97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3460

 

Introduced 2/7/2012, by Sen. Carole Pankau

 

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

    Amends the Illinois Income Tax Act. Provides that the personal property replacement income tax shall not be imposed for the taxable year in which the taxpayer first begins doing business in Illinois or for the 2 immediately succeeding taxable years. Provides that, for subsequent taxable years, the tax shall be increased by 0.5% per year until such time as the tax is imposed at the rates set forth in the Act. Effective immediately.


LRB097 19870 HLH 65153 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3460LRB097 19870 HLH 65153 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1    409 of the Illinois Insurance Code. This paragraph will in
2    no event increase the rates imposed under subsections (b)
3    and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates imposed
6    by subsection (b) and only after the tax imposed by
7    subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (d-2) Rate reduction for new business. For taxable years
14ending on or after December 31, 2012, no tax shall be imposed
15under subsections (c) or (d) for the taxable year in which the
16taxpayer first begins doing business in Illinois or for the 2
17immediately succeeding taxable years. Thereafter, the tax
18shall be increased by 0.5% per year until such time as the tax
19is imposed at the rates set forth in subsections (c) and (d),
20as modified by subsection (d-1), if applicable. This subsection
21(d-2) is exempt from the provisions of Section 250.
22    (e) Investment credit. A taxpayer shall be allowed a credit
23against the Personal Property Tax Replacement Income Tax for
24investment in qualified property.
25        (1) A taxpayer shall be allowed a credit equal to .5%
26    of the basis of qualified property placed in service during

 

 

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1    the taxable year, provided such property is placed in
2    service on or after July 1, 1984. There shall be allowed an
3    additional credit equal to .5% of the basis of qualified
4    property placed in service during the taxable year,
5    provided such property is placed in service on or after
6    July 1, 1986, and the taxpayer's base employment within
7    Illinois has increased by 1% or more over the preceding
8    year as determined by the taxpayer's employment records
9    filed with the Illinois Department of Employment Security.
10    Taxpayers who are new to Illinois shall be deemed to have
11    met the 1% growth in base employment for the first year in
12    which they file employment records with the Illinois
13    Department of Employment Security. The provisions added to
14    this Section by Public Act 85-1200 (and restored by Public
15    Act 87-895) shall be construed as declaratory of existing
16    law and not as a new enactment. If, in any year, the
17    increase in base employment within Illinois over the
18    preceding year is less than 1%, the additional credit shall
19    be limited to that percentage times a fraction, the
20    numerator of which is .5% and the denominator of which is
21    1%, but shall not exceed .5%. The investment credit shall
22    not be allowed to the extent that it would reduce a
23    taxpayer's liability in any tax year below zero, nor may
24    any credit for qualified property be allowed for any year
25    other than the year in which the property was placed in
26    service in Illinois. For tax years ending on or after

 

 

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1    December 31, 1987, and on or before December 31, 1988, the
2    credit shall be allowed for the tax year in which the
3    property is placed in service, or, if the amount of the
4    credit exceeds the tax liability for that year, whether it
5    exceeds the original liability or the liability as later
6    amended, such excess may be carried forward and applied to
7    the tax liability of the 5 taxable years following the
8    excess credit years if the taxpayer (i) makes investments
9    which cause the creation of a minimum of 2,000 full-time
10    equivalent jobs in Illinois, (ii) is located in an
11    enterprise zone established pursuant to the Illinois
12    Enterprise Zone Act and (iii) is certified by the
13    Department of Commerce and Community Affairs (now
14    Department of Commerce and Economic Opportunity) as
15    complying with the requirements specified in clause (i) and
16    (ii) by July 1, 1986. The Department of Commerce and
17    Community Affairs (now Department of Commerce and Economic
18    Opportunity) shall notify the Department of Revenue of all
19    such certifications immediately. For tax years ending
20    after December 31, 1988, the credit shall be allowed for
21    the tax year in which the property is placed in service,
22    or, if the amount of the credit exceeds the tax liability
23    for that year, whether it exceeds the original liability or
24    the liability as later amended, such excess may be carried
25    forward and applied to the tax liability of the 5 taxable
26    years following the excess credit years. The credit shall

 

 

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1    be applied to the earliest year for which there is a
2    liability. If there is credit from more than one tax year
3    that is available to offset a liability, earlier credit
4    shall be applied first.
5        (2) The term "qualified property" means property
6    which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings and
9        signs that are real property, but not including land or
10        improvements to real property that are not a structural
11        component of a building such as landscaping, sewer
12        lines, local access roads, fencing, parking lots, and
13        other appurtenances;
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        (e);
19            (C) is acquired by purchase as defined in Section
20        179(d) of the Internal Revenue Code;
21            (D) is used in Illinois by a taxpayer who is
22        primarily engaged in manufacturing, or in mining coal
23        or fluorite, or in retailing, or was placed in service
24        on or after July 1, 2006 in a River Edge Redevelopment
25        Zone established pursuant to the River Edge
26        Redevelopment Zone Act; and

 

 

