98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB0122

 

Introduced 1/10/2013, by Rep. Greg Harris

 

SYNOPSIS AS INTRODUCED:
 
New Act
35 ILCS 5/224 new
215 ILCS 5/409  from Ch. 73, par. 1021

    Creates the Historic Rehabilitation Tax Credit Act. Authorizes tax credits against Illinois income taxes and insurance company privilege taxes for 25% of the costs of rehabilitating eligible historic property. Allows excess credits to be carried back and forward. Allows credits to be transferred, sold, or assigned. Provides that the credit is administered by the Department of Commerce and Economic Opportunity. Sets forth application and award procedures. Makes related changes in the Illinois Income Tax Act and the Illinois Insurance Code. Effective July 1, 2013.


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FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

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1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 1. Short title. This Act may be cited as the
5Historic Rehabilitation Tax Credit Act.
 
6    Section 5. Definitions.
7    As used in this Act, unless the context requires otherwise:
8    "Certified historic structure" means a property located in
9Illinois that is listed individually on the National Register
10of Historic Places or is designated as a historic structure by
11a unit of local government.
12    "Eligible property" means property located in Illinois
13that is offered or used for residential, non-profit, local
14governmental, or business purposes.
15    "Structure in a historic district" means a structure
16located in Illinois that is certified by the United States
17Department of the Interior as contributing to the historic
18significance of a certified historic district listed on the
19National Register of Historic Places, a local district that has
20been certified by the United States Department of the Interior,
21or a local district that has been designated by a local
22government, either municipal or county.
 

 

 

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1    Section 10. Rehabilitation of eligible property. Any
2person, firm, partnership, trust, estate, corporation, or
3association incurring costs and expenses for the
4rehabilitation of eligible property, when that eligible
5property is a certified historic structure or a structure in a
6certified historic district, is entitled to a credit against
7the taxes imposed under the Illinois Income Tax Act, except
8Article 7 of that Act, and under Section 409 of the Illinois
9Insurance Code in an amount equal to 25% of the total costs and
10expenses of rehabilitation incurred after July 1, 2013.
11Expenses of rehabilitation include, but are not limited to,
12qualified rehabilitation expenditures as defined under Section
1347(c)(2)(A) of the Internal Revenue Code of 1986, as amended,
14and the related regulations thereunder, provided the
15rehabilitation costs and expenses exceed 50% of the total basis
16in the property and the rehabilitation meets standards
17consistent with the standards of the Secretary of the United
18States Department of the Interior for rehabilitation as
19determined by the Department of Commerce and Economic
20Opportunity in consultation with the State Historic
21Preservation Officer.
 
22    Section 15. Use of tax credits, carried forward or carried
23back, assignment.
24    (a) If the amount of the credit exceeds the total tax
25liability for the year in which the rehabilitated property is

 

 

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1placed in service, the amount that exceeds the tax liability
2may be carried back to any of the 3 preceding years and carried
3forward for any of the succeeding 10 years as a credit against
4the taxes imposed under the Illinois Income Tax Act (except
5Article 7) and Section 409 of the Illinois Insurance Code, or
6until the full credit is used, whichever occurs first.
7Taxpayers who are entitled to credits under this Act may
8transfer, sell, or assign the credits. Not-for-profit entities
9are eligible to receive, transfer, sell, or assign the credits.
10Credits granted to a partnership, a limited liability company
11taxed as a partnership, or multiple owners of property shall be
12passed through to the partners, members, or owners respectively
13pro rata or pursuant to an executed agreement among the
14partners, members, or owners documenting an alternate
15distribution method.
16    (b) The assignor of the credits may transfer, sell, or
17assign any or all of the credits to the assignee, who may use
18the acquired credits to offset tax liabilities imposed under
19the Illinois Income Tax Act (except Article 7) and Section 409
20of the Illinois Insurance Code. The assignor must perfect the
21transfer, sale, or assignment by notifying the Department of
22Commerce and Economic Opportunity in writing within 30 calendar
23days following the effective date of the transfer, sale, or
24assignment, and must provide any information that is required
25by the Department of Commerce and Economic Opportunity to
26administer and carry out the provisions of this Section. The

 

 

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1credits may be transferred more than once.
2    (c) If credits that have been transferred are subsequently
3reduced, adjusted, or recaptured by the Department of Commerce
4and Economic Opportunity, Department of Revenue, or any other
5applicable government agency, only the transferor originally
6allowed the credits, and not any subsequent transferee of the
7credits, shall be held liable to repay any amount of that
8reduction, adjustment, or recapture of the credits.
 
