall
21        constitute a separate "radio programming"
22        notwithstanding that the series relates to the same
23        principal subject and is produced during one or more
24        tax periods.
25                (i) In the case of advertising revenue from
26            broadcasting, the customer is the advertiser and

 

 

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1            the service is received in this State if the
2            commercial domicile of the advertiser is in this
3            State.
4                (ii) 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            received from the recipient of the broadcast, the
8            portion of the service that is received in this
9            State is measured by the portion of the recipients
10            of the broadcast located in this State.
11            Accordingly, the fee or other remuneration for
12            such service that is included in the Illinois
13            numerator of the sales factor is the total of those
14            fees or other remuneration received from
15            recipients in Illinois. For purposes of this
16            paragraph, a taxpayer may determine the location
17            of the recipients of its broadcast using the
18            address of the recipient shown in its contracts
19            with the recipient or using the billing address of
20            the recipient in the taxpayer's records.
21                (iii) In the case where film or radio
22            programming is broadcast by a station, a network,
23            or a cable system for a fee or other remuneration
24            from the person providing the programming, the
25            portion of the broadcast service that is received
26            by such station, network, or cable system in this

 

 

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1            State is measured by the portion of recipients of
2            the broadcast located in this State. Accordingly,
3            the amount of revenue related to such an
4            arrangement that is included in the Illinois
5            numerator of the sales factor is the total fee or
6            other total remuneration from the person providing
7            the programming related to that broadcast
8            multiplied by the Illinois audience factor for
9            that broadcast.
10                (iv) In the case where film or radio
11            programming is provided by a taxpayer that is a
12            network or station to a customer for broadcast in
13            exchange for a fee or other remuneration from that
14            customer the broadcasting service is received at
15            the location of the office of the customer from
16            which the services were ordered in the regular
17            course of the customer's trade or business.
18            Accordingly, in such a case the revenue derived by
19            the taxpayer that is included in the taxpayer's
20            Illinois numerator of the sales factor is the
21            revenue from such customers who receive the
22            broadcasting service in Illinois.
23                (v) In the case where film or radio programming
24            is provided by a taxpayer that is not a network or
25            station to another person for broadcasting in
26            exchange for a fee or other remuneration from that

 

 

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1            person, the broadcasting service is received at
2            the location of the office of the customer from
3            which the services were ordered in the regular
4            course of the customer's trade or business.
5            Accordingly, in such a case the revenue derived by
6            the taxpayer that is included in the taxpayer's
7            Illinois numerator of the sales factor is the
8            revenue from such customers who receive the
9            broadcasting service in Illinois.
10        (C) For taxable years ending before December 31, 2008,
11    sales, other than sales governed by paragraphs (B), (B-1),
12    and (B-2), are in this State if:
13            (i) The income-producing activity is performed in
14        this State; or
15            (ii) The income-producing activity is performed
16        both within and without this State and a greater
17        proportion of the income-producing activity is
18        performed within this State than without this State,
19        based on performance costs.
20        (C-5) For taxable years ending on or after December 31,
21    2008, sales, other than sales governed by paragraphs (B),
22    (B-1), (B-2), (B-5), and (B-7), are in this State if any of
23    the following criteria are met:
24            (i) Sales from the sale or lease of real property
25        are in this State if the property is located in this
26        State.

 

 

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1            (ii) Sales from the lease or rental of tangible
2        personal property are in this State if the property is
3        located in this State during the rental period. Sales
4        from the lease or rental of tangible personal property
5        that is characteristically moving property, including,
6        but not limited to, motor vehicles, rolling stock,
7        aircraft, vessels, or mobile equipment are in this
8        State to the extent that the property is used in this
9        State.
10            (iii) In the case of interest, net gains (but not
11        less than zero) and other items of income from
12        intangible personal property, the sale is in this State
13        if:
14                (a) in the case of a taxpayer who is a dealer
15            in the item of intangible personal property within
16            the meaning of Section 475 of the Internal Revenue
17            Code, the income or gain is received from a
18            customer in this State. For purposes of this
19            subparagraph, a customer is in this State if the
20            customer is an individual, trust or estate who is a
21            resident of this State and, for all other
22            customers, if the customer's commercial domicile
23            is in this State. Unless the dealer has actual
24            knowledge of the residence or commercial domicile
25            of a customer during a taxable year, the customer
26            shall be deemed to be a customer in this State if

 

 

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1            the billing address of the customer, as shown in
2            the records of the dealer, is in this State; or
3                (b) in all other cases, if the
4            income-producing activity of the taxpayer is
5            performed in this State or, if the
6            income-producing activity of the taxpayer is
7            performed both within and without this State, if a
8            greater proportion of the income-producing
9            activity of the taxpayer is performed within this
10            State than in any other state, based on performance
11            costs.
12            (iv) Sales of services are in this State if the
13        services are received in this State. For the purposes
14        of this section, gross receipts from the performance of
15        services provided to a corporation, partnership, or
16        trust may only be attributed to a state where that
17        corporation, partnership, or trust has a fixed place of
18        business. If the state where the services are received
19        is not readily determinable or is a state where the
20        corporation, partnership, or trust receiving the
21        service does not have a fixed place of business, the
22        services shall be deemed to be received at the location
23        of the office of the customer from which the services
24        were ordered in the regular course of the customer's
25        trade or business. If the ordering office cannot be
26        determined, the services shall be deemed to be received

 

 

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1        at the office of the customer to which the services are
2        billed. If the taxpayer is not taxable in the state in
3        which the services are received, the sale must be
4        excluded from both the numerator and the denominator of
5        the sales factor. The Department shall adopt rules
6        prescribing where specific types of service are
7        received, including, but not limited to, publishing,
8        and utility service.
9        (D) For taxable years ending on or after December 31,
10    1995, the following items of income shall not be included
11    in the numerator or denominator of the sales factor:
12    dividends; amounts included under Section 78 of the
13    Internal Revenue Code; and Subpart F income as defined in
14    Section 952 of the Internal Revenue Code. No inference
15    shall be drawn from the enactment of this paragraph (D) in
16    construing this Section for taxable years ending before
17    December 31, 1995.
18        (E) Paragraphs (B-1) and (B-2) shall apply to tax years
19    ending on or after December 31, 1999, provided that a
20    taxpayer may elect to apply the provisions of these
21    paragraphs to prior tax years. Such election shall be made
22    in the form and manner prescribed by the Department, shall
23    be irrevocable, and shall apply to all tax years; provided
24    that, if a taxpayer's Illinois income tax liability for any
25    tax year, as assessed under Section 903 prior to January 1,
26    1999, was computed in a manner contrary to the provisions

 

 

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1    of paragraphs (B-1) or (B-2), no refund shall be payable to
2    the taxpayer for that tax year to the extent such refund is
3    the result of applying the provisions of paragraph (B-1) or
4    (B-2) retroactively. In the case of a unitary business
5    group, such election shall apply to all members of such
6    group for every tax year such group is in existence, but
7    shall not apply to any taxpayer for any period during which
8    that taxpayer is not a member of such group.
9    (b) Insurance companies.
10        (1) In general. Except as otherwise provided by
11    paragraph (2), business income of an insurance company for
12    a taxable year shall be apportioned to this State by
13    multiplying such income by a fraction, the numerator of
14    which is the direct premiums written for insurance upon
15    property or risk in this State, and the denominator of
16    which is the direct premiums written for insurance upon
17    property or risk everywhere. For purposes of this
18    subsection, the term "direct premiums written" means the
19    total amount of direct premiums written, assessments and
20    annuity considerations as reported for the taxable year on
21    the annual statement filed by the company with the Illinois
22    Director of Insurance in the form approved by the National
23    Convention of Insurance Commissioners or such other form as
24    may be prescribed in lieu thereof.
25        (2) Reinsurance. If the principal source of premiums
26    written by an insurance company consists of premiums for

 

 

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1    reinsurance accepted by it, the business income of such
2    company shall be apportioned to this State by multiplying
3    such income by a fraction, the numerator of which is the
4    sum of (i) direct premiums written for insurance upon
5    property or risk in this State, plus (ii) premiums written
6    for reinsurance accepted in respect of property or risk in
7    this State, and the denominator of which is the sum of
8    (iii) direct premiums written for insurance upon property
9    or risk everywhere, plus (iv) premiums written for
10    reinsurance accepted in respect of property or risk
11    everywhere. For purposes of this paragraph, premiums
12    written for reinsurance accepted in respect of property or
13    risk in this State, whether or not otherwise determinable,
14    may, at the election of the company, be determined on the
15    basis of the proportion which premiums written for
16    reinsurance accepted from companies commercially domiciled
17    in Illinois bears to premiums written for reinsurance
18    accepted from all sources, or, alternatively, in the
19    proportion which the sum of the direct premiums written for
20    insurance upon property or risk in this State by each
21    ceding company from which reinsurance is accepted bears to
22    the sum of the total direct premiums written by each such
23    ceding company for the taxable year. The election made by a
24    company under this paragraph for its first taxable year
25    ending on or after December 31, 2011, shall be binding for
26    that company for that taxable year and for all subsequent

 

 

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1    taxable years, and may be altered only with the written
2    permission of the Department, which shall not be
3    unreasonably withheld.
4    (c) Financial organizations.
5        (1) In general. For taxable years ending before
6    December 31, 2008, business income of a financial
7    organization shall be apportioned to this State by
8    multiplying such income by a fraction, the numerator of
9    which is its business income from sources within this
10    State, and the denominator of which is its business income
11    from all sources. For the purposes of this subsection, the
12    business income of a financial organization from sources
13    within this State is the sum of the amounts referred to in
14    subparagraphs (A) through (E) following, but excluding the
15    adjusted income of an international banking facility as
16    determined in paragraph (2):
17            (A) Fees, commissions or other compensation for
18        financial services rendered within this State;
19            (B) Gross profits from trading in stocks, bonds or
20        other securities managed within this State;
21            (C) Dividends, and interest from Illinois
22        customers, which are received within this State;
23            (D) Interest charged to customers at places of
24        business maintained within this State for carrying
25        debit balances of margin accounts, without deduction
26        of any costs incurred in carrying such accounts; and

 

 

