Illinois General Assembly - Full Text of SB2854
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Full Text of SB2854  95th General Assembly

SB2854eng 95TH GENERAL ASSEMBLY



 


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

 

 

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1     after June 30, 1989, an amount equal to the sum of (i) 2
2     1/2% of the taxpayer's net income for the period prior to
3     July 1, 1989, as calculated under Section 202.3, and (ii)
4     3% of the taxpayer's net income for the period after June
5     30, 1989, as calculated under Section 202.3.
6         (3) In the case of an individual, trust or estate, for
7     taxable years beginning after June 30, 1989, an amount
8     equal to 3% of the taxpayer's net income for the taxable
9     year.
10         (4) (Blank).
11         (5) (Blank).
12         (6) In the case of a corporation, for taxable years
13     ending prior to July 1, 1989, an amount equal to 4% of the
14     taxpayer's net income for the taxable year.
15         (7) In the case of a corporation, for taxable years
16     beginning prior to July 1, 1989 and ending after June 30,
17     1989, an amount equal to the sum of (i) 4% of the
18     taxpayer's net income for the period prior to July 1, 1989,
19     as calculated under Section 202.3, and (ii) 4.8% of the
20     taxpayer's net income for the period after June 30, 1989,
21     as calculated under Section 202.3.
22         (8) In the case of a corporation, for taxable years
23     beginning after June 30, 1989, an amount equal to 4.8% of
24     the taxpayer's net income for the taxable year.
25     (c) Personal Property Tax Replacement Income Tax.
26 Beginning on July 1, 1979 and thereafter, in addition to such

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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1     years following the excess credit years. The credit shall
2     be applied to the earliest year for which there is a
3     liability. If there is credit from more than one tax year
4     that is available to offset a liability, earlier credit
5     shall be applied first.
6         (2) The term "qualified property" means property
7     which:
8             (A) is tangible, whether new or used, including
9         buildings and structural components of buildings and
10         signs that are real property, but not including land or
11         improvements to real property that are not a structural
12         component of a building such as landscaping, sewer
13         lines, local access roads, fencing, parking lots, and
14         other appurtenances;
15             (B) is depreciable pursuant to Section 167 of the
16         Internal Revenue Code, except that "3-year property"
17         as defined in Section 168(c)(2)(A) of that Code is not
18         eligible for the credit provided by this subsection
19         (e);
20             (C) is acquired by purchase as defined in Section
21         179(d) of the Internal Revenue Code;
22             (D) is used in Illinois by a taxpayer who is
23         primarily engaged in manufacturing, or in mining coal
24         or fluorite, or in retailing, or was placed in service
25         on or after July 1, 2006 in a River Edge Redevelopment
26         Zone established pursuant to the River Edge

 

 

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1         Redevelopment Zone Act; and
2             (E) has not previously been used in Illinois in
3         such a manner and by such a person as would qualify for
4         the credit provided by this subsection (e) or
5         subsection (f).
6         (3) For purposes of this subsection (e),
7     "manufacturing" means the material staging and production
8     of tangible personal property by procedures commonly
9     regarded as manufacturing, processing, fabrication, or
10     assembling which changes some existing material into new
11     shapes, new qualities, or new combinations. For purposes of
12     this subsection (e) the term "mining" shall have the same
13     meaning as the term "mining" in Section 613(c) of the
14     Internal Revenue Code. For purposes of this subsection (e),
15     the term "retailing" means the sale of tangible personal
16     property or services rendered in conjunction with the sale
17     of tangible consumer goods or commodities.
18         (4) The basis of qualified property shall be the basis
19     used to compute the depreciation deduction for federal
20     income tax purposes.
21         (5) If the basis of the property for federal income tax
22     depreciation purposes is increased after it has been placed
23     in service in Illinois by the taxpayer, the amount of such
24     increase shall be deemed property placed in service on the
25     date of such increase in basis.
26         (6) The term "placed in service" shall have the same

 

 

