Illinois General Assembly - Full Text of HB3424
Illinois General Assembly

  Bills & Resolutions  
  Compiled Statutes  
  Public Acts  
  Legislative Reports  
  IL Constitution  
  Legislative Guide  
  Legislative Glossary  

 Search By Number
 (example: HB0001)
Search Tips

Search By Keyword

Full Text of HB3424  102nd General Assembly

HB3424 102ND GENERAL ASSEMBLY

  
  

 


 
102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022
HB3424

 

Introduced 2/22/2021, by Rep. Will Guzzardi

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/304  from Ch. 120, par. 3-304

    Amends the Illinois Income Tax Act. Provides that provisions concerning apportionment of income from federally regulated exchanges apply only for taxable years ending on or before December 31, 2021.


LRB102 14703 HLH 20056 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB3424LRB102 14703 HLH 20056 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 304 as follows:
 
6    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
7    Sec. 304. Business income of persons other than residents.
8    (a) In general. The business income of a person other than
9a resident shall be allocated to this State if such person's
10business income is derived solely from this State. If a person
11other than a resident derives business income from this State
12and one or more other states, then, for tax years ending on or
13before December 30, 1998, and except as otherwise provided by
14this Section, such person's business income shall be
15apportioned to this State by multiplying the income by a
16fraction, the numerator of which is the sum of the property
17factor (if any), the payroll factor (if any) and 200% of the
18sales factor (if any), and the denominator of which is 4
19reduced by the number of factors other than the sales factor
20which have a denominator of zero and by an additional 2 if the
21sales factor has a denominator of zero. For tax years ending on
22or after December 31, 1998, and except as otherwise provided
23by this Section, persons other than residents who derive

 

 

HB3424- 2 -LRB102 14703 HLH 20056 b

1business income from this State and one or more other states
2shall compute their apportionment factor by weighting their
3property, payroll, and sales factors as provided in subsection
4(h) of this Section.
5    (1) Property factor.
6        (A) The property factor is a fraction, the numerator
7    of which is the average value of the person's real and
8    tangible personal property owned or rented and used in the
9    trade or business in this State during the taxable year
10    and the denominator of which is the average value of all
11    the person's real and tangible personal property owned or
12    rented and used in the trade or business during the
13    taxable year.
14        (B) Property owned by the person is valued at its
15    original cost. Property rented by the person is valued at
16    8 times the net annual rental rate. Net annual rental rate
17    is the annual rental rate paid by the person less any
18    annual rental rate received by the person from
19    sub-rentals.
20        (C) The average value of property shall be determined
21    by averaging the values at the beginning and ending of the
22    taxable year but the Director may require the averaging of
23    monthly values during the taxable year if reasonably
24    required to reflect properly the average value of the
25    person's property.
26    (2) Payroll factor.

 

 

HB3424- 3 -LRB102 14703 HLH 20056 b

1        (A) The payroll factor is a fraction, the numerator of
2    which is the total amount paid in this State during the
3    taxable year by the person for compensation, and the
4    denominator of which is the total compensation paid
5    everywhere during the taxable year.
6        (B) Compensation is paid in this State if:
7            (i) The individual's service is performed entirely
8        within this State;
9            (ii) The individual's service is performed both
10        within and without this State, but the service
11        performed without this State is incidental to the
12        individual's service performed within this State; or
13            (iii) For tax years ending prior to December 31,
14        2020, some of the service is performed within this
15        State and either the base of operations, or if there is
16        no base of operations, the place from which the
17        service is directed or controlled is within this
18        State, or the base of operations or the place from
19        which the service is directed or controlled is not in
20        any state in which some part of the service is
21        performed, but the individual's residence is in this
22        State. For tax years ending on or after December 31,
23        2020, compensation is paid in this State if some of the
24        individual's service is performed within this State,
25        the individual's service performed within this State
26        is nonincidental to the individual's service performed

 

 