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1            (E) has not previously been used in Illinois in
2        such a manner and by such a person as would qualify for
3        the credit provided by this subsection (e) or
4        subsection (f).
5        (3) For purposes of this subsection (e),
6    "manufacturing" means the material staging and production
7    of tangible personal property by procedures commonly
8    regarded as manufacturing, processing, fabrication, or
9    assembling which changes some existing material into new
10    shapes, new qualities, or new combinations. For purposes of
11    this subsection (e) the term "mining" shall have the same
12    meaning as the term "mining" in Section 613(c) of the
13    Internal Revenue Code. For purposes of this subsection (e),
14    the term "retailing" means the sale of tangible personal
15    property for use or consumption and not for resale, or
16    services rendered in conjunction with the sale of tangible
17    personal property for use or consumption and not for
18    resale. For purposes of this subsection (e), "tangible
19    personal property" has the same meaning as when that term
20    is used in the Retailers' Occupation Tax Act, and, for
21    taxable years ending after December 31, 2008, does not
22    include the generation, transmission, or distribution of
23    electricity.
24        (4) 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        (5) If the basis of the property for federal income tax
2    depreciation purposes is increased after it has been placed
3    in service in Illinois by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (6) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (7) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside Illinois within 48
12    months after being placed in service, the Personal Property
13    Tax Replacement Income Tax for such taxable year shall be
14    increased. Such increase shall be determined by (i)
15    recomputing the investment credit which would have been
16    allowed for the year in which credit for such property was
17    originally allowed by eliminating such property from such
18    computation and, (ii) subtracting such recomputed credit
19    from the amount of credit previously allowed. For the
20    purposes of this paragraph (7), a reduction of the basis of
21    qualified property resulting from a redetermination of the
22    purchase price shall be deemed a disposition of qualified
23    property to the extent of such reduction.
24        (8) Unless the investment credit is extended by law,
25    the basis of qualified property shall not include costs
26    incurred after December 31, 2013, except for costs incurred

 

 

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1    pursuant to a binding contract entered into on or before
2    December 31, 2013.
3        (9) Each taxable year ending before December 31, 2000,
4    a partnership may elect to pass through to its partners the
5    credits to which the partnership is entitled under this
6    subsection (e) for the taxable year. A partner may use the
7    credit allocated to him or her under this paragraph only
8    against the tax imposed in subsections (c) and (d) of this
9    Section. If the partnership makes that election, those
10    credits shall be allocated among the partners in the
11    partnership in accordance with the rules set forth in
12    Section 704(b) of the Internal Revenue Code, and the rules
13    promulgated under that Section, and the allocated amount of
14    the credits shall be allowed to the partners for that
15    taxable year. The partnership shall make this election on
16    its Personal Property Tax Replacement Income Tax return for
17    that taxable year. The election to pass through the credits
18    shall be irrevocable.
19        For taxable years ending on or after December 31, 2000,
20    a partner that qualifies its partnership for a subtraction
21    under subparagraph (I) of paragraph (2) of subsection (d)
22    of Section 203 or a shareholder that qualifies a Subchapter
23    S corporation for a subtraction under subparagraph (S) of
24    paragraph (2) of subsection (b) of Section 203 shall be
25    allowed a credit under this subsection (e) equal to its
26    share of the credit earned under this subsection (e) during

 

 

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

 

 

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1    River Edge Redevelopment Zone and shall not be allowed to
2    the extent that it would reduce a taxpayer's liability for
3    the tax imposed by subsections (a) and (b) of this Section
4    to below zero. For tax years ending on or after December
5    31, 1985, the credit shall be allowed for the tax year in
6    which the property is placed in service, or, if the amount
7    of the credit exceeds the tax liability for that year,
8    whether it exceeds the original liability or the liability
9    as later amended, such excess may be carried forward and
10    applied to the tax liability of the 5 taxable years
11    following the excess credit year. The credit shall be
12    applied to the earliest year for which there is a
13    liability. If there is credit from more than one tax year
14    that is available to offset a liability, the credit
15    accruing first in time shall be applied first.
16        (2) The term qualified property means property which:
17            (A) is tangible, whether new or used, including
18        buildings and structural components of buildings;
19            (B) is depreciable pursuant to Section 167 of the
20        Internal Revenue Code, except that "3-year property"
21        as defined in Section 168(c)(2)(A) of that Code is not
22        eligible for the credit provided by this subsection
23        (f);
24            (C) is acquired by purchase as defined in Section
25        179(d) of the Internal Revenue Code;
26            (D) is used in the Enterprise Zone or River Edge

 

 

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

 

 