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1            (E) Any other gross income resulting from the
2        operation as a financial organization within this
3        State. In computing the amounts referred to in
4        paragraphs (A) through (E) of this subsection, any
5        amount received by a member of an affiliated group
6        (determined under Section 1504(a) of the Internal
7        Revenue Code but without reference to whether any such
8        corporation is an "includible corporation" under
9        Section 1504(b) of the Internal Revenue Code) from
10        another member of such group shall be included only to
11        the extent such amount exceeds expenses of the
12        recipient directly related thereto.
13        (2) International Banking Facility. For taxable years
14    ending before December 31, 2008:
15            (A) Adjusted Income. The adjusted income of an
16        international banking facility is its income reduced
17        by the amount of the floor amount.
18            (B) Floor Amount. The floor amount shall be the
19        amount, if any, determined by multiplying the income of
20        the international banking facility by a fraction, not
21        greater than one, which is determined as follows:
22                (i) The numerator shall be:
23                The average aggregate, determined on a
24            quarterly basis, of the financial organization's
25            loans to banks in foreign countries, to foreign
26            domiciled borrowers (except where secured

 

 

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1            primarily by real estate) and to foreign
2            governments and other foreign official
3            institutions, as reported for its branches,
4            agencies and offices within the state on its
5            "Consolidated Report of Condition", Schedule A,
6            Lines 2.c., 5.b., and 7.a., which was filed with
7            the Federal Deposit Insurance Corporation and
8            other regulatory authorities, for the year 1980,
9            minus
10                The average aggregate, determined on a
11            quarterly basis, of such loans (other than loans of
12            an international banking facility), as reported by
13            the financial institution for its branches,
14            agencies and offices within the state, on the
15            corresponding Schedule and lines of the
16            Consolidated Report of Condition for the current
17            taxable year, provided, however, that in no case
18            shall the amount determined in this clause (the
19            subtrahend) exceed the amount determined in the
20            preceding clause (the minuend); and
21                (ii) the denominator shall be the average
22            aggregate, determined on a quarterly basis, of the
23            international banking facility's loans to banks in
24            foreign countries, to foreign domiciled borrowers
25            (except where secured primarily by real estate)
26            and to foreign governments and other foreign

 

 

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1            official institutions, which were recorded in its
2            financial accounts for the current taxable year.
3            (C) Change to Consolidated Report of Condition and
4        in Qualification. In the event the Consolidated Report
5        of Condition which is filed with the Federal Deposit
6        Insurance Corporation and other regulatory authorities
7        is altered so that the information required for
8        determining the floor amount is not found on Schedule
9        A, lines 2.c., 5.b. and 7.a., the financial institution
10        shall notify the Department and the Department may, by
11        regulations or otherwise, prescribe or authorize the
12        use of an alternative source for such information. The
13        financial institution shall also notify the Department
14        should its international banking facility fail to
15        qualify as such, in whole or in part, or should there
16        be any amendment or change to the Consolidated Report
17        of Condition, as originally filed, to the extent such
18        amendment or change alters the information used in
19        determining the floor amount.
20        (3) For taxable years ending on or after December 31,
21    2008, the business income of a financial organization shall
22    be apportioned to this State by multiplying such income by
23    a fraction, the numerator of which is its gross receipts
24    from sources in this State or otherwise attributable to
25    this State's marketplace and the denominator of which is
26    its gross receipts everywhere during the taxable year.

 

 

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1    "Gross receipts" for purposes of this subparagraph (3)
2    means gross income, including net taxable gain on
3    disposition of assets, including securities and money
4    market instruments, when derived from transactions and
5    activities in the regular course of the financial
6    organization's trade or business. The following examples
7    are illustrative:
8            (i) Receipts from the lease or rental of real or
9        tangible personal property are in this State if the
10        property is located in this State during the rental
11        period. Receipts from the lease or rental of tangible
12        personal property that is characteristically moving
13        property, including, but not limited to, motor
14        vehicles, rolling stock, aircraft, vessels, or mobile
15        equipment are from sources in this State to the extent
16        that the property is used in this State.
17            (ii) Interest income, commissions, fees, gains on
18        disposition, and other receipts from assets in the
19        nature of loans that are secured primarily by real
20        estate or tangible personal property are from sources
21        in this State if the security is located in this State.
22            (iii) Interest income, commissions, fees, gains on
23        disposition, and other receipts from consumer loans
24        that are not secured by real or tangible personal
25        property are from sources in this State if the debtor
26        is a resident of this State.

 

 

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1            (iv) Interest income, commissions, fees, gains on
2        disposition, and other receipts from commercial loans
3        and installment obligations that are not secured by
4        real or tangible personal property are from sources in
5        this State if the proceeds of the loan are to be
6        applied in this State. If it cannot be determined where
7        the funds are to be applied, the income and receipts
8        are from sources in this State if the office of the
9        borrower from which the loan was negotiated in the
10        regular course of business is located in this State. If
11        the location of this office cannot be determined, the
12        income and receipts shall be excluded from the
13        numerator and denominator of the sales factor.
14            (v) Interest income, fees, gains on disposition,
15        service charges, merchant discount income, and other
16        receipts from credit card receivables are from sources
17        in this State if the card charges are regularly billed
18        to a customer in this State.
19            (vi) Receipts from the performance of services,
20        including, but not limited to, fiduciary, advisory,
21        and brokerage services, are in this State if the
22        services are received in this State within the meaning
23        of subparagraph (a)(3)(C-5)(iv) of this Section.
24            (vii) Receipts from the issuance of travelers
25        checks and money orders are from sources in this State
26        if the checks and money orders are issued from a

 

 

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1        location within this State.
2            (viii) Receipts from investment assets and
3        activities and trading assets and activities are
4        included in the receipts factor as follows:
5                (1) Interest, dividends, net gains (but not
6            less than zero) and other income from investment
7            assets and activities from trading assets and
8            activities shall be included in the receipts
9            factor. Investment assets and activities and
10            trading assets and activities include but are not
11            limited to: investment securities; trading account
12            assets; federal funds; securities purchased and
13            sold under agreements to resell or repurchase;
14            options; futures contracts; forward contracts;
15            notional principal contracts such as swaps;
16            equities; and foreign currency transactions. With
17            respect to the investment and trading assets and
18            activities described in subparagraphs (A) and (B)
19            of this paragraph, the receipts factor shall
20            include the amounts described in such
21            subparagraphs.
22                    (A) The receipts factor shall include the
23                amount by which interest from federal funds
24                sold and securities purchased under resale
25                agreements exceeds interest expense on federal
26                funds purchased and securities sold under

 

 

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1                repurchase agreements.
2                    (B) The receipts factor shall include the
3                amount by which interest, dividends, gains and
4                other income from trading assets and
5                activities, including but not limited to
6                assets and activities in the matched book, in
7                the arbitrage book, and foreign currency
8                transactions, exceed amounts paid in lieu of
9                interest, amounts paid in lieu of dividends,
10                and losses from such assets and activities.
11                (2) The numerator of the receipts factor
12            includes interest, dividends, net gains (but not
13            less than zero), and other income from investment
14            assets and activities and from trading assets and
15            activities described in paragraph (1) of this
16            subsection that are attributable to this State.
17                    (A) The amount of interest, dividends, net
18                gains (but not less than zero), and other
19                income from investment assets and activities
20                in the investment account to be attributed to
21                this State and included in the numerator is
22                determined by multiplying all such income from
23                such assets and activities by a fraction, the
24                numerator of which is the gross income from
25                such assets and activities which are properly
26                assigned to a fixed place of business of the

 

 

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1                taxpayer within this State and the denominator
2                of which is the gross income from all such
3                assets and activities.
4                    (B) The amount of interest from federal
5                funds sold and purchased and from securities
6                purchased under resale agreements and
7                securities sold under repurchase agreements
8                attributable to this State and included in the
9                numerator is determined by multiplying the
10                amount described in subparagraph (A) of
11                paragraph (1) of this subsection from such
12                funds and such securities by a fraction, the
13                numerator of which is the gross income from
14                such funds and such securities 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 funds and such securities.
19                    (C) The amount of interest, dividends,
20                gains, and other income from trading assets and
21                activities, including but not limited to
22                assets and activities in the matched book, in
23                the arbitrage book and foreign currency
24                transactions (but excluding amounts described
25                in subparagraphs (A) or (B) of this paragraph),
26                attributable to this State and included in the

 

 

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1                numerator is determined by multiplying the
2                amount described in subparagraph (B) of
3                paragraph (1) of this subsection by a fraction,
4                the numerator of which is the gross income from
5                such trading assets and activities which are
6                properly assigned to a fixed place of business
7                of the taxpayer within this State and the
8                denominator of which is the gross income from
9                all such assets and activities.
10                    (D) Properly assigned, for purposes of
11                this paragraph (2) of this subsection, means
12                the investment or trading asset or activity is
13                assigned to the fixed place of business with
14                which it has a preponderance of substantive
15                contacts. An investment or trading asset or
16                activity assigned by the taxpayer to a fixed
17                place of business without the State shall be
18                presumed to have been properly assigned if:
19                        (i) the taxpayer has assigned, in the
20                    regular course of its business, such asset
21                    or activity on its records to a fixed place
22                    of business consistent with federal or
23                    state regulatory requirements;
24                        (ii) such assignment on its records is
25                    based upon substantive contacts of the
26                    asset or activity to such fixed place of

 

 

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

 

 

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1                domicile is located. For purposes of this
2                subparagraph (E), it shall be presumed,
3                subject to rebuttal, that taxpayer's
4                commercial domicile is in the state of the
5                United States or the District of Columbia to
6                which the greatest number of employees are
7                regularly connected with the management of the
8                investment or trading income or out of which
9                they are working, irrespective of where the
10                services of such employees are performed, as of
11                the last day of the taxable year.
12        (4) (Blank).
13        (5) (Blank).
14    (c-1) Federally regulated exchanges. For taxable years
15ending on or after December 31, 2012, business income of a
16federally regulated exchange shall, at the option of the
17federally regulated exchange, be apportioned to this State by
18multiplying such income by a fraction, the numerator of which
19is its business income from sources within this State, and the
20denominator of which is its business income from all sources.
21For purposes of this subsection, the business income within
22this State of a federally regulated exchange is the sum of the
23following:
24        (1) Receipts attributable to transactions executed on
25    a physical trading floor if that physical trading floor is
26    located in this State.