HB3424- 4 -LRB102 14703 HLH 20056 b

1        without this State, and the individual's service is
2        performed within this State for more than 30 working
3        days during the tax year. The amount of compensation
4        paid in this State shall include the portion of the
5        individual's total compensation for services performed
6        on behalf of his or her employer during the tax year
7        which the number of working days spent within this
8        State during the tax year bears to the total number of
9        working days spent both within and without this State
10        during the tax year. For purposes of this paragraph:
11                (a) The term "working day" means all days
12            during the tax year in which the individual
13            performs duties on behalf of his or her employer.
14            All days in which the individual performs no
15            duties on behalf of his or her employer (e.g.,
16            weekends, vacation days, sick days, and holidays)
17            are not working days.
18                (b) A working day is spent within this State
19            if:
20                    (1) the individual performs service on
21                behalf of the employer and a greater amount of
22                time on that day is spent by the individual
23                performing duties on behalf of the employer
24                within this State, without regard to time
25                spent traveling, than is spent performing
26                duties on behalf of the employer without this

 

 

HB3424- 5 -LRB102 14703 HLH 20056 b

1                State; or
2                    (2) the only service the individual
3                performs on behalf of the employer on that day
4                is traveling to a destination within this
5                State, and the individual arrives on that day.
6                (c) Working days spent within this State do
7            not include any day in which the employee is
8            performing services in this State during a
9            disaster period solely in response to a request
10            made to his or her employer by the government of
11            this State, by any political subdivision of this
12            State, or by a person conducting business in this
13            State to perform disaster or emergency-related
14            services in this State. For purposes of this item
15            (c):
16                    "Declared State disaster or emergency"
17                means a disaster or emergency event (i) for
18                which a Governor's proclamation of a state of
19                emergency has been issued or (ii) for which a
20                Presidential declaration of a federal major
21                disaster or emergency has been issued.
22                    "Disaster period" means a period that
23                begins 10 days prior to the date of the
24                Governor's proclamation or the President's
25                declaration (whichever is earlier) and extends
26                for a period of 60 calendar days after the end

 

 

HB3424- 6 -LRB102 14703 HLH 20056 b

1                of the declared disaster or emergency period.
2                    "Disaster or emergency-related services"
3                means repairing, renovating, installing,
4                building, or rendering services or conducting
5                other business activities that relate to
6                infrastructure that has been damaged,
7                impaired, or destroyed by the declared State
8                disaster or emergency.
9                    "Infrastructure" means property and
10                equipment owned or used by a public utility,
11                communications network, broadband and internet
12                service provider, cable and video service
13                provider, electric or gas distribution system,
14                or water pipeline that provides service to
15                more than one customer or person, including
16                related support facilities. "Infrastructure"
17                includes, but is not limited to, real and
18                personal property such as buildings, offices,
19                power lines, cable lines, poles,
20                communications lines, pipes, structures, and
21                equipment.
22            (iv) Compensation paid to nonresident professional
23        athletes.
24            (a) General. The Illinois source income of a
25        nonresident individual who is a member of a
26        professional athletic team includes the portion of the

 

 

HB3424- 7 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 8 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 9 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 10 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 11 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 12 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 13 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 14 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 15 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 16 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 17 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 18 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 19 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 20 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 21 -LRB102 14703 HLH 20056 b

1            CFR 20.3;
2                (h) "Ancillary services"; or
3                (i) Digital products "delivered
4            electronically", including, but not limited to,
5            software, music, video, reading materials or ring
6            tones.
7            "Vertical service" means an "ancillary service"
8        that is offered in connection with one or more
9        "telecommunications services", which offers advanced
10        calling features that allow customers to identify
11        callers and to manage multiple calls and call
12        connections, including "conference bridging services".
13            "Voice mail service" means an "ancillary service"
14        that enables the customer to store, send or receive
15        recorded messages. "Voice mail service" does not
16        include any "vertical services" that the customer may
17        be required to have in order to utilize the "voice mail
18        service".
19            (ii) Receipts from the sale of telecommunications
20        service sold on an individual call-by-call basis are
21        in this State if either of the following applies:
22                (a) The call both originates and terminates in
23            this State.
24                (b) The call either originates or terminates
25            in this State and the service address is located
26            in this State.