SB3460- 18 -LRB097 19870 HLH 65153 b

1    originally allowed by eliminating such property from such
2    computation, and (ii) subtracting such recomputed credit
3    from the amount of credit previously allowed. For the
4    purposes of this paragraph (6), a reduction of the basis of
5    qualified property resulting from a redetermination of the
6    purchase price shall be deemed a disposition of qualified
7    property to the extent of such reduction.
8        (7) There shall be allowed an additional credit equal
9    to 0.5% of the basis of qualified property placed in
10    service during the taxable year in a River Edge
11    Redevelopment Zone, provided such property is placed in
12    service on or after July 1, 2006, and the taxpayer's base
13    employment within Illinois has increased by 1% or more over
14    the preceding year as determined by the taxpayer's
15    employment records filed with the Illinois Department of
16    Employment Security. Taxpayers who are new to Illinois
17    shall be deemed to have met the 1% growth in base
18    employment for the first year in which they file employment
19    records with the Illinois Department of Employment
20    Security. If, in any year, the increase in base employment
21    within Illinois over the preceding year is less than 1%,
22    the additional credit shall be limited to that percentage
23    times a fraction, the numerator of which is 0.5% and the
24    denominator of which is 1%, but shall not exceed 0.5%.
25    (g) Jobs Tax Credit; Enterprise Zone, River Edge
26Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.

 

 

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1        (1) A taxpayer conducting a trade or business in an
2    enterprise zone or a High Impact Business designated by the
3    Department of Commerce and Economic Opportunity or for
4    taxable years ending on or after December 31, 2006, in a
5    River Edge Redevelopment Zone conducting a trade or
6    business in a federally designated Foreign Trade Zone or
7    Sub-Zone shall be allowed a credit against the tax imposed
8    by subsections (a) and (b) of this Section in the amount of
9    $500 per eligible employee hired to work in the zone during
10    the taxable year.
11        (2) To qualify for the credit:
12            (A) the taxpayer must hire 5 or more eligible
13        employees to work in an enterprise zone, River Edge
14        Redevelopment Zone, or federally designated Foreign
15        Trade Zone or Sub-Zone during the taxable year;
16            (B) the taxpayer's total employment within the
17        enterprise zone, River Edge Redevelopment Zone, or
18        federally designated Foreign Trade Zone or Sub-Zone
19        must increase by 5 or more full-time employees beyond
20        the total employed in that zone at the end of the
21        previous tax year for which a jobs tax credit under
22        this Section was taken, or beyond the total employed by
23        the taxpayer as of December 31, 1985, whichever is
24        later; and
25            (C) the eligible employees must be employed 180
26        consecutive days in order to be deemed hired for

 

 

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1        purposes of this subsection.
2        (3) An "eligible employee" means an employee who is:
3            (A) Certified by the Department of Commerce and
4        Economic Opportunity as "eligible for services"
5        pursuant to regulations promulgated in accordance with
6        Title II of the Job Training Partnership Act, Training
7        Services for the Disadvantaged or Title III of the Job
8        Training Partnership Act, Employment and Training
9        Assistance for Dislocated Workers Program.
10            (B) Hired after the enterprise zone, River Edge
11        Redevelopment Zone, or federally designated Foreign
12        Trade Zone or Sub-Zone was designated or the trade or
13        business was located in that zone, whichever is later.
14            (C) Employed in the enterprise zone, River Edge
15        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
16        An employee is employed in an enterprise zone or
17        federally designated Foreign Trade Zone or Sub-Zone if
18        his services are rendered there or it is the base of
19        operations for the services performed.
20            (D) A full-time employee working 30 or more hours
21        per week.
22        (4) For tax years ending on or after December 31, 1985
23    and prior to December 31, 1988, the credit shall be allowed
24    for the tax year in which the eligible employees are hired.
25    For tax years ending on or after December 31, 1988, the
26    credit shall be allowed for the tax year immediately

 

 

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1    following the tax year in which the eligible employees are
2    hired. If the amount of the credit exceeds the tax
3    liability for that year, whether it exceeds the original
4    liability or the liability as later amended, such excess
5    may be carried forward and applied to the tax liability of
6    the 5 taxable years following the excess credit year. The
7    credit shall be applied to the earliest year for which
8    there is a liability. If there is credit from more than one
9    tax year that is available to offset a liability, earlier
10    credit shall be applied first.
11        (5) The Department of Revenue shall promulgate such
12    rules and regulations as may be deemed necessary to carry
13    out the purposes of this subsection (g).
14        (6) The credit shall be available for eligible
15    employees hired on or after January 1, 1986.
16    (h) Investment credit; High Impact Business.
17        (1) Subject to subsections (b) and (b-5) of Section 5.5
18    of the Illinois Enterprise Zone Act, a taxpayer shall be
19    allowed a credit against the tax imposed by subsections (a)
20    and (b) of this Section for investment in qualified
21    property which is placed in service by a Department of
22    Commerce and Economic Opportunity designated High Impact
23    Business. The credit shall be .5% of the basis for such
24    property. The credit shall not be available (i) until the
25    minimum investments in qualified property set forth in
26    subdivision (a)(3)(A) of Section 5.5 of the Illinois

 

 

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

 

 

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

 

 

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

 

 