 

 

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1        (2) Receipts attributable to all other matching,
2    execution, or clearing transactions, including without
3    limitation receipts from the provision of matching,
4    execution, or clearing services to another entity,
5    multiplied by (i) for taxable years ending on or after
6    December 31, 2012 but before December 31, 2013, 63.77%; and
7    (ii) for taxable years ending on or after December 31,
8    2013, 27.54%.
9        (3) All other receipts not governed by subparagraphs
10    (1) or (2) of this subsection (c-1), to the extent the
11    receipts would be characterized as "sales in this State"
12    under item (3) of subsection (a) of this Section.
13    "Federally regulated exchange" means (i) a "registered
14entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
15or (C), (ii) an "exchange" or "clearing agency" within the
16meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
17entities regulated under any successor regulatory structure to
18the foregoing, and (iv) all taxpayers who are members of the
19same unitary business group as a federally regulated exchange,
20determined without regard to the prohibition in Section
211501(a)(27) of this Act against including in a unitary business
22group taxpayers who are ordinarily required to apportion
23business income under different subsections of this Section;
24provided that this subparagraph (iv) shall apply only if 50% or
25more of the business receipts of the unitary business group
26determined by application of this subparagraph (iv) for the

 

 

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1taxable year are attributable to the matching, execution, or
2clearing of transactions conducted by an entity described in
3subparagraph (i), (ii), or (iii) of this paragraph.
4    In no event shall the Illinois apportionment percentage
5computed in accordance with this subsection (c-1) for any
6taxpayer for any tax year be less than the Illinois
7apportionment percentage computed under this subsection (c-1)
8for that taxpayer for the first full tax year ending on or
9after December 31, 2013 for which this subsection (c-1) applied
10to the taxpayer.
11    (d) Transportation services. For taxable years ending
12before December 31, 2008, business income derived from
13furnishing transportation services shall be apportioned to
14this State in accordance with paragraphs (1) and (2):
15        (1) Such business income (other than that derived from
16    transportation by pipeline) shall be apportioned to this
17    State by multiplying such income by a fraction, the
18    numerator of which is the revenue miles of the person in
19    this State, and the denominator of which is the revenue
20    miles of the person everywhere. For purposes of this
21    paragraph, a revenue mile is the transportation of 1
22    passenger or 1 net ton of freight the distance of 1 mile
23    for a consideration. Where a person is engaged in the
24    transportation of both passengers and freight, the
25    fraction above referred to shall be determined by means of
26    an average of the passenger revenue mile fraction and the

 

 

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1    freight revenue mile fraction, weighted to reflect the
2    person's
3            (A) relative railway operating income from total
4        passenger and total freight service, as reported to the
5        Interstate Commerce Commission, in the case of
6        transportation by railroad, and
7            (B) relative gross receipts from passenger and
8        freight transportation, in case of transportation
9        other than by railroad.
10        (2) Such business income derived from transportation
11    by pipeline shall be apportioned to this State by
12    multiplying such income by a fraction, the numerator of
13    which is the revenue miles of the person in this State, and
14    the denominator of which is the revenue miles of the person
15    everywhere. For the purposes of this paragraph, a revenue
16    mile is the transportation by pipeline of 1 barrel of oil,
17    1,000 cubic feet of gas, or of any specified quantity of
18    any other substance, the distance of 1 mile for a
19    consideration.
20        (3) For taxable years ending on or after December 31,
21    2008, business income derived from providing
22    transportation services other than airline services shall
23    be apportioned to this State by using a fraction, (a) the
24    numerator of which shall be (i) all receipts from any
25    movement or shipment of people, goods, mail, oil, gas, or
26    any other substance (other than by airline) that both

 

 

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

 

 

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1    by multiplying such income by a fraction, the numerator of
2    which is the revenue miles of the person in this State, and
3    the denominator of which is the revenue miles of the person
4    everywhere. For purposes of this paragraph, a revenue mile
5    is the transportation of one passenger or one net ton of
6    freight the distance of one mile for a consideration. If a
7    person is engaged in the transportation of both passengers
8    and freight, the fraction above referred to shall be
9    determined by means of an average of the passenger revenue
10    mile fraction and the freight revenue mile fraction,
11    weighted to reflect the person's relative gross receipts
12    from passenger and freight airline transportation.
13    (e) Combined apportionment. Where 2 or more persons are
14engaged in a unitary business as described in subsection
15(a)(27) of Section 1501, a part of which is conducted in this
16State by one or more members of the group, the business income
17attributable to this State by any such member or members shall
18be apportioned by means of the combined apportionment method.
19    (f) Alternative allocation. If the allocation and
20apportionment provisions of subsections (a) through (e) and of
21subsection (h) do not fairly represent the extent of a person's
22business activity in this State, the person may petition for,
23or the Director may, without a petition, permit or require, in
24respect of all or any part of the person's business activity,
25if reasonable:
26        (1) Separate accounting;

 

 

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1        (2) The exclusion of any one or more factors;
2        (3) The inclusion of one or more additional factors
3    which will fairly represent the person's business
4    activities in this State; or
5        (4) The employment of any other method to effectuate an
6    equitable allocation and apportionment of the person's
7    business income.
8    (g) Cross reference. For allocation of business income by
9residents, see Section 301(a).
10    (h) For tax years ending on or after December 31, 1998, the
11apportionment factor of persons who apportion their business
12income to this State under subsection (a) shall be equal to:
13        (1) for tax years ending on or after December 31, 1998
14    and before December 31, 1999, 16 2/3% of the property
15    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
16    the sales factor;
17        (2) for tax years ending on or after December 31, 1999
18    and before December 31, 2000, 8 1/3% of the property factor
19    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
20    factor;
21        (3) for tax years ending on or after December 31, 2000,
22    the sales factor.
23If, in any tax year ending on or after December 31, 1998 and
24before December 31, 2000, the denominator of the payroll,
25property, or sales factor is zero, the apportionment factor
26computed in paragraph (1) or (2) of this subsection for that

 

 

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

 

 

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1            (B) Required Annual Payment. For purposes of
2        subparagraph (A), the term "required annual payment"
3        means the lesser of:
4                (i) 90% of the tax shown on the return for the
5            taxable year, or if no return is filed, 90% of the
6            tax for such year; ,
7                (ii) for installments due prior to February 1,
8            2011, and after January 31, 2012, 100% of the tax
9            shown on the return of the taxpayer for the
10            preceding taxable year if a return showing a
11            liability for tax was filed by the taxpayer for the
12            preceding taxable year and such preceding year was
13            a taxable year of 12 months; or
14                (iii) for installments due after January 31,
15            2011, and prior to February 1, 2012, 150% of the
16            tax shown on the return of the taxpayer for the
17            preceding taxable year if a return showing a
18            liability for tax was filed by the taxpayer for the
19            preceding taxable year and such preceding year was
20            a taxable year of 12 months.
21        (2) Lower Required Installment where Annualized Income
22    Installment is Less Than Amount Determined Under Paragraph
23    (1).
24            (A) In General. In the case of any required
25        installment if a taxpayer establishes that the
26        annualized income installment is less than the amount

 

 

SB0397 Enrolled- 150 -LRB097 04209 HLH 44248 b

1        determined under paragraph (1),
2                (i) the amount of such required installment
3            shall be the annualized income installment, and
4                (ii) any reduction in a required installment
5            resulting from the application of this
6            subparagraph shall be recaptured by increasing the
7            amount of the next required installment determined
8            under paragraph (1) by the amount of such
9            reduction, and by increasing subsequent required
10            installments to the extent that the reduction has
11            not previously been recaptured under this clause.
12            (B) Determination of Annualized Income
13        Installment. In the case of any required installment,
14        the annualized income installment is the excess, if
15        any, of:
16                (i) an amount equal to the applicable
17            percentage of the tax for the taxable year computed
18            by placing on an annualized basis the net income
19            for months in the taxable year ending before the
20            due date for the installment, over
21                (ii) the aggregate amount of any prior
22            required installments for the taxable year.
23            (C) Applicable Percentage.
24        In the case of the followingThe applicable
25        required installments:percentage is:
26        1st ...............................22.5%

 

 

SB0397 Enrolled- 151 -LRB097 04209 HLH 44248 b

1        2nd ...............................45%
2        3rd ...............................67.5%
3        4th ...............................90%
4            (D) Annualized Net Income; Individuals. For
5        individuals, net income shall be placed on an
6        annualized basis by:
7                (i) multiplying by 12, or in the case of a
8            taxable year of less than 12 months, by the number
9            of months in the taxable year, the net income
10            computed without regard to the standard exemption
11            for the months in the taxable year ending before
12            the month in which the installment is required to
13            be paid;
14                (ii) dividing the resulting amount by the
15            number of months in the taxable year ending before
16            the month in which such installment date falls; and
17                (iii) deducting from such amount the standard
18            exemption allowable for the taxable year, such
19            standard exemption being determined as of the last
20            date prescribed for payment of the installment.
21            (E) Annualized Net Income; Corporations. For
22        corporations, net income shall be placed on an
23        annualized basis by multiplying by 12 the taxable
24        income
25                (i) for the first 3 months of the taxable year,
26            in the case of the installment required to be paid

 

 

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1            in the 4th month,
2                (ii) for the first 3 months or for the first 5
3            months of the taxable year, in the case of the
4            installment required to be paid in the 6th month,
5                (iii) for the first 6 months or for the first 8
6            months of the taxable year, in the case of the
7            installment required to be paid in the 9th month,
8            and
9                (iv) for the first 9 months or for the first 11
10            months of the taxable year, in the case of the
11            installment required to be paid in the 12th month
12            of the taxable year,
13        then dividing the resulting amount by the number of
14        months in the taxable year (3, 5, 6, 8, 9, or 11 as the
15        case may be).
16        (3) Notwithstanding any other provision of this
17    subsection (c), in the case of a federally regulated
18    exchange that elects to apportion its income under Section
19    304(c-1) of this Act, the amount of each required
20    installment due prior to June 30 of the first taxable year
21    to which the election applies shall be 25% of the tax that
22    would have been shown on the return for that taxable year
23    if the taxpayer had not made such election.
24    (d) Exceptions. Notwithstanding the provisions of the
25preceding subsections, the penalty imposed by subsection (a)
26shall not be imposed if the taxpayer was not required to file

 

 