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1     meaning as under Section 46 of the Internal Revenue Code.
2         (7) If during any taxable year, any property ceases to
3     be qualified property in the hands of the taxpayer within
4     48 months after being placed in service, or the situs of
5     any qualified property is moved outside Illinois within 48
6     months after being placed in service, the Personal Property
7     Tax Replacement Income Tax for such taxable year shall be
8     increased. Such increase shall be determined by (i)
9     recomputing the investment credit which would have been
10     allowed for the year in which credit for such property was
11     originally allowed by eliminating such property from such
12     computation and, (ii) subtracting such recomputed credit
13     from the amount of credit previously allowed. For the
14     purposes of this paragraph (7), a reduction of the basis of
15     qualified property resulting from a redetermination of the
16     purchase price shall be deemed a disposition of qualified
17     property to the extent of such reduction.
18         (8) Unless the investment credit is extended by law,
19     the basis of qualified property shall not include costs
20     incurred after December 31, 2008, except for costs incurred
21     pursuant to a binding contract entered into on or before
22     December 31, 2008.
23         (9) Each taxable year ending before December 31, 2000,
24     a partnership may elect to pass through to its partners the
25     credits to which the partnership is entitled under this
26     subsection (e) for the taxable year. A partner may use the

 

 

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1     credit allocated to him or her under this paragraph only
2     against the tax imposed in subsections (c) and (d) of this
3     Section. If the partnership makes that election, those
4     credits shall be allocated among the partners in the
5     partnership in accordance with the rules set forth in
6     Section 704(b) of the Internal Revenue Code, and the rules
7     promulgated under that Section, and the allocated amount of
8     the credits shall be allowed to the partners for that
9     taxable year. The partnership shall make this election on
10     its Personal Property Tax Replacement Income Tax return for
11     that taxable year. The election to pass through the credits
12     shall be irrevocable.
13         For taxable years ending on or after December 31, 2000,
14     a partner that qualifies its partnership for a subtraction
15     under subparagraph (I) of paragraph (2) of subsection (d)
16     of Section 203 or a shareholder that qualifies a Subchapter
17     S corporation for a subtraction under subparagraph (S) of
18     paragraph (2) of subsection (b) of Section 203 shall be
19     allowed a credit under this subsection (e) equal to its
20     share of the credit earned under this subsection (e) during
21     the taxable year by the partnership or Subchapter S
22     corporation, determined in accordance with the
23     determination of income and distributive share of income
24     under Sections 702 and 704 and Subchapter S of the Internal
25     Revenue Code. This paragraph is exempt from the provisions
26     of Section 250.

 

 

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

 

 

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

 

 

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

 

 

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1     property to the extent of such reduction.
2         (7) There shall be allowed an additional credit equal
3     to 0.5% of the basis of qualified property placed in
4     service during the taxable year in a River Edge
5     Redevelopment Zone, provided such property is placed in
6     service on or after July 1, 2006, and the taxpayer's base
7     employment within Illinois has increased by 1% or more over
8     the preceding year as determined by the taxpayer's
9     employment records filed with the Illinois Department of
10     Employment Security. Taxpayers who are new to Illinois
11     shall be deemed to have met the 1% growth in base
12     employment for the first year in which they file employment
13     records with the Illinois Department of Employment
14     Security. If, in any year, the increase in base employment
15     within Illinois over the preceding year is less than 1%,
16     the additional credit shall be limited to that percentage
17     times a fraction, the numerator of which is 0.5% and the
18     denominator of which is 1%, but shall not exceed 0.5%.
19     (g) Jobs Tax Credit; Enterprise Zone, River Edge
20 Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
21         (1) A taxpayer conducting a trade or business in an
22     enterprise zone or a High Impact Business designated by the
23     Department of Commerce and Economic Opportunity or for
24     taxable years ending on or after December 31, 2006, in a
25     River Edge Redevelopment Zone conducting a trade or
26     business in a federally designated Foreign Trade Zone or

 

 

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

 

 