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1    the explicit terms and length of the contract under Section
2    18-183 of the Property Tax Code, the tax imposed under
3    subsections (a) and (b) of this Section shall be increased
4    for the taxable year in which the taxpayer relocated its
5    facility by an amount equal to the amount of credit
6    received by the taxpayer under this subsection (h).
7    (i) Credit for Personal Property Tax Replacement Income
8Tax. For tax years ending prior to December 31, 2003, a credit
9shall be allowed against the tax imposed by subsections (a) and
10(b) of this Section for the tax imposed by subsections (c) and
11(d) of this Section. This credit shall be computed by
12multiplying the tax imposed by subsections (c) and (d) of this
13Section by a fraction, the numerator of which is base income
14allocable to Illinois and the denominator of which is Illinois
15base income, and further multiplying the product by the tax
16rate imposed by subsections (a) and (b) of this Section.
17    Any credit earned on or after December 31, 1986 under this
18subsection which is unused in the year the credit is computed
19because it exceeds the tax liability imposed by subsections (a)
20and (b) for that year (whether it exceeds the original
21liability or the liability as later amended) may be carried
22forward and applied to the tax liability imposed by subsections
23(a) and (b) of the 5 taxable years following the excess credit
24year, provided that no credit may be carried forward to any
25year ending on or after December 31, 2003. This credit shall be
26applied first to the earliest year for which there is a

 

 

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1liability. If there is a credit under this subsection from more
2than one tax year that is available to offset a liability the
3earliest credit arising under this subsection shall be applied
4first.
5    If, during any taxable year ending on or after December 31,
61986, the tax imposed by subsections (c) and (d) of this
7Section for which a taxpayer has claimed a credit under this
8subsection (i) is reduced, the amount of credit for such tax
9shall also be reduced. Such reduction shall be determined by
10recomputing the credit to take into account the reduced tax
11imposed by subsections (c) and (d). If any portion of the
12reduced amount of credit has been carried to a different
13taxable year, an amended return shall be filed for such taxable
14year to reduce the amount of credit claimed.
15    (j) Training expense credit. Beginning with tax years
16ending on or after December 31, 1986 and prior to December 31,
172003, a taxpayer shall be allowed a credit against the tax
18imposed by subsections (a) and (b) under this Section for all
19amounts paid or accrued, on behalf of all persons employed by
20the taxpayer in Illinois or Illinois residents employed outside
21of Illinois by a taxpayer, for educational or vocational
22training in semi-technical or technical fields or semi-skilled
23or skilled fields, which were deducted from gross income in the
24computation of taxable income. The credit against the tax
25imposed by subsections (a) and (b) shall be 1.6% of such
26training expenses. For partners, shareholders of subchapter S

 

 

SB3460- 27 -LRB097 19870 HLH 65153 b

1corporations, and owners of limited liability companies, if the
2liability company is treated as a partnership for purposes of
3federal and State income taxation, there shall be allowed a
4credit under this subsection (j) to be determined in accordance
5with the determination of income and distributive share of
6income under Sections 702 and 704 and subchapter S of the
7Internal Revenue Code.
8    Any credit allowed under this subsection which is unused in
9the year the credit is earned may be carried forward to each of
10the 5 taxable years following the year for which the credit is
11first computed until it is used. This credit shall be applied
12first to the earliest year for which there is a liability. If
13there is a credit under this subsection from more than one tax
14year that is available to offset a liability the earliest
15credit arising under this subsection shall be applied first. No
16carryforward credit may be claimed in any tax year ending on or
17after December 31, 2003.
18    (k) Research and development credit.
19    For tax years ending after July 1, 1990 and prior to
20December 31, 2003, and beginning again for tax years ending on
21or after December 31, 2004, and ending prior to January 1,
222011, a taxpayer shall be allowed a credit against the tax
23imposed by subsections (a) and (b) of this Section for
24increasing research activities in this State. The credit
25allowed against the tax imposed by subsections (a) and (b)
26shall be equal to 6 1/2% of the qualifying expenditures for

 

 

SB3460- 28 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 29 -LRB097 19870 HLH 65153 b

1taxable years or until it has been fully used, whichever occurs
2first; provided that no credit earned in a tax year ending
3prior to December 31, 2003 may be carried forward to any year
4ending on or after December 31, 2003, and no credit may be
5carried forward to any taxable year ending on or after January
61, 2011.
7    If an unused credit is carried forward to a given year from
82 or more earlier years, that credit arising in the earliest
9year will be applied first against the tax liability for the
10given year. If a tax liability for the given year still
11remains, the credit from the next earliest year will then be
12applied, and so on, until all credits have been used or no tax
13liability for the given year remains. Any remaining unused
14credit or credits then will be carried forward to the next
15following year in which a tax liability is incurred, except
16that no credit can be carried forward to a year which is more
17than 5 years after the year in which the expense for which the
18credit is given was incurred.
19    No inference shall be drawn from this amendatory Act of the
2091st General Assembly in construing this Section for taxable
21years beginning before January 1, 1999.
22    (l) Environmental Remediation Tax Credit.
23        (i) For tax years ending after December 31, 1997 and on
24    or before December 31, 2001, a taxpayer shall be allowed a
25    credit against the tax imposed by subsections (a) and (b)
26    of this Section for certain amounts paid for unreimbursed