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1an Illinois income tax return for the preceding taxable year,
2or, for individuals, if the taxpayer had no tax liability for
3the preceding taxable year and such year was a taxable year of
412 months. The penalty imposed by subsection (a) shall also not
5be imposed on any underpayments of estimated tax due before the
6effective date of this amendatory Act of 1998 which
7underpayments are solely attributable to the change in
8apportionment from subsection (a) to subsection (h) of Section
9304. The provisions of this amendatory Act of 1998 apply to tax
10years ending on or after December 31, 1998.
11    (e) The penalty imposed for underpayment of estimated tax
12by subsection (a) of this Section shall not be imposed to the
13extent that the Director or his or her designate determines,
14pursuant to Section 3-8 of the Uniform Penalty and Interest Act
15that the penalty should not be imposed.
16    (f) Definition of tax. For purposes of subsections (b) and
17(c), the term "tax" means the excess of the tax imposed under
18Article 2 of this Act, over the amounts credited against such
19tax under Sections 601(b) (3) and (4).
20    (g) Application of Section in case of tax withheld under
21Article 7. For purposes of applying this Section:
22        (1) tax withheld from compensation for the taxable year
23    shall be deemed a payment of estimated tax, and an equal
24    part of such amount shall be deemed paid on each
25    installment date for such taxable year, unless the taxpayer
26    establishes the dates on which all amounts were actually

 

 

SB0397 Enrolled- 154 -LRB097 04209 HLH 44248 b

1    withheld, in which case the amounts so withheld shall be
2    deemed payments of estimated tax on the dates on which such
3    amounts were actually withheld;
4        (2) amounts timely paid by a partnership, Subchapter S
5    corporation, or trust on behalf of a partner, shareholder,
6    or beneficiary pursuant to subsection (f) of Section 502 or
7    Section 709.5 and claimed as a payment of estimated tax
8    shall be deemed a payment of estimated tax made on the last
9    day of the taxable year of the partnership, Subchapter S
10    corporation, or trust for which the income from the
11    withholding is made was computed; and
12        (3) all other amounts pursuant to Article 7 shall be
13    deemed a payment of estimated tax on the date the payment
14    is made to the taxpayer of the amount from which the tax is
15    withheld.
16    (g-5) Amounts withheld under the State Salary and Annuity
17Withholding Act. An individual who has amounts withheld under
18paragraph (10) of Section 4 of the State Salary and Annuity
19Withholding Act may elect to have those amounts treated as
20payments of estimated tax made on the dates on which those
21amounts are actually withheld.
22    (i) Short taxable year. The application of this Section to
23taxable years of less than 12 months shall be in accordance
24with regulations prescribed by the Department.
25    The changes in this Section made by Public Act 84-127 shall
26apply to taxable years ending on or after January 1, 1986.

 

 

SB0397 Enrolled- 155 -LRB097 04209 HLH 44248 b

1(Source: P.A. 96-1496, eff. 1-13-11; 97-507, eff. 8-23-11;
2revised 11-18-11.)
 
3    (35 ILCS 5/1501)  (from Ch. 120, par. 15-1501)
4    Sec. 1501. Definitions.
5    (a) In general. When used in this Act, where not otherwise
6distinctly expressed or manifestly incompatible with the
7intent thereof:
8        (1) Business income. The term "business income" means
9    all income that may be treated as apportionable business
10    income under the Constitution of the United States.
11    Business income is net of the deductions allocable thereto.
12    Such term does not include compensation or the deductions
13    allocable thereto. For each taxable year beginning on or
14    after January 1, 2003, a taxpayer may elect to treat all
15    income other than compensation as business income. This
16    election shall be made in accordance with rules adopted by
17    the Department and, once made, shall be irrevocable.
18        (1.5) Captive real estate investment trust:
19            (A) The term "captive real estate investment
20        trust" means a corporation, trust, or association:
21                (i) that is considered a real estate
22            investment trust for the taxable year under
23            Section 856 of the Internal Revenue Code;
24                (ii) the certificates of beneficial interest
25            or shares of which are not regularly traded on an

 

 

SB0397 Enrolled- 156 -LRB097 04209 HLH 44248 b

1            established securities market; and
2                (iii) of which more than 50% of the voting
3            power or value of the beneficial interest or
4            shares, at any time during the last half of the
5            taxable year, is owned or controlled, directly,
6            indirectly, or constructively, by a single
7            corporation.
8            (B) The term "captive real estate investment
9        trust" does not include:
10                (i) a real estate investment trust of which
11            more than 50% of the voting power or value of the
12            beneficial interest or shares is owned or
13            controlled, directly, indirectly, or
14            constructively, by:
15                    (a) a real estate investment trust, other
16                than a captive real estate investment trust;
17                    (b) a person who is exempt from taxation
18                under Section 501 of the Internal Revenue Code,
19                and who is not required to treat income
20                received from the real estate investment trust
21                as unrelated business taxable income under
22                Section 512 of the Internal Revenue Code;
23                    (c) a listed Australian property trust, if
24                no more than 50% of the voting power or value
25                of the beneficial interest or shares of that
26                trust, at any time during the last half of the

 

 

SB0397 Enrolled- 157 -LRB097 04209 HLH 44248 b

1                taxable year, is owned or controlled, directly
2                or indirectly, by a single person;
3                    (d) an entity organized as a trust,
4                provided a listed Australian property trust
5                described in subparagraph (c) owns or
6                controls, directly or indirectly, or
7                constructively, 75% or more of the voting power
8                or value of the beneficial interests or shares
9                of such entity; or
10                    (e) an entity that is organized outside of
11                the laws of the United States and that
12                satisfies all of the following criteria:
13                        (1) at least 75% of the entity's total
14                    asset value at the close of its taxable
15                    year is represented by real estate assets
16                    (as defined in Section 856(c)(5)(B) of the
17                    Internal Revenue Code, thereby including
18                    shares or certificates of beneficial
19                    interest in any real estate investment
20                    trust), cash and cash equivalents, and
21                    U.S. Government securities;
22                        (2) the entity is not subject to tax on
23                    amounts that are distributed to its
24                    beneficial owners or is exempt from
25                    entity-level taxation;
26                        (3) the entity distributes at least

 

 

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1                    85% of its taxable income (as computed in
2                    the jurisdiction in which it is organized)
3                    to the holders of its shares or
4                    certificates of beneficial interest on an
5                    annual basis;
6                        (4) either (i) the shares or
7                    beneficial interests of the entity are
8                    regularly traded on an established
9                    securities market or (ii) not more than 10%
10                    of the voting power or value in the entity
11                    is held, directly, indirectly, or
12                    constructively, by a single entity or
13                    individual; and
14                        (5) the entity is organized in a
15                    country that has entered into a tax treaty
16                    with the United States; or
17                (ii) during its first taxable year for which it
18            elects to be treated as a real estate investment
19            trust under Section 856(c)(1) of the Internal
20            Revenue Code, a real estate investment trust the
21            certificates of beneficial interest or shares of
22            which are not regularly traded on an established
23            securities market, but only if the certificates of
24            beneficial interest or shares of the real estate
25            investment trust are regularly traded on an
26            established securities market prior to the earlier

 

 

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1            of the due date (including extensions) for filing
2            its return under this Act for that first taxable
3            year or the date it actually files that return.
4            (C) For the purposes of this subsection (1.5), the
5        constructive ownership rules prescribed under Section
6        318(a) of the Internal Revenue Code, as modified by
7        Section 856(d)(5) of the Internal Revenue Code, apply
8        in determining the ownership of stock, assets, or net
9        profits of any person.
10        (2) Commercial domicile. The term "commercial
11    domicile" means the principal place from which the trade or
12    business of the taxpayer is directed or managed.
13        (3) Compensation. The term "compensation" means wages,
14    salaries, commissions and any other form of remuneration
15    paid to employees for personal services.
16        (4) Corporation. The term "corporation" includes
17    associations, joint-stock companies, insurance companies
18    and cooperatives. Any entity, including a limited
19    liability company formed under the Illinois Limited
20    Liability Company Act, shall be treated as a corporation if
21    it is so classified for federal income tax purposes.
22        (5) Department. The term "Department" means the
23    Department of Revenue of this State.
24        (6) Director. The term "Director" means the Director of
25    Revenue of this State.
26        (7) Fiduciary. The term "fiduciary" means a guardian,

 

 

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1    trustee, executor, administrator, receiver, or any person
2    acting in any fiduciary capacity for any person.
3        (8) Financial organization.
4            (A) The term "financial organization" means any
5        bank, bank holding company, trust company, savings
6        bank, industrial bank, land bank, safe deposit
7        company, private banker, savings and loan association,
8        building and loan association, credit union, currency
9        exchange, cooperative bank, small loan company, sales
10        finance company, investment company, or any person
11        which is owned by a bank or bank holding company. For
12        the purpose of this Section a "person" will include
13        only those persons which a bank holding company may
14        acquire and hold an interest in, directly or
15        indirectly, under the provisions of the Bank Holding
16        Company Act of 1956 (12 U.S.C. 1841, et seq.), except
17        where interests in any person must be disposed of
18        within certain required time limits under the Bank
19        Holding Company Act of 1956.
20            (B) For purposes of subparagraph (A) of this
21        paragraph, the term "bank" includes (i) any entity that
22        is regulated by the Comptroller of the Currency under
23        the National Bank Act, or by the Federal Reserve Board,
24        or by the Federal Deposit Insurance Corporation and
25        (ii) any federally or State chartered bank operating as
26        a credit card bank.

 

 

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1            (C) For purposes of subparagraph (A) of this
2        paragraph, the term "sales finance company" has the
3        meaning provided in the following item (i) or (ii):
4                (i) A person primarily engaged in one or more
5            of the following businesses: the business of
6            purchasing customer receivables, the business of
7            making loans upon the security of customer
8            receivables, the business of making loans for the
9            express purpose of funding purchases of tangible
10            personal property or services by the borrower, or
11            the business of finance leasing. For purposes of
12            this item (i), "customer receivable" means:
13                    (a) a retail installment contract or
14                retail charge agreement within the meaning of
15                the Sales Finance Agency Act, the Retail
16                Installment Sales Act, or the Motor Vehicle
17                Retail Installment Sales Act;
18                    (b) an installment, charge, credit, or
19                similar contract or agreement arising from the
20                sale of tangible personal property or services
21                in a transaction involving a deferred payment
22                price payable in one or more installments
23                subsequent to the sale; or
24                    (c) the outstanding balance of a contract
25                or agreement described in provisions (a) or (b)
26                of this item (i).