 

 

HB3424- 22 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 23 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 24 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 25 -LRB102 14703 HLH 20056 b

1        (B-7) For taxable years ending on or after December
2    31, 2008, receipts from the sale of broadcasting services
3    are in this State if the broadcasting services are
4    received in this State. For purposes of this paragraph
5    (B-7), the following terms have the following meanings:
6            "Advertising revenue" means consideration received
7        by the taxpayer in exchange for broadcasting services
8        or allowing the broadcasting of commercials or
9        announcements in connection with the broadcasting of
10        film or radio programming, from sponsorships of the
11        programming, or from product placements in the
12        programming.
13            "Audience factor" means the ratio that the
14        audience or subscribers located in this State of a
15        station, a network, or a cable system bears to the
16        total audience or total subscribers for that station,
17        network, or cable system. The audience factor for film
18        or radio programming shall be determined by reference
19        to the books and records of the taxpayer or by
20        reference to published rating statistics provided the
21        method used by the taxpayer is consistently used from
22        year to year for this purpose and fairly represents
23        the taxpayer's activity in this State.
24            "Broadcast" or "broadcasting" or "broadcasting
25        services" means the transmission or provision of film
26        or radio programming, whether through the public

 

 

HB3424- 26 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 27 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 28 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 29 -LRB102 14703 HLH 20056 b

1            programming is provided by a taxpayer that is not
2            a network or station to another person for
3            broadcasting in exchange for a fee or other
4            remuneration from that person, the broadcasting
5            service is received at the location of the office
6            of the customer from which the services were
7            ordered in the regular course of the customer's
8            trade or business. Accordingly, in such a case the
9            revenue derived by the taxpayer that is included
10            in the taxpayer's Illinois numerator of the sales
11            factor is the revenue from such customers who
12            receive the broadcasting service in Illinois.
13        (B-8) Gross receipts from winnings under the Illinois
14    Lottery Law from the assignment of a prize under Section
15    13.1 of the Illinois Lottery Law are received in this
16    State. This paragraph (B-8) applies only to taxable years
17    ending on or after December 31, 2013.
18        (B-9) For taxable years ending on or after December
19    31, 2019, gross receipts from winnings from pari-mutuel
20    wagering conducted at a wagering facility licensed under
21    the Illinois Horse Racing Act of 1975 or from winnings
22    from gambling games conducted on a riverboat or in a
23    casino or organization gaming facility licensed under the
24    Illinois Gambling Act are in this State.
25        (C) For taxable years ending before December 31, 2008,
26    sales, other than sales governed by paragraphs (B), (B-1),

 

 

HB3424- 30 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 31 -LRB102 14703 HLH 20056 b

1        intangible personal property, the sale is in this
2        State if:
3                (a) in the case of a taxpayer who is a dealer
4            in the item of intangible personal property within
5            the meaning of Section 475 of the Internal Revenue
6            Code, the income or gain is received from a
7            customer in this State. For purposes of this
8            subparagraph, a customer is in this State if the
9            customer is an individual, trust or estate who is
10            a resident of this State and, for all other
11            customers, if the customer's commercial domicile
12            is in this State. Unless the dealer has actual
13            knowledge of the residence or commercial domicile
14            of a customer during a taxable year, the customer
15            shall be deemed to be a customer in this State if
16            the billing address of the customer, as shown in
17            the records of the dealer, is in this State; or
18                (b) in all other cases, if the
19            income-producing activity of the taxpayer is
20            performed in this State or, if the
21            income-producing activity of the taxpayer is
22            performed both within and without this State, if a
23            greater proportion of the income-producing
24            activity of the taxpayer is performed within this
25            State than in any other state, based on
26            performance costs.

 

 

HB3424- 32 -LRB102 14703 HLH 20056 b

1            (iv) Sales of services are in this State if the
2        services are received in this State. For the purposes
3        of this section, gross receipts from the performance
4        of services provided to a corporation, partnership, or
5        trust may only be attributed to a state where that
6        corporation, partnership, or trust has a fixed place
7        of business. If the state where the services are
8        received is not readily determinable or is a state
9        where the corporation, partnership, or trust receiving
10        the service does not have a fixed place of business,
11        the services shall be deemed to be received at the
12        location of the office of the customer from which the
13        services were ordered in the regular course of the
14        customer's trade or business. If the ordering office
15        cannot be determined, the services shall be deemed to
16        be received at the office of the customer to which the
17        services are billed. If the taxpayer is not taxable in
18        the state in which the services are received, the sale
19        must be excluded from both the numerator and the
20        denominator of the sales factor. The Department shall
21        adopt rules prescribing where specific types of
22        service are received, including, but not limited to,
23        publishing, and utility service.
24        (D) For taxable years ending on or after December 31,
25    1995, the following items of income shall not be included
26    in the numerator or denominator of the sales factor:

 

 

HB3424- 33 -LRB102 14703 HLH 20056 b

1    dividends; amounts included under Section 78 of the
2    Internal Revenue Code; and Subpart F income as defined in
3    Section 952 of the Internal Revenue Code. No inference
4    shall be drawn from the enactment of this paragraph (D) in
5    construing this Section for taxable years ending before
6    December 31, 1995.
7        (E) Paragraphs (B-1) and (B-2) shall apply to tax
8    years ending on or after December 31, 1999, provided that
9    a taxpayer may elect to apply the provisions of these
10    paragraphs to prior tax years. Such election shall be made
11    in the form and manner prescribed by the Department, shall
12    be irrevocable, and shall apply to all tax years; provided
13    that, if a taxpayer's Illinois income tax liability for
14    any tax year, as assessed under Section 903 prior to
15    January 1, 1999, was computed in a manner contrary to the
16    provisions of paragraphs (B-1) or (B-2), no refund shall
17    be payable to the taxpayer for that tax year to the extent
18    such refund is the result of applying the provisions of
19    paragraph (B-1) or (B-2) retroactively. In the case of a
20    unitary business group, such election shall apply to all
21    members of such group for every tax year such group is in
22    existence, but shall not apply to any taxpayer for any
23    period during which that taxpayer is not a member of such
24    group.
25    (b) Insurance companies.
26        (1) In general. Except as otherwise provided by

 

 

HB3424- 34 -LRB102 14703 HLH 20056 b

1    paragraph (2), business income of an insurance company for
2    a taxable year shall be apportioned to this State by
3    multiplying such income by a fraction, the numerator of
4    which is the direct premiums written for insurance upon
5    property or risk in this State, and the denominator of
6    which is the direct premiums written for insurance upon
7    property or risk everywhere. For purposes of this
8    subsection, the term "direct premiums written" means the
9    total amount of direct premiums written, assessments and
10    annuity considerations as reported for the taxable year on
11    the annual statement filed by the company with the
12    Illinois Director of Insurance in the form approved by the
13    National Convention of Insurance Commissioners or such
14    other form as may be prescribed in lieu thereof.
15        (2) Reinsurance. If the principal source of premiums
16    written by an insurance company consists of premiums for
17    reinsurance accepted by it, the business income of such
18    company shall be apportioned to this State by multiplying
19    such income by a fraction, the numerator of which is the
20    sum of (i) direct premiums written for insurance upon
21    property or risk in this State, plus (ii) premiums written
22    for reinsurance accepted in respect of property or risk in
23    this State, and the denominator of which is the sum of
24    (iii) direct premiums written for insurance upon property
25    or risk everywhere, plus (iv) premiums written for
26    reinsurance accepted in respect of property or risk

 

 

HB3424- 35 -LRB102 14703 HLH 20056 b

1    everywhere. For purposes of this paragraph, premiums
2    written for reinsurance accepted in respect of property or
3    risk in this State, whether or not otherwise determinable,
4    may, at the election of the company, be determined on the
5    basis of the proportion which premiums written for
6    reinsurance accepted from companies commercially domiciled
7    in Illinois bears to premiums written for reinsurance
8    accepted from all sources, or, alternatively, in the
9    proportion which the sum of the direct premiums written
10    for insurance upon property or risk in this State by each
11    ceding company from which reinsurance is accepted bears to
12    the sum of the total direct premiums written by each such
13    ceding company for the taxable year. The election made by
14    a company under this paragraph for its first taxable year
15    ending on or after December 31, 2011, shall be binding for
16    that company for that taxable year and for all subsequent
17    taxable years, and may be altered only with the written
18    permission of the Department, which shall not be
19    unreasonably withheld.
20    (c) Financial organizations.
21        (1) In general. For taxable years ending before
22    December 31, 2008, business income of a financial
23    organization shall be apportioned to this State by
24    multiplying such income by a fraction, the numerator of
25    which is its business income from sources within this
26    State, and the denominator of which is its business income

 

 