9    Section 20. Application to claim tax credit; certificates
10of eligible credits.
11    (a) To obtain the credit, an application must be made to
12the Department of Commerce and Economic Opportunity. The
13Department, in consultation with the Director of Historic Sites
14and Preservation and the United States Department of the
15Interior, shall determine the amount of eligible
16rehabilitation costs and expenses and whether the
17rehabilitation meets the standards of the Secretary of the
18United States Department of the Interior for rehabilitation.
19The Department of Commerce and Economic Opportunity shall issue
20a certificate in the amount of the eligible credits. The
21taxpayer must attach the certificate to the tax return on which
22the credits are to be claimed.
23    (b) The Department of Commerce and Economic Opportunity
24shall determine, on an annual basis, the overall economic
25impact to the State from the rehabilitation of eligible

 

 

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1property.
2    (c) The Department of Commerce and Economic Opportunity is
3granted and has all powers necessary or convenient to carry out
4the provisions of this Act, including, but not limited to, the
5power to adopt rules for the administration of this Act and the
6power to establish application forms and other agreements.
 
7    Section 50. The Illinois Income Tax Act is amended by
8adding Section 224 as follows:
 
9    (35 ILCS 5/224 new)
10    Sec. 224. Historic rehabilitation tax credit. A taxpayer
11who is awarded a credit under the Historic Rehabilitation Tax
12Credit Act is entitled to a credit against the taxes imposed
13under subsections (a) and (b) of Section 201 of this Act as
14provided in the Historic Rehabilitation Tax Credit Act. This
15Section is exempt from the provisions of Section 250.
 
16    Section 55. The Illinois Insurance Code is amended by
17changing Section 409 as follows:
 
18    (215 ILCS 5/409)  (from Ch. 73, par. 1021)
19    Sec. 409. Annual privilege tax payable by companies.
20    (1) As of January 1, 1999 for all health maintenance
21organization premiums written; as of July 1, 1998 for all
22premiums written as accident and health business, voluntary

 

 

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1health service plan business, dental service plan business, or
2limited health service organization business; and as of January
31, 1998 for all other types of insurance premiums written,
4every company doing any form of insurance business in this
5State, including, but not limited to, every risk retention
6group, and excluding all fraternal benefit societies, all farm
7mutual companies, all religious charitable risk pooling
8trusts, and excluding all statutory residual market and special
9purpose entities in which companies are statutorily required to
10participate, whether incorporated or otherwise, shall pay, for
11the privilege of doing business in this State, to the Director
12for the State treasury a State tax equal to 0.5% of the net
13taxable premium written, together with any amounts due under
14Section 444 of this Code, except that the tax to be paid on any
15premium derived from any accident and health insurance or on
16any insurance business written by any company operating as a
17health maintenance organization, voluntary health service
18plan, dental service plan, or limited health service
19organization shall be equal to 0.4% of such net taxable premium
20written, together with any amounts due under Section 444. Upon
21the failure of any company to pay any such tax due, the
22Director may, by order, revoke or suspend the company's
23certificate of authority after giving 20 days written notice to
24the company, or commence proceedings for the suspension of
25business in this State under the procedures set forth by
26Section 401.1 of this Code. The gross taxable premium written

 

 

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1shall be the gross amount of premiums received on direct
2business during the calendar year on contracts covering risks
3in this State, except premiums on annuities, premiums on which
4State premium taxes are prohibited by federal law, premiums
5paid by the State for health care coverage for Medicaid
6eligible insureds as described in Section 5-2 of the Illinois
7Public Aid Code, premiums paid for health care services
8included as an element of tuition charges at any university or
9college owned and operated by the State of Illinois, premiums
10on group insurance contracts under the State Employees Group
11Insurance Act of 1971, and except premiums for deferred
12compensation plans for employees of the State, units of local
13government, or school districts. The net taxable premium shall
14be the gross taxable premium written reduced only by the
15following:
16        (a) the amount of premiums returned thereon which shall
17    be limited to premiums returned during the same preceding
18    calendar year and shall not include the return of cash
19    surrender values or death benefits on life policies
20    including annuities;
21        (b) dividends on such direct business that have been
22    paid in cash, applied in reduction of premiums or left to
23    accumulate to the credit of policyholders or annuitants. In
24    the case of life insurance, no deduction shall be made for
25    the payment of deferred dividends paid in cash to
26    policyholders on maturing policies; dividends left to