 

 

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1                A customer receivable need not provide for
2            payment of interest on deferred payments. A sales
3            finance company may purchase a customer receivable
4            from, or make a loan secured by a customer
5            receivable to, the seller in the original
6            transaction or to a person who purchased the
7            customer receivable directly or indirectly from
8            that seller.
9                (ii) A corporation meeting each of the
10            following criteria:
11                    (a) the corporation must be a member of an
12                "affiliated group" within the meaning of
13                Section 1504(a) of the Internal Revenue Code,
14                determined without regard to Section 1504(b)
15                of the Internal Revenue Code;
16                    (b) more than 50% of the gross income of
17                the corporation for the taxable year must be
18                interest income derived from qualifying loans.
19                A "qualifying loan" is a loan made to a member
20                of the corporation's affiliated group that
21                originates customer receivables (within the
22                meaning of item (i)) or to whom customer
23                receivables originated by a member of the
24                affiliated group have been transferred, to the
25                extent the average outstanding balance of
26                loans from that corporation to members of its

 

 

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1                affiliated group during the taxable year do not
2                exceed the limitation amount for that
3                corporation. The "limitation amount" for a
4                corporation is the average outstanding
5                balances during the taxable year of customer
6                receivables (within the meaning of item (i))
7                originated by all members of the affiliated
8                group. If the average outstanding balances of
9                the loans made by a corporation to members of
10                its affiliated group exceed the limitation
11                amount, the interest income of that
12                corporation from qualifying loans shall be
13                equal to its interest income from loans to
14                members of its affiliated groups times a
15                fraction equal to the limitation amount
16                divided by the average outstanding balances of
17                the loans made by that corporation to members
18                of its affiliated group;
19                    (c) the total of all shareholder's equity
20                (including, without limitation, paid-in
21                capital on common and preferred stock and
22                retained earnings) of the corporation plus the
23                total of all of its loans, advances, and other
24                obligations payable or owed to members of its
25                affiliated group may not exceed 20% of the
26                total assets of the corporation at any time

 

 

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1                during the tax year; and
2                    (d) more than 50% of all interest-bearing
3                obligations of the affiliated group payable to
4                persons outside the group determined in
5                accordance with generally accepted accounting
6                principles must be obligations of the
7                corporation.
8            This amendatory Act of the 91st General Assembly is
9        declaratory of existing law.
10            (D) Subparagraphs (B) and (C) of this paragraph are
11        declaratory of existing law and apply retroactively,
12        for all tax years beginning on or before December 31,
13        1996, to all original returns, to all amended returns
14        filed no later than 30 days after the effective date of
15        this amendatory Act of 1996, and to all notices issued
16        on or before the effective date of this amendatory Act
17        of 1996 under subsection (a) of Section 903, subsection
18        (a) of Section 904, subsection (e) of Section 909, or
19        Section 912. A taxpayer that is a "financial
20        organization" that engages in any transaction with an
21        affiliate shall be a "financial organization" for all
22        purposes of this Act.
23            (E) For all tax years beginning on or before
24        December 31, 1996, a taxpayer that falls within the
25        definition of a "financial organization" under
26        subparagraphs (B) or (C) of this paragraph, but who

 

 

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1        does not fall within the definition of a "financial
2        organization" under the Proposed Regulations issued by
3        the Department of Revenue on July 19, 1996, may
4        irrevocably elect to apply the Proposed Regulations
5        for all of those years as though the Proposed
6        Regulations had been lawfully promulgated, adopted,
7        and in effect for all of those years. For purposes of
8        applying subparagraphs (B) or (C) of this paragraph to
9        all of those years, the election allowed by this
10        subparagraph applies only to the taxpayer making the
11        election and to those members of the taxpayer's unitary
12        business group who are ordinarily required to
13        apportion business income under the same subsection of
14        Section 304 of this Act as the taxpayer making the
15        election. No election allowed by this subparagraph
16        shall be made under a claim filed under subsection (d)
17        of Section 909 more than 30 days after the effective
18        date of this amendatory Act of 1996.
19            (F) Finance Leases. For purposes of this
20        subsection, a finance lease shall be treated as a loan
21        or other extension of credit, rather than as a lease,
22        regardless of how the transaction is characterized for
23        any other purpose, including the purposes of any
24        regulatory agency to which the lessor is subject. A
25        finance lease is any transaction in the form of a lease
26        in which the lessee is treated as the owner of the

 

 

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1        leased asset entitled to any deduction for
2        depreciation allowed under Section 167 of the Internal
3        Revenue Code.
4        (9) Fiscal year. The term "fiscal year" means an
5    accounting period of 12 months ending on the last day of
6    any month other than December.
7        (9.5) Fixed place of business. The term "fixed place of
8    business" has the same meaning as that term is given in
9    Section 864 of the Internal Revenue Code and the related
10    Treasury regulations.
11        (10) Includes and including. The terms "includes" and
12    "including" when used in a definition contained in this Act
13    shall not be deemed to exclude other things otherwise
14    within the meaning of the term defined.
15        (11) Internal Revenue Code. The term "Internal Revenue
16    Code" means the United States Internal Revenue Code of 1954
17    or any successor law or laws relating to federal income
18    taxes in effect for the taxable year.
19        (11.5) Investment partnership.
20            (A) The term "investment partnership" means any
21        entity that is treated as a partnership for federal
22        income tax purposes that meets the following
23        requirements:
24                (i) no less than 90% of the partnership's cost
25            of its total assets consists of qualifying
26            investment securities, deposits at banks or other

 

 

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1            financial institutions, and office space and
2            equipment reasonably necessary to carry on its
3            activities as an investment partnership;
4                (ii) no less than 90% of its gross income
5            consists of interest, dividends, and gains from
6            the sale or exchange of qualifying investment
7            securities; and
8                (iii) the partnership is not a dealer in
9            qualifying investment securities.
10            (B) For purposes of this paragraph (11.5), the term
11        "qualifying investment securities" includes all of the
12        following:
13                (i) common stock, including preferred or debt
14            securities convertible into common stock, and
15            preferred stock;
16                (ii) bonds, debentures, and other debt
17            securities;
18                (iii) foreign and domestic currency deposits
19            secured by federal, state, or local governmental
20            agencies;
21                (iv) mortgage or asset-backed securities
22            secured by federal, state, or local governmental
23            agencies;
24                (v) repurchase agreements and loan
25            participations;
26                (vi) foreign currency exchange contracts and

 

 

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1            forward and futures contracts on foreign
2            currencies;
3                (vii) stock and bond index securities and
4            futures contracts and other similar financial
5            securities and futures contracts on those
6            securities;
7                (viii) options for the purchase or sale of any
8            of the securities, currencies, contracts, or
9            financial instruments described in items (i) to
10            (vii), inclusive;
11                (ix) regulated futures contracts;
12                (x) commodities (not described in Section
13            1221(a)(1) of the Internal Revenue Code) or
14            futures, forwards, and options with respect to
15            such commodities, provided, however, that any item
16            of a physical commodity to which title is actually
17            acquired in the partnership's capacity as a dealer
18            in such commodity shall not be a qualifying
19            investment security;
20                (xi) derivatives; and
21                (xii) a partnership interest in another
22            partnership that is an investment partnership.
23        (12) Mathematical error. The term "mathematical error"
24    includes the following types of errors, omissions, or
25    defects in a return filed by a taxpayer which prevents
26    acceptance of the return as filed for processing:

 

 

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1            (A) arithmetic errors or incorrect computations on
2        the return or supporting schedules;
3            (B) entries on the wrong lines;
4            (C) omission of required supporting forms or
5        schedules or the omission of the information in whole
6        or in part called for thereon; and
7            (D) an attempt to claim, exclude, deduct, or
8        improperly report, in a manner directly contrary to the
9        provisions of the Act and regulations thereunder any
10        item of income, exemption, deduction, or credit.
11        (13) Nonbusiness income. The term "nonbusiness income"
12    means all income other than business income or
13    compensation.
14        (14) Nonresident. The term "nonresident" means a
15    person who is not a resident.
16        (15) Paid, incurred and accrued. The terms "paid",
17    "incurred" and "accrued" shall be construed according to
18    the method of accounting upon the basis of which the
19    person's base income is computed under this Act.
20        (16) Partnership and partner. The term "partnership"
21    includes a syndicate, group, pool, joint venture or other
22    unincorporated organization, through or by means of which
23    any business, financial operation, or venture is carried
24    on, and which is not, within the meaning of this Act, a
25    trust or estate or a corporation; and the term "partner"
26    includes a member in such syndicate, group, pool, joint

 

 

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1    venture or organization.
2        The term "partnership" includes any entity, including
3    a limited liability company formed under the Illinois
4    Limited Liability Company Act, classified as a partnership
5    for federal income tax purposes.
6        The term "partnership" does not include a syndicate,
7    group, pool, joint venture, or other unincorporated
8    organization established for the sole purpose of playing
9    the Illinois State Lottery.
10        (17) Part-year resident. The term "part-year resident"
11    means an individual who became a resident during the
12    taxable year or ceased to be a resident during the taxable
13    year. Under Section 1501(a)(20)(A)(i) residence commences
14    with presence in this State for other than a temporary or
15    transitory purpose and ceases with absence from this State
16    for other than a temporary or transitory purpose. Under
17    Section 1501(a)(20)(A)(ii) residence commences with the
18    establishment of domicile in this State and ceases with the
19    establishment of domicile in another State.
20        (18) Person. The term "person" shall be construed to
21    mean and include an individual, a trust, estate,
22    partnership, association, firm, company, corporation,
23    limited liability company, or fiduciary. For purposes of
24    Section 1301 and 1302 of this Act, a "person" means (i) an
25    individual, (ii) a corporation, (iii) an officer, agent, or
26    employee of a corporation, (iv) a member, agent or employee

 

 

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1    of a partnership, or (v) a member, manager, employee,
2    officer, director, or agent of a limited liability company
3    who in such capacity commits an offense specified in
4    Section 1301 and 1302.
5        (18A) Records. The term "records" includes all data
6    maintained by the taxpayer, whether on paper, microfilm,
7    microfiche, or any type of machine-sensible data
8    compilation.
9        (19) Regulations. The term "regulations" includes
10    rules promulgated and forms prescribed by the Department.
11        (20) Resident. The term "resident" means:
12            (A) an individual (i) who is in this State for
13        other than a temporary or transitory purpose during the
14        taxable year; or (ii) who is domiciled in this State
15        but is absent from the State for a temporary or
16        transitory purpose during the taxable year;
17            (B) The estate of a decedent who at his or her
18        death was domiciled in this State;
19            (C) A trust created by a will of a decedent who at
20        his death was domiciled in this State; and
21            (D) An irrevocable trust, the grantor of which was
22        domiciled in this State at the time such trust became
23        irrevocable. For purpose of this subparagraph, a trust
24        shall be considered irrevocable to the extent that the
25        grantor is not treated as the owner thereof under
26        Sections 671 through 678 of the Internal Revenue Code.