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1         Services for the Disadvantaged or Title III of the Job
2         Training Partnership Act, Employment and Training
3         Assistance for Dislocated Workers Program.
4             (B) Hired after the enterprise zone, River Edge
5         Redevelopment Zone, or federally designated Foreign
6         Trade Zone or Sub-Zone was designated or the trade or
7         business was located in that zone, whichever is later.
8             (C) Employed in the enterprise zone, River Edge
9         Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
10         An employee is employed in an enterprise zone or
11         federally designated Foreign Trade Zone or Sub-Zone if
12         his services are rendered there or it is the base of
13         operations for the services performed.
14             (D) A full-time employee working 30 or more hours
15         per week.
16         (4) For tax years ending on or after December 31, 1985
17     and prior to December 31, 1988, the credit shall be allowed
18     for the tax year in which the eligible employees are hired.
19     For tax years ending on or after December 31, 1988, the
20     credit shall be allowed for the tax year immediately
21     following the tax year in which the eligible employees are
22     hired. If the amount of the credit exceeds the tax
23     liability for that year, whether it exceeds the original
24     liability or the liability as later amended, such excess
25     may be carried forward and applied to the tax liability of
26     the 5 taxable years following the excess credit year. The

 

 

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

 

 

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1     reduce a taxpayer's liability for the tax imposed by
2     subsections (a) and (b) of this Section to below zero. The
3     credit applicable to such investments shall be taken in the
4     taxable year in which such investments have been completed.
5     The credit for additional investments beyond the minimum
6     investment by a designated high impact business authorized
7     under subdivision (a)(3)(A) of Section 5.5 of the Illinois
8     Enterprise Zone Act shall be available only in the taxable
9     year in which the property is placed in service and shall
10     not be allowed to the extent that it would reduce a
11     taxpayer's liability for the tax imposed by subsections (a)
12     and (b) of this Section to below zero. For tax years ending
13     on or after December 31, 1987, the credit shall be allowed
14     for the tax year in which the property is placed in
15     service, or, if the amount of the credit exceeds the tax
16     liability for that year, whether it exceeds the original
17     liability or the liability as later amended, such excess
18     may be carried forward and applied to the tax liability of
19     the 5 taxable years following the excess credit year. The
20     credit shall be applied to the earliest year for which
21     there is a liability. If there is credit from more than one
22     tax year that is available to offset a liability, the
23     credit accruing first in time shall be applied first.
24         Changes made in this subdivision (h)(1) by Public Act
25     88-670 restore changes made by Public Act 85-1182 and
26     reflect existing law.

 

 

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1         (2) The term qualified property means property which:
2             (A) is tangible, whether new or used, including
3         buildings and structural components of buildings;
4             (B) is depreciable pursuant to Section 167 of the
5         Internal Revenue Code, except that "3-year property"
6         as defined in Section 168(c)(2)(A) of that Code is not
7         eligible for the credit provided by this subsection
8         (h);
9             (C) is acquired by purchase as defined in Section
10         179(d) of the Internal Revenue Code; and
11             (D) is not eligible for the Enterprise Zone
12         Investment Credit provided by subsection (f) of this
13         Section.
14         (3) The basis of qualified property shall be the basis
15     used to compute the depreciation deduction for federal
16     income tax purposes.
17         (4) If the basis of the property for federal income tax
18     depreciation purposes is increased after it has been placed
19     in service in a federally designated Foreign Trade Zone or
20     Sub-Zone located in Illinois by the taxpayer, the amount of
21     such increase shall be deemed property placed in service on
22     the date of such increase in basis.
23         (5) The term "placed in service" shall have the same
24     meaning as under Section 46 of the Internal Revenue Code.
25         (6) If during any taxable year ending on or before
26     December 31, 1996, any property ceases to be qualified

 

 

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1     property in the hands of the taxpayer within 48 months
2     after being placed in service, or the situs of any
3     qualified property is moved outside Illinois within 48
4     months after being placed in service, the tax imposed under
5     subsections (a) and (b) of this Section for such taxable
6     year shall be increased. Such increase shall be determined
7     by (i) recomputing the investment credit which would have
8     been allowed for the year in which credit for such property
9     was originally allowed by eliminating such property from
10     such computation, and (ii) subtracting such recomputed
11     credit from the amount of credit previously allowed. For
12     the purposes of this paragraph (6), a reduction of the
13     basis of qualified property resulting from a
14     redetermination of the purchase price shall be deemed a
15     disposition of qualified property to the extent of such
16     reduction.
17         (7) Beginning with tax years ending after December 31,
18     1996, if a taxpayer qualifies for the credit under this
19     subsection (h) and thereby is granted a tax abatement and
20     the taxpayer relocates its entire facility in violation of
21     the explicit terms and length of the contract under Section
22     18-183 of the Property Tax Code, the tax imposed under
23     subsections (a) and (b) of this Section shall be increased
24     for the taxable year in which the taxpayer relocated its
25     facility by an amount equal to the amount of credit
26     received by the taxpayer under this subsection (h).