 

 

SB3460- 30 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 31 -LRB097 19870 HLH 65153 b

1    deduction for losses by paragraphs (b), (c), and (f)(1) of
2    Section 267 of the Internal Revenue Code by virtue of being
3    a related taxpayer, as well as any of its partners. The
4    credit allowed against the tax imposed by subsections (a)
5    and (b) shall be equal to 25% of the unreimbursed eligible
6    remediation costs in excess of $100,000 per site, except
7    that the $100,000 threshold shall not apply to any site
8    contained in an enterprise zone as determined by the
9    Department of Commerce and Community Affairs (now
10    Department of Commerce and Economic Opportunity). The
11    total credit allowed shall not exceed $40,000 per year with
12    a maximum total of $150,000 per site. For partners and
13    shareholders of subchapter S corporations, there shall be
14    allowed a credit under this subsection to be determined in
15    accordance with the determination of income and
16    distributive share of income under Sections 702 and 704 and
17    subchapter S of the Internal Revenue Code.
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. The
22    term "unused credit" does not include any amounts of
23    unreimbursed eligible remediation costs in excess of the
24    maximum credit per site authorized under paragraph (i).
25    This credit shall be applied first to the earliest year for
26    which there is a liability. If there is a credit under this

 

 

SB3460- 32 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 33 -LRB097 19870 HLH 65153 b

1credit under this subsection claimed by a family that is the
2custodian of qualifying pupils exceed $500. In no event shall a
3credit under this subsection reduce the taxpayer's liability
4under this Act to less than zero. This subsection is exempt
5from the provisions of Section 250 of this Act.
6    For purposes of this subsection:
7    "Qualifying pupils" means individuals who (i) are
8residents of the State of Illinois, (ii) are under the age of
921 at the close of the school year for which a credit is
10sought, and (iii) during the school year for which a credit is
11sought were full-time pupils enrolled in a kindergarten through
12twelfth grade education program at any school, as defined in
13this subsection.
14    "Qualified education expense" means the amount incurred on
15behalf of a qualifying pupil in excess of $250 for tuition,
16book fees, and lab fees at the school in which the pupil is
17enrolled during the regular school year.
18    "School" means any public or nonpublic elementary or
19secondary school in Illinois that is in compliance with Title
20VI of the Civil Rights Act of 1964 and attendance at which
21satisfies the requirements of Section 26-1 of the School Code,
22except that nothing shall be construed to require a child to
23attend any particular public or nonpublic school to qualify for
24the credit under this Section.
25    "Custodian" means, with respect to qualifying pupils, an
26Illinois resident who is a parent, the parents, a legal

 

 

SB3460- 34 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 35 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 36 -LRB097 19870 HLH 65153 b

1    carry-forward period of the seller. To perfect the
2    transfer, the assignor shall record the transfer in the
3    chain of title for the site and provide written notice to
4    the Director of the Illinois Department of Revenue of the
5    assignor's intent to sell the remediation site and the
6    amount of the tax credit to be transferred as a portion of
7    the sale. In no event may a credit be transferred to any
8    taxpayer if the taxpayer or a related party would not be
9    eligible under the provisions of subsection (i).
10        (iii) For purposes of this Section, the term "site"
11    shall have the same meaning as under Section 58.2 of the
12    Environmental Protection Act.
13(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1496-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
151-13-11; 97-2, eff. 5-6-11.)
 
16    (Text of Section after amendment by P.A. 97-636)
17    Sec. 201. Tax Imposed.
18    (a) In general. A tax measured by net income is hereby
19imposed on every individual, corporation, trust and estate for
20each taxable year ending after July 31, 1969 on the privilege
21of earning or receiving income in or as a resident of this
22State. Such tax shall be in addition to all other occupation or
23privilege taxes imposed by this State or by any municipal
24corporation or political subdivision thereof.
25    (b) Rates. The tax imposed by subsection (a) of this

 

 

SB3460- 37 -LRB097 19870 HLH 65153 b

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

 

 

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1    ending prior to January 1, 2015, an amount equal to 5% of
2    the taxpayer's net income for the taxable year.
3        (5.1) In the case of an individual, trust, or estate,
4    for taxable years beginning prior to January 1, 2015, and
5    ending after December 31, 2014, an amount equal to the sum
6    of (i) 5% of the taxpayer's net income for the period prior
7    to January 1, 2015, as calculated under Section 202.5, and
8    (ii) 3.75% of the taxpayer's net income for the period
9    after December 31, 2014, as calculated under Section 202.5.
10        (5.2) In the case of an individual, trust, or estate,
11    for taxable years beginning on or after January 1, 2015,
12    and ending prior to January 1, 2025, an amount equal to
13    3.75% of the taxpayer's net income for the taxable year.
14        (5.3) In the case of an individual, trust, or estate,
15    for taxable years beginning prior to January 1, 2025, and
16    ending after December 31, 2024, an amount equal to the sum
17    of (i) 3.75% of the taxpayer's net income for the period
18    prior to January 1, 2025, as calculated under Section
19    202.5, and (ii) 3.25% of the taxpayer's net income for the
20    period after December 31, 2024, as calculated under Section
21    202.5.
22        (5.4) In the case of an individual, trust, or estate,
23    for taxable years beginning on or after January 1, 2025, an
24    amount equal to 3.25% of the taxpayer's net income for the
25    taxable year.
26        (6) In the case of a corporation, for taxable years