 

 

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1        (21) Sales. The term "sales" means all gross receipts
2    of the taxpayer not allocated under Sections 301, 302 and
3    303.
4        (22) State. The term "state" when applied to a
5    jurisdiction other than this State means any state of the
6    United States, the District of Columbia, the Commonwealth
7    of Puerto Rico, any Territory or Possession of the United
8    States, and any foreign country, or any political
9    subdivision of any of the foregoing. For purposes of the
10    foreign tax credit under Section 601, the term "state"
11    means any state of the United States, the District of
12    Columbia, the Commonwealth of Puerto Rico, and any
13    territory or possession of the United States, or any
14    political subdivision of any of the foregoing, effective
15    for tax years ending on or after December 31, 1989.
16        (23) Taxable year. The term "taxable year" means the
17    calendar year, or the fiscal year ending during such
18    calendar year, upon the basis of which the base income is
19    computed under this Act. "Taxable year" means, in the case
20    of a return made for a fractional part of a year under the
21    provisions of this Act, the period for which such return is
22    made.
23        (24) Taxpayer. The term "taxpayer" means any person
24    subject to the tax imposed by this Act.
25        (25) International banking facility. The term
26    international banking facility shall have the same meaning

 

 

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1    as is set forth in the Illinois Banking Act or as is set
2    forth in the laws of the United States or regulations of
3    the Board of Governors of the Federal Reserve System.
4        (26) Income Tax Return Preparer.
5            (A) The term "income tax return preparer" means any
6        person who prepares for compensation, or who employs
7        one or more persons to prepare for compensation, any
8        return of tax imposed by this Act or any claim for
9        refund of tax imposed by this Act. The preparation of a
10        substantial portion of a return or claim for refund
11        shall be treated as the preparation of that return or
12        claim for refund.
13            (B) A person is not an income tax return preparer
14        if all he or she does is
15                (i) furnish typing, reproducing, or other
16            mechanical assistance;
17                (ii) prepare returns or claims for refunds for
18            the employer by whom he or she is regularly and
19            continuously employed;
20                (iii) prepare as a fiduciary returns or claims
21            for refunds for any person; or
22                (iv) prepare claims for refunds for a taxpayer
23            in response to any notice of deficiency issued to
24            that taxpayer or in response to any waiver of
25            restriction after the commencement of an audit of
26            that taxpayer or of another taxpayer if a

 

 

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1            determination in the audit of the other taxpayer
2            directly or indirectly affects the tax liability
3            of the taxpayer whose claims he or she is
4            preparing.
5        (27) Unitary business group.
6            (A) The term "unitary business group" means a group
7        of persons related through common ownership whose
8        business activities are integrated with, dependent
9        upon and contribute to each other. The group will not
10        include those members whose business activity outside
11        the United States is 80% or more of any such member's
12        total business activity; for purposes of this
13        paragraph and clause (a)(3)(B)(ii) of Section 304,
14        business activity within the United States shall be
15        measured by means of the factors ordinarily applicable
16        under subsections (a), (b), (c), (d), or (h) of Section
17        304 except that, in the case of members ordinarily
18        required to apportion business income by means of the 3
19        factor formula of property, payroll and sales
20        specified in subsection (a) of Section 304, including
21        the formula as weighted in subsection (h) of Section
22        304, such members shall not use the sales factor in the
23        computation and the results of the property and payroll
24        factor computations of subsection (a) of Section 304
25        shall be divided by 2 (by one if either the property or
26        payroll factor has a denominator of zero). The

 

 

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1        computation required by the preceding sentence shall,
2        in each case, involve the division of the member's
3        property, payroll, or revenue miles in the United
4        States, insurance premiums on property or risk in the
5        United States, or financial organization business
6        income from sources within the United States, as the
7        case may be, by the respective worldwide figures for
8        such items. Common ownership in the case of
9        corporations is the direct or indirect control or
10        ownership of more than 50% of the outstanding voting
11        stock of the persons carrying on unitary business
12        activity. Unitary business activity can ordinarily be
13        illustrated where the activities of the members are:
14        (1) in the same general line (such as manufacturing,
15        wholesaling, retailing of tangible personal property,
16        insurance, transportation or finance); or (2) are
17        steps in a vertically structured enterprise or process
18        (such as the steps involved in the production of
19        natural resources, which might include exploration,
20        mining, refining, and marketing); and, in either
21        instance, the members are functionally integrated
22        through the exercise of strong centralized management
23        (where, for example, authority over such matters as
24        purchasing, financing, tax compliance, product line,
25        personnel, marketing and capital investment is not
26        left to each member).

 

 

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1            (B) In no event, shall any unitary business group
2        include members which are ordinarily required to
3        apportion business income under different subsections
4        of Section 304 except that for tax years ending on or
5        after December 31, 1987 this prohibition shall not
6        apply to a holding company that would otherwise be a
7        member of a unitary business group with taxpayers that
8        apportion business income under any of subsections
9        (b), (c), (c-1), or (d) of Section 304. If a unitary
10        business group would, but for the preceding sentence,
11        include members that are ordinarily required to
12        apportion business income under different subsections
13        of Section 304, then for each subsection of Section 304
14        for which there are two or more members, there shall be
15        a separate unitary business group composed of such
16        members. For purposes of the preceding two sentences, a
17        member is "ordinarily required to apportion business
18        income" under a particular subsection of Section 304 if
19        it would be required to use the apportionment method
20        prescribed by such subsection except for the fact that
21        it derives business income solely from Illinois. As
22        used in this paragraph, the phrase "United States"
23        means only the 50 states and the District of Columbia,
24        but does not include any territory or possession of the
25        United States or any area over which the United States
26        has asserted jurisdiction or claimed exclusive rights

 

 

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1        with respect to the exploration for or exploitation of
2        natural resources.
3            (C) Holding companies.
4                (i) For purposes of this subparagraph, a
5            "holding company" is a corporation (other than a
6            corporation that is a financial organization under
7            paragraph (8) of this subsection (a) of Section
8            1501 because it is a bank holding company under the
9            provisions of the Bank Holding Company Act of 1956
10            (12 U.S.C. 1841, et seq.) or because it is owned by
11            a bank or a bank holding company) that owns a
12            controlling interest in one or more other
13            taxpayers ("controlled taxpayers"); that, during
14            the period that includes the taxable year and the 2
15            immediately preceding taxable years or, if the
16            corporation was formed during the current or
17            immediately preceding taxable year, the taxable
18            years in which the corporation has been in
19            existence, derived substantially all its gross
20            income from dividends, interest, rents, royalties,
21            fees or other charges received from controlled
22            taxpayers for the provision of services, and gains
23            on the sale or other disposition of interests in
24            controlled taxpayers or in property leased or
25            licensed to controlled taxpayers or used by the
26            taxpayer in providing services to controlled

 

 

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1            taxpayers; and that incurs no substantial expenses
2            other than expenses (including interest and other
3            costs of borrowing) incurred in connection with
4            the acquisition and holding of interests in
5            controlled taxpayers and in the provision of
6            services to controlled taxpayers or in the leasing
7            or licensing of property to controlled taxpayers.
8                (ii) The income of a holding company which is a
9            member of more than one unitary business group
10            shall be included in each unitary business group of
11            which it is a member on a pro rata basis, by
12            including in each unitary business group that
13            portion of the base income of the holding company
14            that bears the same proportion to the total base
15            income of the holding company as the gross receipts
16            of the unitary business group bears to the combined
17            gross receipts of all unitary business groups (in
18            both cases without regard to the holding company)
19            or on any other reasonable basis, consistently
20            applied.
21                (iii) A holding company shall apportion its
22            business income under the subsection of Section
23            304 used by the other members of its unitary
24            business group. The apportionment factors of a
25            holding company which would be a member of more
26            than one unitary business group shall be included

 

 

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1            with the apportionment factors of each unitary
2            business group of which it is a member on a pro
3            rata basis using the same method used in clause
4            (ii).
5                (iv) The provisions of this subparagraph (C)
6            are intended to clarify existing law.
7            (D) If including the base income and factors of a
8        holding company in more than one unitary business group
9        under subparagraph (C) does not fairly reflect the
10        degree of integration between the holding company and
11        one or more of the unitary business groups, the
12        dependence of the holding company and one or more of
13        the unitary business groups upon each other, or the
14        contributions between the holding company and one or
15        more of the unitary business groups, the holding
16        company may petition the Director, under the
17        procedures provided under Section 304(f), for
18        permission to include all base income and factors of
19        the holding company only with members of a unitary
20        business group apportioning their business income
21        under one subsection of subsections (a), (b), (c), or
22        (d) of Section 304. If the petition is granted, the
23        holding company shall be included in a unitary business
24        group only with persons apportioning their business
25        income under the selected subsection of Section 304
26        until the Director grants a petition of the holding

 

 

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1        company either to be included in more than one unitary
2        business group under subparagraph (C) or to include its
3        base income and factors only with members of a unitary
4        business group apportioning their business income
5        under a different subsection of Section 304.
6            (E) If the unitary business group members'
7        accounting periods differ, the common parent's
8        accounting period or, if there is no common parent, the
9        accounting period of the member that is expected to
10        have, on a recurring basis, the greatest Illinois
11        income tax liability must be used to determine whether
12        to use the apportionment method provided in subsection
13        (a) or subsection (h) of Section 304. The prohibition
14        against membership in a unitary business group for
15        taxpayers ordinarily required to apportion income
16        under different subsections of Section 304 does not
17        apply to taxpayers required to apportion income under
18        subsection (a) and subsection (h) of Section 304. The
19        provisions of this amendatory Act of 1998 apply to tax
20        years ending on or after December 31, 1998.
21        (28) Subchapter S corporation. The term "Subchapter S
22    corporation" means a corporation for which there is in
23    effect an election under Section 1362 of the Internal
24    Revenue Code, or for which there is a federal election to
25    opt out of the provisions of the Subchapter S Revision Act
26    of 1982 and have applied instead the prior federal

 

 

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1    Subchapter S rules as in effect on July 1, 1982.
2        (30) Foreign person. The term "foreign person" means
3    any person who is a nonresident alien individual and any
4    nonindividual entity, regardless of where created or
5    organized, whose business activity outside the United
6    States is 80% or more of the entity's total business
7    activity.
 