HB3424- 36 -LRB102 14703 HLH 20056 b

1    from all sources. For the purposes of this subsection, the
2    business income of a financial organization from sources
3    within this State is the sum of the amounts referred to in
4    subparagraphs (A) through (E) following, but excluding the
5    adjusted income of an international banking facility as
6    determined in paragraph (2):
7            (A) Fees, commissions or other compensation for
8        financial services rendered within this State;
9            (B) Gross profits from trading in stocks, bonds or
10        other securities managed within this State;
11            (C) Dividends, and interest from Illinois
12        customers, which are received within this State;
13            (D) Interest charged to customers at places of
14        business maintained within this State for carrying
15        debit balances of margin accounts, without deduction
16        of any costs incurred in carrying such accounts; and
17            (E) Any other gross income resulting from the
18        operation as a financial organization within this
19        State.
20        In computing the amounts referred to in paragraphs (A)
21    through (E) of this subsection, any amount received by a
22    member of an affiliated group (determined under Section
23    1504(a) of the Internal Revenue Code but without reference
24    to whether any such corporation is an "includible
25    corporation" under Section 1504(b) of the Internal Revenue
26    Code) from another member of such group shall be included

 

 

HB3424- 37 -LRB102 14703 HLH 20056 b

1    only to the extent such amount exceeds expenses of the
2    recipient directly related thereto.
3        (2) International Banking Facility. For taxable years
4    ending before December 31, 2008:
5            (A) Adjusted Income. The adjusted income of an
6        international banking facility is its income reduced
7        by the amount of the floor amount.
8            (B) Floor Amount. The floor amount shall be the
9        amount, if any, determined by multiplying the income
10        of the international banking facility by a fraction,
11        not greater than one, which is determined as follows:
12                (i) The numerator shall be:
13                The average aggregate, determined on a
14            quarterly basis, of the financial organization's
15            loans to banks in foreign countries, to foreign
16            domiciled borrowers (except where secured
17            primarily by real estate) and to foreign
18            governments and other foreign official
19            institutions, as reported for its branches,
20            agencies and offices within the state on its
21            "Consolidated Report of Condition", Schedule A,
22            Lines 2.c., 5.b., and 7.a., which was filed with
23            the Federal Deposit Insurance Corporation and
24            other regulatory authorities, for the year 1980,
25            minus
26                The average aggregate, determined on a

 

 

HB3424- 38 -LRB102 14703 HLH 20056 b

1            quarterly basis, of such loans (other than loans
2            of an international banking facility), as reported
3            by the financial institution for its branches,
4            agencies and offices within the state, on the
5            corresponding Schedule and lines of the
6            Consolidated Report of Condition for the current
7            taxable year, provided, however, that in no case
8            shall the amount determined in this clause (the
9            subtrahend) exceed the amount determined in the
10            preceding clause (the minuend); and
11                (ii) the denominator shall be the average
12            aggregate, determined on a quarterly basis, of the
13            international banking facility's loans to banks in
14            foreign countries, to foreign domiciled borrowers
15            (except where secured primarily by real estate)
16            and to foreign governments and other foreign
17            official institutions, which were recorded in its
18            financial accounts for the current taxable year.
19            (C) Change to Consolidated Report of Condition and
20        in Qualification. In the event the Consolidated Report
21        of Condition which is filed with the Federal Deposit
22        Insurance Corporation and other regulatory authorities
23        is altered so that the information required for
24        determining the floor amount is not found on Schedule
25        A, lines 2.c., 5.b. and 7.a., the financial
26        institution shall notify the Department and the

 

 

HB3424- 39 -LRB102 14703 HLH 20056 b

1        Department may, by regulations or otherwise, prescribe
2        or authorize the use of an alternative source for such
3        information. The financial institution shall also
4        notify the Department should its international banking
5        facility fail to qualify as such, in whole or in part,
6        or should there be any amendment or change to the
7        Consolidated Report of Condition, as originally filed,
8        to the extent such amendment or change alters the
9        information used in determining the floor amount.
10        (3) For taxable years ending on or after December 31,
11    2008, the business income of a financial organization
12    shall be apportioned to this State by multiplying such
13    income by a fraction, the numerator of which is its gross
14    receipts from sources in this State or otherwise
15    attributable to this State's marketplace and the
16    denominator of which is its gross receipts everywhere
17    during the taxable year. "Gross receipts" for purposes of
18    this subparagraph (3) means gross income, including net
19    taxable gain on disposition of assets, including
20    securities and money market instruments, when derived from
21    transactions and activities in the regular course of the
22    financial organization's trade or business. The following
23    examples are illustrative:
24            (i) Receipts from the lease or rental of real or
25        tangible personal property are in this State if the
26        property is located in this State during the rental