 

 

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

 

 

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1    December 31, 2014, an amount equal to the sum of (i) 7% of
2    the taxpayer's net income for the period prior to January
3    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
4    of the taxpayer's net income for the period after December
5    31, 2014, as calculated under Section 202.5.
6        (12) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2015, and ending prior to
8    January 1, 2025, an amount equal to 5.25% of the taxpayer's
9    net income for the taxable year.
10        (13) In the case of a corporation, for taxable years
11    beginning prior to January 1, 2025, and ending after
12    December 31, 2024, an amount equal to the sum of (i) 5.25%
13    of the taxpayer's net income for the period prior to
14    January 1, 2025, as calculated under Section 202.5, and
15    (ii) 4.8% of the taxpayer's net income for the period after
16    December 31, 2024, as calculated under Section 202.5.
17        (14) In the case of a corporation, for taxable years
18    beginning on or after January 1, 2025, an amount equal to
19    4.8% of the taxpayer's net income for the taxable year.
20    The rates under this subsection (b) are subject to the
21provisions of Section 201.5.
22    (c) Personal Property Tax Replacement Income Tax.
23Beginning on July 1, 1979 and thereafter, in addition to such
24income tax, there is also hereby imposed the Personal Property
25Tax Replacement Income Tax measured by net income on every
26corporation (including Subchapter S corporations), partnership

 

 

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1and trust, for each taxable year ending after June 30, 1979.
2Such taxes are imposed on the privilege of earning or receiving
3income in or as a resident of this State. The Personal Property
4Tax Replacement Income Tax shall be in addition to the income
5tax imposed by subsections (a) and (b) of this Section and in
6addition to all other occupation or privilege taxes imposed by
7this State or by any municipal corporation or political
8subdivision thereof.
9    (d) Additional Personal Property Tax Replacement Income
10Tax Rates. The personal property tax replacement income tax
11imposed by this subsection and subsection (c) of this Section
12in the case of a corporation, other than a Subchapter S
13corporation and except as adjusted by subsection (d-1), shall
14be an additional amount equal to 2.85% of such taxpayer's net
15income for the taxable year, except that beginning on January
161, 1981, and thereafter, the rate of 2.85% specified in this
17subsection shall be reduced to 2.5%, and in the case of a
18partnership, trust or a Subchapter S corporation shall be an
19additional amount equal to 1.5% of such taxpayer's net income
20for the taxable year.
21    (d-1) Rate reduction for certain foreign insurers. In the
22case of a foreign insurer, as defined by Section 35A-5 of the
23Illinois Insurance Code, whose state or country of domicile
24imposes on insurers domiciled in Illinois a retaliatory tax
25(excluding any insurer whose premiums from reinsurance assumed
26are 50% or more of its total insurance premiums as determined

 

 

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1under paragraph (2) of subsection (b) of Section 304, except
2that for purposes of this determination premiums from
3reinsurance do not include premiums from inter-affiliate
4reinsurance arrangements), beginning with taxable years ending
5on or after December 31, 1999, the sum of the rates of tax
6imposed by subsections (b) and (d) shall be reduced (but not
7increased) to the rate at which the total amount of tax imposed
8under this Act, net of all credits allowed under this Act,
9shall equal (i) the total amount of tax that would be imposed
10on the foreign insurer's net income allocable to Illinois for
11the taxable year by such foreign insurer's state or country of
12domicile if that net income were subject to all income taxes
13and taxes measured by net income imposed by such foreign
14insurer's state or country of domicile, net of all credits
15allowed or (ii) a rate of zero if no such tax is imposed on such
16income by the foreign insurer's state of domicile. For the
17purposes of this subsection (d-1), an inter-affiliate includes
18a mutual insurer under common management.
19        (1) For the purposes of subsection (d-1), in no event
20    shall the sum of the rates of tax imposed by subsections
21    (b) and (d) be reduced below the rate at which the sum of:
22            (A) the total amount of tax imposed on such foreign
23        insurer under this Act for a taxable year, net of all
24        credits allowed under this Act, plus
25            (B) the privilege tax imposed by Section 409 of the
26        Illinois Insurance Code, the fire insurance company

 

 