8    (b) Other definitions.
9        (1) Words denoting number, gender, and so forth, when
10    used in this Act, where not otherwise distinctly expressed
11    or manifestly incompatible with the intent thereof:
12            (A) Words importing the singular include and apply
13        to several persons, parties or things;
14            (B) Words importing the plural include the
15        singular; and
16            (C) Words importing the masculine gender include
17        the feminine as well.
18        (2) "Company" or "association" as including successors
19    and assigns. The word "company" or "association", when used
20    in reference to a corporation, shall be deemed to embrace
21    the words "successors and assigns of such company or
22    association", and in like manner as if these last-named
23    words, or words of similar import, were expressed.
24        (3) Other terms. Any term used in any Section of this
25    Act with respect to the application of, or in connection

 

 

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1    with, the provisions of any other Section of this Act shall
2    have the same meaning as in such other Section.
3(Source: P.A. 96-641, eff. 8-24-09; 97-507, eff. 8-23-11.)
 
4    Section 15-15. The Economic Development for a Growing
5Economy Tax Credit Act is amended by changing Section 5-15 as
6follows:
 
7    (35 ILCS 10/5-15)
8    Sec. 5-15. Tax Credit Awards. Subject to the conditions set
9forth in this Act, a Taxpayer is entitled to a Credit against
10or, as described in subsection (g) of this Section, a payment
11towards taxes imposed pursuant to subsections (a) and (b) of
12Section 201 of the Illinois Income Tax Act that may be imposed
13on the Taxpayer for a taxable year beginning on or after
14January 1, 1999, if the Taxpayer is awarded a Credit by the
15Department under this Act for that taxable year.
16    (a) The Department shall make Credit awards under this Act
17to foster job creation and retention in Illinois.
18    (b) A person that proposes a project to create new jobs in
19Illinois must enter into an Agreement with the Department for
20the Credit under this Act.
21    (c) The Credit shall be claimed for the taxable years
22specified in the Agreement.
23    (d) The Credit shall not exceed the Incremental Income Tax
24attributable to the project that is the subject of the

 

 

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1Agreement.
2    (e) Nothing herein shall prohibit a Tax Credit Award to an
3Applicant that uses a PEO if all other award criteria are
4satisfied.
5    (f) In lieu of the Credit allowed under this Act against
6the taxes imposed pursuant to subsections (a) and (b) of
7Section 201 of the Illinois Income Tax Act for any taxable year
8ending on or after December 31, 2009, the Taxpayer may elect to
9claim the Credit against its obligation to pay over withholding
10under Section 704A of the Illinois Income Tax Act.
11        (1) The election under this subsection (f) may be made
12    only by a Taxpayer that (i) is primarily engaged in one of
13    the following business activities: water purification and
14    treatment, motor vehicle metal stamping, automobile
15    manufacturing, automobile and light duty motor vehicle
16    manufacturing, motor vehicle manufacturing, light truck
17    and utility vehicle manufacturing, heavy duty truck
18    manufacturing, motor vehicle body manufacturing, cable
19    television infrastructure design or manufacturing, or
20    wireless telecommunication or computing terminal device
21    design or manufacturing for use on public networks and (ii)
22    meets the following criteria:
23            (A) the Taxpayer (i) had an Illinois net loss or an
24        Illinois net loss deduction under Section 207 of the
25        Illinois Income Tax Act for the taxable year in which
26        the Credit is awarded, (ii) employed a minimum of 1,000

 

 

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1        full-time employees in this State during the taxable
2        year in which the Credit is awarded, (iii) has an
3        Agreement under this Act on December 14, 2009 (the
4        effective date of Public Act 96-834), and (iv) is in
5        compliance with all provisions of that Agreement;
6            (B) 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, and (iii) has
12        applied for an Agreement within 365 days after December
13        14, 2009 (the effective date of Public Act 96-834);
14            (C) the Taxpayer (i) had an Illinois net operating
15        loss carryforward under Section 207 of the Illinois
16        Income Tax Act in a taxable year ending during calendar
17        year 2008, (ii) has applied for an Agreement within 150
18        days after the effective date of this amendatory Act of
19        the 96th General Assembly, (iii) creates at least 400
20        new jobs in Illinois, (iv) retains at least 2,000 jobs
21        in Illinois that would have been at risk of relocation
22        out of Illinois over a 10-year period, and (v) makes a
23        capital investment of at least $75,000,000;
24            (D) the Taxpayer (i) had an Illinois net operating
25        loss carryforward under Section 207 of the Illinois
26        Income Tax Act in a taxable year ending during calendar

 

 

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1        year 2009, (ii) has applied for an Agreement within 150
2        days after the effective date of this amendatory Act of
3        the 96th General Assembly, (iii) creates at least 150
4        new jobs, (iv) retains at least 1,000 jobs in Illinois
5        that would have been at risk of relocation out of
6        Illinois over a 10-year period, and (v) makes a capital
7        investment of at least $57,000,000; or
8            (E) the Taxpayer (i) employed at least 2,500
9        full-time employees in the State during the year in
10        which the Credit is awarded, (ii) commits to make at
11        least $500,000,000 in combined capital improvements
12        and project costs under the Agreement, (iii) applies
13        for an Agreement between January 1, 2011 and June 30,
14        2011, (iv) executes an Agreement for the Credit during
15        calendar year 2011, and (v) was incorporated no more
16        than 5 years before the filing of an application for an
17        Agreement.
18        (1.5) The election under this subsection (f) may also
19    be made by a Taxpayer for any Credit awarded pursuant to an
20    agreement that was executed between January 1, 2011 and
21    June 30, 2011, if the Taxpayer (i) is primarily engaged in
22    the manufacture of inner tubes or tires, or both, from
23    natural and synthetic rubber, (ii) employs a minimum of
24    2,400 full-time employees in Illinois at the time of
25    application, (iii) creates at least 350 full-time jobs and
26    retains at least 250 full-time jobs in Illinois that would

 

 

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1    have been at risk of being created or retained outside of
2    Illinois, and (iv) makes a capital investment of at least
3    $200,000,000 at the project location.
4        (1.6) The election under this subsection (f) may also
5    be made by a Taxpayer for any Credit awarded pursuant to an
6    agreement that was executed within 150 days after the
7    effective date of this amendatory Act of the 97th General
8    Assembly, if the Taxpayer (i) is primarily engaged in the
9    operation of a discount department store, (ii) maintains
10    its corporate headquarters in Illinois, (iii) employs a
11    minimum of 4,250 full-time employees at its corporate
12    headquarters in Illinois at the time of application, (iv)
13    retains at least 4,250 full-time jobs in Illinois that
14    would have been at risk of being relocated outside of
15    Illinois, (v) had a minimum of $40,000,000,000 in total
16    revenue in 2010, and (vi) makes a capital investment of at
17    least $300,000,000 at the project location.
18        (1.7) Notwithstanding any other provision of law, the
19    election under this subsection (f) may also be made by a
20    Taxpayer for any Credit awarded pursuant to an agreement
21    that was executed or applied for on or after July 1, 2011
22    and on or before March 31, 2012, if the Taxpayer is
23    primarily engaged in the manufacture of original and
24    aftermarket filtration parts and products for automobiles,
25    motor vehicles, light duty motor vehicles, light trucks and
26    utility vehicles, and heavy duty trucks, (ii) employs a

 

 

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1    minimum of 1,000 full-time employees in Illinois at the
2    time of application, (iii) creates at least 250 full-time
3    jobs in Illinois, (iv) relocates its corporate
4    headquarters to Illinois from another state, and (v) makes
5    a capital investment of at least $4,000,000 at the project
6    location.
7        (2) An election under this subsection shall allow the
8    credit to be taken against payments otherwise due under
9    Section 704A of the Illinois Income Tax Act during the
10    first calendar year beginning after the end of the taxable
11    year in which the credit is awarded under this Act.
12        (3) The election shall be made in the form and manner
13    required by the Illinois Department of Revenue and, once
14    made, shall be irrevocable.
15        (4) If a Taxpayer who meets the requirements of
16    subparagraph (A) of paragraph (1) of this subsection (f)
17    elects to claim the Credit against its withholdings as
18    provided in this subsection (f), then, on and after the
19    date of the election, the terms of the Agreement between
20    the Taxpayer and the Department may not be further amended
21    during the term of the Agreement.
22    (g) A pass-through entity that has been awarded a credit
23under this Act, its shareholders, or its partners may treat
24some or all of the credit awarded pursuant to this Act as a tax
25payment for purposes of the Illinois Income Tax Act. The term
26"tax payment" means a payment as described in Article 6 or

 

 

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1Article 8 of the Illinois Income Tax Act or a composite payment
2made by a pass-through entity on behalf of any of its
3shareholders or partners to satisfy such shareholders' or
4partners' taxes imposed pursuant to subsections (a) and (b) of
5Section 201 of the Illinois Income Tax Act. In no event shall
6the amount of the award credited pursuant to this Act exceed
7the Illinois income tax liability of the pass-through entity or
8its shareholders or partners for the taxable year.
9(Source: P.A. 96-834, eff. 12-14-09; 96-836, eff. 12-16-09;
1096-905, eff. 6-4-10; 96-1000, eff. 7-2-10; 96-1534, eff.
113-4-11; 97-2, eff. 5-6-11.)
 