 

 

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1    accumulate to the credit of policyholders or annuitants
2    shall be included as gross taxable premium written when
3    such dividend accumulations are applied to purchase
4    paid-up insurance or to shorten the endowment or premium
5    paying period.
6    (2) The annual privilege tax payment due from a company
7under subsection (4) of this Section may be reduced by: (a) the
8excess amount, if any, by which the aggregate income taxes paid
9by the company, on a cash basis, for the preceding calendar
10year under subsections (a) through (d) of Section 201 of the
11Illinois Income Tax Act exceed 1.5% of the company's net
12taxable premium written for that prior calendar year, as
13determined under subsection (1) of this Section; and (b) the
14amount of any fire department taxes paid by the company during
15the preceding calendar year under Section 11-10-1 of the
16Illinois Municipal Code. Any deductible amount or offset
17allowed under items (a) and (b) of this subsection for any
18calendar year will not be allowed as a deduction or offset
19against the company's privilege tax liability for any other
20taxing period or calendar year.
21    (3) If a company survives or was formed by a merger,
22consolidation, reorganization, or reincorporation, the
23premiums received and amounts returned or paid by all companies
24party to the merger, consolidation, reorganization, or
25reincorporation shall, for purposes of determining the amount
26of the tax imposed by this Section, be regarded as received,

 

 

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1returned, or paid by the surviving or new company.
2    (4)(a) All companies subject to the provisions of this
3Section shall make an annual return for the preceding calendar
4year on or before March 15 setting forth such information on
5such forms as the Director may reasonably require. Payments of
6quarterly installments of the taxpayer's total estimated tax
7for the current calendar year shall be due on or before April
815, June 15, September 15, and December 15 of such year, except
9that all companies transacting insurance in this State whose
10annual tax for the immediately preceding calendar year was less
11than $5,000 shall make only an annual return. Failure of a
12company to make the annual payment, or to make the quarterly
13payments, if required, of at least 25% of either (i) the total
14tax paid during the previous calendar year or (ii) 80% of the
15actual tax for the current calendar year shall subject it to
16the penalty provisions set forth in Section 412 of this Code.
17    (b) Notwithstanding the foregoing provisions, no annual
18return shall be required or made on March 15, 1998, under this
19subsection. For the calendar year 1998:
20        (i) each health maintenance organization shall have no
21    estimated tax installments;
22        (ii) all companies subject to the tax as of July 1,
23    1998 as set forth in subsection (1) shall have estimated
24    tax installments due on September 15 and December 15 of
25    1998 which installments shall each amount to no less than
26    one-half of 80% of the actual tax on its net taxable

 

 

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1    premium written during the period July 1, 1998, through
2    December 31, 1998; and
3        (iii) all other companies shall have estimated tax
4    installments due on June 15, September 15, and December 15
5    of 1998 which installments shall each amount to no less
6    than one-third of 80% of the actual tax on its net taxable
7    premium written during the calendar year 1998.
8    In the year 1999 and thereafter all companies shall make
9annual and quarterly installments of their estimated tax as
10provided by paragraph (a) of this subsection.
11    (5) In addition to the authority specifically granted under
12Article XXV of this Code, the Director shall have such
13authority to adopt rules and establish forms as may be
14reasonably necessary for purposes of determining the
15allocation of Illinois corporate income taxes paid under
16subsections (a) through (d) of Section 201 of the Illinois
17Income Tax Act amongst members of a business group that files
18an Illinois corporate income tax return on a unitary basis, for
19purposes of regulating the amendment of tax returns, for
20purposes of defining terms, and for purposes of enforcing the
21provisions of Article XXV of this Code. The Director shall also
22have authority to defer, waive, or abate the tax imposed by
23this Section if in his opinion the company's solvency and
24ability to meet its insured obligations would be immediately
25threatened by payment of the tax due.
26    (6) This Section is subject to the provisions of Section 10

 

 

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1of the New Markets Development Program Act.
2    (7) This Section is subject to the provisions of the
3Historic Rehabilitation Tax Credit Act.
4(Source: P.A. 97-813, eff. 7-13-12.)
 
5    Section 99. Effective date. This Act takes effect July 1,
62013.