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1        tax imposed by Section 12 of the Fire Investigation
2        Act, and the fire department taxes imposed under
3        Section 11-10-1 of the Illinois Municipal Code,
4    equals 1.25% for taxable years ending prior to December 31,
5    2003, or 1.75% for taxable years ending on or after
6    December 31, 2003, of the net taxable premiums written for
7    the taxable year, as described by subsection (1) of Section
8    409 of the Illinois Insurance Code. This paragraph will in
9    no event increase the rates imposed under subsections (b)
10    and (d).
11        (2) Any reduction in the rates of tax imposed by this
12    subsection shall be applied first against the rates imposed
13    by subsection (b) and only after the tax imposed by
14    subsection (a) net of all credits allowed under this
15    Section other than the credit allowed under subsection (i)
16    has been reduced to zero, against the rates imposed by
17    subsection (d).
18    This subsection (d-1) is exempt from the provisions of
19Section 250.
20    (d-2) Rate reduction for new business. For taxable years
21ending on or after December 31, 2012, no tax shall be imposed
22under subsections (c) or (d) for the taxable year in which the
23taxpayer first begins doing business in Illinois or for the 2
24immediately succeeding taxable years. Thereafter, the tax
25shall be increased by 0.5% per year until such time as the tax
26is imposed at the rates set forth in subsections (c) and (d),

 

 

SB3460- 44 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 45 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 46 -LRB097 19870 HLH 65153 b

1    after December 31, 1988, the credit shall be allowed for
2    the tax year in which the property is placed in service,
3    or, if the amount of the credit exceeds the tax liability
4    for that year, whether it exceeds the original liability or
5    the liability as later amended, such excess may be carried
6    forward and applied to the tax liability of the 5 taxable
7    years following the excess credit years. The credit shall
8    be applied to the earliest year for which there is a
9    liability. If there is credit from more than one tax year
10    that is available to offset a liability, earlier credit
11    shall be applied first.
12        (2) The term "qualified property" means property
13    which:
14            (A) is tangible, whether new or used, including
15        buildings and structural components of buildings and
16        signs that are real property, but not including land or
17        improvements to real property that are not a structural
18        component of a building such as landscaping, sewer
19        lines, local access roads, fencing, parking lots, and
20        other appurtenances;
21            (B) is depreciable pursuant to Section 167 of the
22        Internal Revenue Code, except that "3-year property"
23        as defined in Section 168(c)(2)(A) of that Code is not
24        eligible for the credit provided by this subsection
25        (e);
26            (C) is acquired by purchase as defined in Section

 

 

SB3460- 47 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 48 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 49 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 50 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 51 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 52 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 53 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 54 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 55 -LRB097 19870 HLH 65153 b

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

 

 

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1            (D) A full-time employee working 30 or more hours
2        per week.
3        (4) For tax years ending on or after December 31, 1985
4    and prior to December 31, 1988, the credit shall be allowed
5    for the tax year in which the eligible employees are hired.
6    For tax years ending on or after December 31, 1988, the
7    credit shall be allowed for the tax year immediately
8    following the tax year in which the eligible employees are
9    hired. If the amount of the credit exceeds the tax
10    liability for that year, whether it exceeds the original
11    liability or the liability as later amended, such excess
12    may be carried forward and applied to the tax liability of
13    the 5 taxable years following the excess credit year. The
14    credit shall be applied to the earliest year for which
15    there is a liability. If there is credit from more than one
16    tax year that is available to offset a liability, earlier
17    credit shall be applied first.
18        (5) The Department of Revenue shall promulgate such
19    rules and regulations as may be deemed necessary to carry
20    out the purposes of this subsection (g).
21        (6) The credit shall be available for eligible
22    employees hired on or after January 1, 1986.
23    (h) Investment credit; High Impact Business.
24        (1) Subject to subsections (b) and (b-5) of Section 5.5
25    of the Illinois Enterprise Zone Act, a taxpayer shall be
26    allowed a credit against the tax imposed by subsections (a)

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1and (b) for that year (whether it exceeds the original
2liability or the liability as later amended) may be carried
3forward and applied to the tax liability imposed by subsections
4(a) and (b) of the 5 taxable years following the excess credit
5year, provided that no credit may be carried forward to any
6year ending on or after December 31, 2003. This credit shall be
7applied first to the earliest year for which there is a
8liability. If there is a credit under this subsection from more
9than one tax year that is available to offset a liability the
10earliest credit arising under this subsection shall be applied
11first.
12    If, during any taxable year ending on or after December 31,
131986, the tax imposed by subsections (c) and (d) of this
14Section for which a taxpayer has claimed a credit under this
15subsection (i) is reduced, the amount of credit for such tax
16shall also be reduced. Such reduction shall be determined by
17recomputing the credit to take into account the reduced tax
18imposed by subsections (c) and (d). If any portion of the
19reduced amount of credit has been carried to a different
20taxable year, an amended return shall be filed for such taxable
21year to reduce the amount of credit claimed.
22    (j) Training expense credit. Beginning with tax years
23ending on or after December 31, 1986 and prior to December 31,
242003, a taxpayer shall be allowed a credit against the tax
25imposed by subsections (a) and (b) under this Section for all
26amounts paid or accrued, on behalf of all persons employed by

 

 

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

 

 