 

 

HB3424- 40 -LRB102 14703 HLH 20056 b

1        period. Receipts from the lease or rental of tangible
2        personal property that is characteristically moving
3        property, including, but not limited to, motor
4        vehicles, rolling stock, aircraft, vessels, or mobile
5        equipment are from sources in this State to the extent
6        that the property is used in this State.
7            (ii) Interest income, commissions, fees, gains on
8        disposition, and other receipts from assets in the
9        nature of loans that are secured primarily by real
10        estate or tangible personal property are from sources
11        in this State if the security is located in this State.
12            (iii) Interest income, commissions, fees, gains on
13        disposition, and other receipts from consumer loans
14        that are not secured by real or tangible personal
15        property are from sources in this State if the debtor
16        is a resident of this State.
17            (iv) Interest income, commissions, fees, gains on
18        disposition, and other receipts from commercial loans
19        and installment obligations that are not secured by
20        real or tangible personal property are from sources in
21        this State if the proceeds of the loan are to be
22        applied in this State. If it cannot be determined
23        where the funds are to be applied, the income and
24        receipts are from sources in this State if the office
25        of the borrower from which the loan was negotiated in
26        the regular course of business is located in this

 

 

HB3424- 41 -LRB102 14703 HLH 20056 b

1        State. If the location of this office cannot be
2        determined, the income and receipts shall be excluded
3        from the numerator and denominator of the sales
4        factor.
5            (v) Interest income, fees, gains on disposition,
6        service charges, merchant discount income, and other
7        receipts from credit card receivables are from sources
8        in this State if the card charges are regularly billed
9        to a customer in this State.
10            (vi) Receipts from the performance of services,
11        including, but not limited to, fiduciary, advisory,
12        and brokerage services, are in this State if the
13        services are received in this State within the meaning
14        of subparagraph (a)(3)(C-5)(iv) of this Section.
15            (vii) Receipts from the issuance of travelers
16        checks and money orders are from sources in this State
17        if the checks and money orders are issued from a
18        location within this State.
19            (viii) Receipts from investment assets and
20        activities and trading assets and activities are
21        included in the receipts factor as follows:
22                (1) Interest, dividends, net gains (but not
23            less than zero) and other income from investment
24            assets and activities from trading assets and
25            activities shall be included in the receipts
26            factor. Investment assets and activities and

 

 

HB3424- 42 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 43 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 44 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 45 -LRB102 14703 HLH 20056 b

1                assets and activities.
2                    (D) Properly assigned, for purposes of
3                this paragraph (2) of this subsection, means
4                the investment or trading asset or activity is
5                assigned to the fixed place of business with
6                which it has a preponderance of substantive
7                contacts. An investment or trading asset or
8                activity assigned by the taxpayer to a fixed
9                place of business without the State shall be
10                presumed to have been properly assigned if:
11                        (i) the taxpayer has assigned, in the
12                    regular course of its business, such asset
13                    or activity on its records to a fixed
14                    place of business consistent with federal
15                    or state regulatory requirements;
16                        (ii) such assignment on its records is
17                    based upon substantive contacts of the
18                    asset or activity to such fixed place of
19                    business; and
20                        (iii) the taxpayer uses such records
21                    reflecting assignment of such assets or
22                    activities for the filing of all state and
23                    local tax returns for which an assignment
24                    of such assets or activities to a fixed
25                    place of business is required.
26                    (E) The presumption of proper assignment

 

 