12    Section 15-17. The Business Location Efficiency Incentive
13Act is amended by changing Section 25 as follows:
 
14    (35 ILCS 11/25)
15    (Section scheduled to be repealed on December 31, 2011)
16    Sec. 25. Repeal. This Act is repealed on December 31, 2016
172011.
18(Source: P.A. 94-966, eff. 1-1-07.)
 
19    Section 15-18. The Small Business Job Creation Tax Credit
20Act is amended by changing Sections 10 and 25 as follows:
 
21    (35 ILCS 25/10)
22    Sec. 10. Definitions. In this Act:

 

 

SB0397 Enrolled- 189 -LRB097 04209 HLH 44248 b

1    "Applicant" means a person that is operating a business
2located within the State of Illinois that is engaged in
3interstate or intrastate commerce and either:
4        (1) has no more than 50 full-time employees, without
5    regard to the location of employment of such employees at
6    the beginning of the incentive period; or
7        (2) hired within the incentive period an employee who
8    had participated as worker-trainee in the Put Illinois to
9    Work Program during 2010.
10    In the case of any person that is a member of a unitary
11business group within the meaning of subdivision (a)(27) of
12Section 1501 of the Illinois Income Tax Act, "applicant" refers
13to the unitary business group.
14    "Certificate" means the tax credit certificate issued by
15the Department under Section 35 of this Act.
16    "Certificate of eligibility" means the certificate issued
17by the Department under Section 20 of this Act.
18    "Credit" means the amount awarded by the Department to an
19applicant by issuance of a certificate under Section 35 of this
20Act for each new full-time equivalent employee hired or job
21created.
22    "Department" means the Department of Commerce and Economic
23Opportunity.
24    "Director" means the Director of the Department.
25    "Full-time employee" means an individual who is employed
26for a basic wage for at least 35 hours each week or who renders

 

 

SB0397 Enrolled- 190 -LRB097 04209 HLH 44248 b

1any other standard of service generally accepted by industry
2custom or practice as full-time employment.
3    "Incentive period" means the period beginning on July 1 and
4ending on June 30 of the following year. The first incentive
5period shall begin on July 1, 2010 and the last incentive
6period shall end ending on June 30, 2016 2011.
7    "Basic wage" means compensation for employment that is no
8less than $10 per hour or the equivalent salary for a new
9employee.
10    "New employee" means a full-time employee:
11        (1) who first became employed by an applicant with less
12    than 50 full-time employees within the incentive period
13    whose hire results in a net increase in the applicant's
14    full-time Illinois employees and who is receiving a basic
15    wage as compensation; or
16        (2) who participated as a worker-trainee in the Put
17    Illinois to Work Program during 2010 and who is
18    subsequently hired during the incentive period by an
19    applicant and who is receiving a basic wage as
20    compensation.
21    The term "new employee" does not include:
22        (1) a person who was previously employed in Illinois by
23    the applicant or a related member prior to the onset of the
24    incentive period; or
25        (2) any individual who has a direct or indirect
26    ownership interest of at least 5% in the profits, capital,

 

 

SB0397 Enrolled- 191 -LRB097 04209 HLH 44248 b

1    or value of the applicant or a related member.
2    "Noncompliance date" means, in the case of an applicant
3that is not complying with the requirements of the provisions
4of this Act, the day following the last date upon which the
5taxpayer was in compliance with the requirements of the
6provisions of this Act, as determined by the Director, pursuant
7to Section 45 of this Act.
8    "Put Illinois to Work Program" means a worker training and
9employment program that was established by the State of
10Illinois with funding from the United States Department of
11Health and Human Services of Emergency Temporary Assistance to
12Needy Families funds authorized by the American Recovery and
13Reinvestment Act of 2009 (ARRA TANF Funds). These ARRA TANF
14funds were in turn used by the State of Illinois to fund the
15Put Illinois to Work Program.
16    "Related member" means a person that, with respect to the
17applicant during any portion of the incentive period, is any
18one of the following,
19        (1) An individual, if the individual and the members of
20    the individual's family (as defined in Section 318 of the
21    Internal Revenue Code) own directly, indirectly,
22    beneficially, or constructively, in the aggregate, at
23    least 50% of the value of the outstanding profits, capital,
24    stock, or other ownership interest in the applicant.
25        (2) A partnership, estate, or trust and any partner or
26    beneficiary, if the partnership, estate, or trust and its

 

 

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1    partners or beneficiaries own directly, indirectly,
2    beneficially, or constructively, in the aggregate, at
3    least 50% of the profits, capital, stock, or other
4    ownership interest in the applicant.
5        (3) A corporation, and any party related to the
6    corporation in a manner that would require an attribution
7    of stock from the corporation under the attribution rules
8    of Section 318 of the Internal Revenue Code, if the
9    applicant and any other related member own, in the
10    aggregate, directly, indirectly, beneficially, or
11    constructively, at least 50% of the value of the
12    corporation's outstanding stock.
13        (4) A corporation and any party related to that
14    corporation in a manner that would require an attribution
15    of stock from the corporation to the party or from the
16    party to the corporation under the attribution rules of
17    Section 318 of the Internal Revenue Code, if the
18    corporation and all such related parties own, in the
19    aggregate, at least 50% of the profits, capital, stock, or
20    other ownership interest in the applicant.
21        (5) A person to or from whom there is attribution of
22    stock ownership in accordance with Section 1563(e) of the
23    Internal Revenue Code, except that for purposes of
24    determining whether a person is a related member under this
25    paragraph, "20%" shall be substituted for "5%" whenever
26    "5%" appears in Section 1563(e) of the Internal Revenue

 

 

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1    Code.
2(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
3    (35 ILCS 25/25)
4    Sec. 25. Tax credit.
5    (a) Subject to the conditions set forth in this Act, an
6applicant is entitled to a credit against payment of taxes
7withheld under Section 704A of the Illinois Income Tax Act:
8        (1) for new employees who participated as
9    worker-trainees in the Put Illinois to Work Program during
10    2010:
11            (A) in the first calendar year ending on or after
12        the date that is 6 months after December 31, 2010, or
13        the date of hire, whichever is later. Under this
14        subparagraph, the applicant is entitled to one-half of
15        the credit allowable for each new employee who is
16        employed for at least 6 months after the date of hire;
17        and
18            (B) in the first calendar year ending on or after
19        the date that is 12 months after December 31, 2010, or
20        the date of hire, whichever is later. Under this
21        subparagraph, the applicant is entitled to one-half of
22        the credit allowable for each new employee who is
23        employed for at least 12 months after the date of hire;
24         (2) for all other new employees, in the first calendar
25    year ending on or after the date that is 12 months after

 

 

SB0397 Enrolled- 194 -LRB097 04209 HLH 44248 b

1    the date of hire of a new employee. The credit shall be
2    allowed as a credit to an applicant for each full-time
3    employee hired during the incentive period that results in
4    a net increase in full-time Illinois employees, where the
5    net increase in the employer's full-time Illinois
6    employees is maintained for at least 12 months.
7    (b) The Department shall make credit awards under this Act
8to further job creation.
9    (c) The credit shall be claimed for the first calendar year
10ending on or after the date on which the certificate is issued
11by the Department.
12    (d) The credit shall not exceed $2,500 per new employee
13hired.
14    (e) The net increase in full-time Illinois employees,
15measured on an annual full-time equivalent basis, shall be the
16total number of full-time Illinois employees of the applicant
17on the final day of the incentive period June 30, 2011, minus
18the number of full-time Illinois employees employed by the
19employer on the first day of that same incentive period July 1,
202010. For purposes of the calculation, an employer that begins
21doing business in this State during the incentive period, as
22determined by the Director, shall be treated as having zero
23Illinois employees on the first day of the incentive period
24July 1, 2010.
25    (f) The net increase in the number of full-time Illinois
26employees of the applicant under subsection (e) must be

 

 

SB0397 Enrolled- 195 -LRB097 04209 HLH 44248 b

1sustained continuously for at least 12 months, starting with
2the date of hire of a new employee during the incentive period.
3Eligibility for the credit does not depend on the continuous
4employment of any particular individual. For purposes of this
5subsection (f), if a new employee ceases to be employed before
6the completion of the 12-month period for any reason, the net
7increase in the number of full-time Illinois employees shall be
8treated as continuous if a different new employee is hired as a
9replacement within a reasonable time for the same position.
10(Source: P.A. 96-888, eff. 4-13-10; 96-1498, eff. 1-18-11.)
 
11    Section 15-20. The Use Tax Act is amended by changing
12Sections 3-5, 3-10, and 3-90 as follows:
 
13    (35 ILCS 105/3-5)
14    Sec. 3-5. Exemptions. Use of the following tangible
15personal property is exempt from the tax imposed by this Act:
16    (1) Personal property purchased from a corporation,
17society, association, foundation, institution, or
18organization, other than a limited liability company, that is
19organized and operated as a not-for-profit service enterprise
20for the benefit of persons 65 years of age or older if the
21personal property was not purchased by the enterprise for the
22purpose of resale by the enterprise.
23    (2) Personal property purchased by a not-for-profit
24Illinois county fair association for use in conducting,

 

 

SB0397 Enrolled- 196 -LRB097 04209 HLH 44248 b

1operating, or promoting the county fair.
2    (3) Personal property purchased by a not-for-profit arts or
3cultural organization that establishes, by proof required by
4the Department by rule, that it has received an exemption under
5Section 501(c)(3) of the Internal Revenue Code and that is
6organized and operated primarily for the presentation or
7support of arts or cultural programming, activities, or
8services. These organizations include, but are not limited to,
9music and dramatic arts organizations such as symphony
10orchestras and theatrical groups, arts and cultural service
11organizations, local arts councils, visual arts organizations,
12and media arts organizations. On and after the effective date
13of this amendatory Act of the 92nd General Assembly, however,
14an entity otherwise eligible for this exemption shall not make
15tax-free purchases unless it has an active identification
16number issued by the Department.
17    (4) Personal property purchased by a governmental body, by
18a corporation, society, association, foundation, or
19institution organized and operated exclusively for charitable,
20religious, or educational purposes, or by a not-for-profit
21corporation, society, association, foundation, institution, or
22organization that has no compensated officers or employees and
23that is organized and operated primarily for the recreation of
24persons 55 years of age or older. A limited liability company
25may qualify for the exemption under this paragraph only if the
26limited liability company is organized and operated