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1December 31, 2003, and beginning again for tax years ending on
2or after December 31, 2004, and ending prior to January 1,
32016, a taxpayer shall be allowed a credit against the tax
4imposed by subsections (a) and (b) of this Section for
5increasing research activities in this State. The credit
6allowed against the tax imposed by subsections (a) and (b)
7shall be equal to 6 1/2% of the qualifying expenditures for
8increasing research activities in this State. For partners,
9shareholders of subchapter S corporations, and owners of
10limited liability companies, if the liability company is
11treated as a partnership for purposes of federal and State
12income taxation, there shall be allowed a credit under this
13subsection to be determined in accordance with the
14determination of income and distributive share of income under
15Sections 702 and 704 and subchapter S of the Internal Revenue
16Code.
17    For purposes of this subsection, "qualifying expenditures"
18means the qualifying expenditures as defined for the federal
19credit for increasing research activities which would be
20allowable under Section 41 of the Internal Revenue Code and
21which are conducted in this State, "qualifying expenditures for
22increasing research activities in this State" means the excess
23of qualifying expenditures for the taxable year in which
24incurred over qualifying expenditures for the base period,
25"qualifying expenditures for the base period" means the average
26of the qualifying expenditures for each year in the base

 

 

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1period, and "base period" means the 3 taxable years immediately
2preceding the taxable year for which the determination is being
3made.
4    Any credit in excess of the tax liability for the taxable
5year may be carried forward. A taxpayer may elect to have the
6unused credit shown on its final completed return carried over
7as a credit against the tax liability for the following 5
8taxable years or until it has been fully used, whichever occurs
9first; provided that no credit earned in a tax year ending
10prior to December 31, 2003 may be carried forward to any year
11ending on or after December 31, 2003.
12    If an unused credit is carried forward to a given year from
132 or more earlier years, that credit arising in the earliest
14year will be applied first against the tax liability for the
15given year. If a tax liability for the given year still
16remains, the credit from the next earliest year will then be
17applied, and so on, until all credits have been used or no tax
18liability for the given year remains. Any remaining unused
19credit or credits then will be carried forward to the next
20following year in which a tax liability is incurred, except
21that no credit can be carried forward to a year which is more
22than 5 years after the year in which the expense for which the
23credit is given was incurred.
24    No inference shall be drawn from this amendatory Act of the
2591st General Assembly in construing this Section for taxable
26years beginning before January 1, 1999.

 

 

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

 

 

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

 

 

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

 

 

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1of one or more qualifying pupils shall be allowed a credit
2against the tax imposed by subsections (a) and (b) of this
3Section for qualified education expenses incurred on behalf of
4the qualifying pupils. The credit shall be equal to 25% of
5qualified education expenses, but in no event may the total
6credit under this subsection claimed by a family that is the
7custodian of qualifying pupils exceed $500. In no event shall a
8credit under this subsection reduce the taxpayer's liability
9under this Act to less than zero. This subsection is exempt
10from the provisions of Section 250 of this Act.
11    For purposes of this subsection:
12    "Qualifying pupils" means individuals who (i) are
13residents of the State of Illinois, (ii) are under the age of
1421 at the close of the school year for which a credit is
15sought, and (iii) during the school year for which a credit is
16sought were full-time pupils enrolled in a kindergarten through
17twelfth grade education program at any school, as defined in
18this subsection.
19    "Qualified education expense" means the amount incurred on
20behalf of a qualifying pupil in excess of $250 for tuition,
21book fees, and lab fees at the school in which the pupil is
22enrolled during the regular school year.
23    "School" means any public or nonpublic elementary or
24secondary school in Illinois that is in compliance with Title
25VI of the Civil Rights Act of 1964 and attendance at which
26satisfies the requirements of Section 26-1 of the School Code,

 

 

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

 

 

SB3460- 70 -LRB097 19870 HLH 65153 b

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

 

 

SB3460- 71 -LRB097 19870 HLH 65153 b

1    subsection shall be applied first. A credit allowed under
2    this subsection may be sold to a buyer as part of a sale of
3    all or part of the remediation site for which the credit
4    was granted. The purchaser of a remediation site and the
5    tax credit shall succeed to the unused credit and remaining
6    carry-forward period of the seller. To perfect the
7    transfer, the assignor shall record the transfer in the
8    chain of title for the site and provide written notice to
9    the Director of the Illinois Department of Revenue of the
10    assignor's intent to sell the remediation site and the
11    amount of the tax credit to be transferred as a portion of
12    the sale. In no event may a credit be transferred to any
13    taxpayer if the taxpayer or a related party would not be
14    eligible under the provisions of subsection (i).
15        (iii) For purposes of this Section, the term "site"
16    shall have the same meaning as under Section 58.2 of the
17    Environmental Protection Act.
18(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1996-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
201-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
21    Section 95. No acceleration or delay. Where this Act makes
22changes in a statute that is represented in this Act by text
23that is not yet or no longer in effect (for example, a Section
24represented by multiple versions), the use of that text does
25not accelerate or delay the taking effect of (i) the changes

 

 

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1made by this Act or (ii) provisions derived from any other
2Public Act.
 
3    Section 99. Effective date. This Act takes effect upon
4becoming law.