HB3424- 46 -LRB102 14703 HLH 20056 b

1                of an investment or trading asset or activity
2                provided in subparagraph (D) of paragraph (2)
3                of this subsection may be rebutted upon a
4                showing by the Department, supported by a
5                preponderance of the evidence, that the
6                preponderance of substantive contacts
7                regarding such asset or activity did not occur
8                at the fixed place of business to which it was
9                assigned on the taxpayer's records. If the
10                fixed place of business that has a
11                preponderance of substantive contacts cannot
12                be determined for an investment or trading
13                asset or activity to which the presumption in
14                subparagraph (D) of paragraph (2) of this
15                subsection does not apply or with respect to
16                which that presumption has been rebutted, that
17                asset or activity is properly assigned to the
18                state in which the taxpayer's commercial
19                domicile is located. For purposes of this
20                subparagraph (E), it shall be presumed,
21                subject to rebuttal, that taxpayer's
22                commercial domicile is in the state of the
23                United States or the District of Columbia to
24                which the greatest number of employees are
25                regularly connected with the management of the
26                investment or trading income or out of which

 

 

HB3424- 47 -LRB102 14703 HLH 20056 b

1                they are working, irrespective of where the
2                services of such employees are performed, as
3                of the last day of the taxable year.
4        (4) (Blank).
5        (5) (Blank).
6    (c-1) Federally regulated exchanges. For taxable years
7ending on or after December 31, 2012 and ending on or before
8December 31, 2021, business income of a federally regulated
9exchange shall, at the option of the federally regulated
10exchange, be apportioned to this State by multiplying such
11income by a fraction, the numerator of which is its business
12income from sources within this State, and the denominator of
13which is its business income from all sources. For purposes of
14this subsection, the business income within this State of a
15federally regulated exchange is the sum of the following:
16        (1) Receipts attributable to transactions executed on
17    a physical trading floor if that physical trading floor is
18    located in this State.
19        (2) Receipts attributable to all other matching,
20    execution, or clearing transactions, including without
21    limitation receipts from the provision of matching,
22    execution, or clearing services to another entity,
23    multiplied by (i) for taxable years ending on or after
24    December 31, 2012 but before December 31, 2013, 63.77%;
25    and (ii) for taxable years ending on or after December 31,
26    2013, 27.54%.

 

 

HB3424- 48 -LRB102 14703 HLH 20056 b

1        (3) All other receipts not governed by subparagraphs
2    (1) or (2) of this subsection (c-1), to the extent the
3    receipts would be characterized as "sales in this State"
4    under item (3) of subsection (a) of this Section.
5    "Federally regulated exchange" means (i) a "registered
6entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
7or (C), (ii) an "exchange" or "clearing agency" within the
8meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
9entities regulated under any successor regulatory structure to
10the foregoing, and (iv) all taxpayers who are members of the
11same unitary business group as a federally regulated exchange,
12determined without regard to the prohibition in Section
131501(a)(27) of this Act against including in a unitary
14business group taxpayers who are ordinarily required to
15apportion business income under different subsections of this
16Section; provided that this subparagraph (iv) shall apply only
17if 50% or more of the business receipts of the unitary business
18group determined by application of this subparagraph (iv) for
19the taxable year are attributable to the matching, execution,
20or clearing of transactions conducted by an entity described
21in subparagraph (i), (ii), or (iii) of this paragraph.
22    In no event shall the Illinois apportionment percentage
23computed in accordance with this subsection (c-1) for any
24taxpayer for any tax year be less than the Illinois
25apportionment percentage computed under this subsection (c-1)
26for that taxpayer for the first full tax year ending on or

 

 

HB3424- 49 -LRB102 14703 HLH 20056 b

1after December 31, 2013 for which this subsection (c-1)
2applied to the taxpayer.
3    (d) Transportation services. For taxable years ending
4before December 31, 2008, business income derived from
5furnishing transportation services shall be apportioned to
6this State in accordance with paragraphs (1) and (2):
7        (1) Such business income (other than that derived from
8    transportation by pipeline) shall be apportioned to this
9    State by multiplying such income by a fraction, the
10    numerator of which is the revenue miles of the person in
11    this State, and the denominator of which is the revenue
12    miles of the person everywhere. For purposes of this
13    paragraph, a revenue mile is the transportation of 1
14    passenger or 1 net ton of freight the distance of 1 mile
15    for a consideration. Where a person is engaged in the
16    transportation of both passengers and freight, the
17    fraction above referred to shall be determined by means of
18    an average of the passenger revenue mile fraction and the
19    freight revenue mile fraction, weighted to reflect the
20    person's
21            (A) relative railway operating income from total
22        passenger and total freight service, as reported to
23        the Interstate Commerce Commission, in the case of
24        transportation by railroad, and
25            (B) relative gross receipts from passenger and
26        freight transportation, in case of transportation

 

 

HB3424- 50 -LRB102 14703 HLH 20056 b

1        other than by railroad.
2        (2) Such business income derived from transportation
3    by pipeline shall be apportioned to this State by
4    multiplying such income by a fraction, the numerator of
5    which is the revenue miles of the person in this State, and
6    the denominator of which is the revenue miles of the
7    person everywhere. For the purposes of this paragraph, a
8    revenue mile is the transportation by pipeline of 1 barrel
9    of oil, 1,000 cubic feet of gas, or of any specified
10    quantity of any other substance, the distance of 1 mile
11    for a consideration.
12        (3) For taxable years ending on or after December 31,
13    2008, business income derived from providing
14    transportation services other than airline services shall
15    be apportioned to this State by using a fraction, (a) the
16    numerator of which shall be (i) all receipts from any
17    movement or shipment of people, goods, mail, oil, gas, or
18    any other substance (other than by airline) that both
19    originates and terminates in this State, plus (ii) that
20    portion of the person's gross receipts from movements or
21    shipments of people, goods, mail, oil, gas, or any other
22    substance (other than by airline) that originates in one
23    state or jurisdiction and terminates in another state or
24    jurisdiction, that is determined by the ratio that the
25    miles traveled in this State bears to total miles
26    everywhere and (b) the denominator of which shall be all

 

 

HB3424- 51 -LRB102 14703 HLH 20056 b

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

 

 

HB3424- 52 -LRB102 14703 HLH 20056 b

1    transportation of both passengers and freight, the
2    fraction above referred to shall be determined by means of
3    an average of the passenger revenue mile fraction and the
4    freight revenue mile fraction, weighted to reflect the
5    person's relative gross receipts from passenger and
6    freight airline transportation.
7    (e) Combined apportionment. Where 2 or more persons are
8engaged in a unitary business as described in subsection
9(a)(27) of Section 1501, a part of which is conducted in this
10State by one or more members of the group, the business income
11attributable to this State by any such member or members shall
12be apportioned by means of the combined apportionment method.
13    (f) Alternative allocation. If the allocation and
14apportionment provisions of subsections (a) through (e) and of
15subsection (h) do not, for taxable years ending before
16December 31, 2008, fairly represent the extent of a person's
17business activity in this State, or, for taxable years ending
18on or after December 31, 2008, fairly represent the market for
19the person's goods, services, or other sources of business
20income, the person may petition for, or the Director may,
21without a petition, permit or require, in respect of all or any
22part of the person's business activity, if reasonable:
23        (1) Separate accounting;
24        (2) The exclusion of any one or more factors;
25        (3) The inclusion of one or more additional factors
26    which will fairly represent the person's business

 

 

HB3424- 53 -LRB102 14703 HLH 20056 b

1    activities or market in this State; or
2        (4) The employment of any other method to effectuate
3    an equitable allocation and apportionment of the person's
4    business income.
5    (g) Cross reference. For allocation of business income by
6residents, see Section 301(a).
7    (h) For tax years ending on or after December 31, 1998, the
8apportionment factor of persons who apportion their business
9income to this State under subsection (a) shall be equal to:
10        (1) for tax years ending on or after December 31, 1998
11    and before December 31, 1999, 16 2/3% of the property
12    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
13    the sales factor;
14        (2) for tax years ending on or after December 31, 1999
15    and before December 31, 2000, 8 1/3% of the property
16    factor plus 8 1/3% of the payroll factor plus 83 1/3% of
17    the sales factor;
18        (3) for tax years ending on or after December 31,
19    2000, the sales factor.
20If, in any tax year ending on or after December 31, 1998 and
21before December 31, 2000, the denominator of the payroll,
22property, or sales factor is zero, the apportionment factor
23computed in paragraph (1) or (2) of this subsection for that
24year shall be divided by an amount equal to 100% minus the
25percentage weight given to each factor whose denominator is
26equal to zero.

 

 

HB3424- 54 -LRB102 14703 HLH 20056 b

1(Source: P.A. 100-201, eff. 8-18-17; 101-31, eff. 6-28-19;
2101-585, eff. 8-26-19; revised 9-12-19.)