 

 

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

 

 

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1 Section for which a taxpayer has claimed a credit under this
2 subsection (i) is reduced, the amount of credit for such tax
3 shall also be reduced. Such reduction shall be determined by
4 recomputing the credit to take into account the reduced tax
5 imposed by subsections (c) and (d). If any portion of the
6 reduced amount of credit has been carried to a different
7 taxable year, an amended return shall be filed for such taxable
8 year to reduce the amount of credit claimed.
9     (j) Training expense credit. Beginning with tax years
10 ending on or after December 31, 1986 and prior to December 31,
11 2003 and for tax years ending on or after December 31, 2009 and
12 on or before December 30, 2019, a taxpayer shall be allowed a
13 credit against the tax imposed by subsections (a) and (b) under
14 this Section for all amounts paid or accrued, on behalf of all
15 persons employed by the taxpayer in Illinois or Illinois
16 residents employed outside of Illinois by a taxpayer, for
17 educational or vocational training in semi-technical or
18 technical fields or semi-skilled or skilled fields, which were
19 deducted from gross income in the computation of taxable
20 income. The credit against the tax imposed by subsections (a)
21 and (b) shall be 1.6% of such training expenses for tax years
22 ending prior to December 31, 2003 and 2% for tax years ending
23 on or after December 31, 2009 and on or before December 30,
24 2019. For partners, shareholders of subchapter S corporations,
25 and owners of limited liability companies, if the liability
26 company is treated as a partnership for purposes of federal and

 

 

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1 State income taxation, there shall be allowed a credit under
2 this subsection (j) to be determined in accordance with the
3 determination of income and distributive share of income under
4 Sections 702 and 704 and subchapter S of the Internal Revenue
5 Code.
6     Any credit allowed under this subsection which is unused in
7 the year the credit is earned may be carried forward to each of
8 the 5 taxable years following the year for which the credit is
9 first computed until it is used. This credit shall be applied
10 first to the earliest year for which there is a liability. If
11 there is a credit under this subsection from more than one tax
12 year that is available to offset a liability the earliest
13 credit arising under this subsection shall be applied first. No
14 carryforward credit may be claimed in any tax year ending on or
15 after December 31, 2003 and prior to December 31, 2010.
16     (k) Research and development credit.
17     For tax years ending after July 1, 1990 and prior to
18 December 31, 2003, and beginning again for tax years ending on
19 or after December 31, 2004, a taxpayer shall be allowed a
20 credit against the tax imposed by subsections (a) and (b) of
21 this Section for increasing research activities in this State.
22 The credit allowed against the tax imposed by subsections (a)
23 and (b) shall be equal to 6 1/2% of the qualifying expenditures
24 for increasing research activities in this State. For partners,
25 shareholders of subchapter S corporations, and owners of
26 limited liability companies, if the liability company is

 

 

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1 treated as a partnership for purposes of federal and State
2 income taxation, there shall be allowed a credit under this
3 subsection to be determined in accordance with the
4 determination of income and distributive share of income under
5 Sections 702 and 704 and subchapter S of the Internal Revenue
6 Code.
7     For purposes of this subsection, "qualifying expenditures"
8 means the qualifying expenditures as defined for the federal
9 credit for increasing research activities which would be
10 allowable under Section 41 of the Internal Revenue Code and
11 which are conducted in this State, "qualifying expenditures for
12 increasing research activities in this State" means the excess
13 of qualifying expenditures for the taxable year in which
14 incurred over qualifying expenditures for the base period,
15 "qualifying expenditures for the base period" means the average
16 of the qualifying expenditures for each year in the base
17 period, and "base period" means the 3 taxable years immediately
18 preceding the taxable year for which the determination is being
19 made.
20     Any credit in excess of the tax liability for the taxable
21 year may be carried forward. A taxpayer may elect to have the
22 unused credit shown on its final completed return carried over
23 as a credit against the tax liability for the following 5
24 taxable years or until it has been fully used, whichever occurs
25 first; provided that no credit earned in a tax year ending
26 prior to December 31, 2003 may be carried forward to any year

 

 

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1 ending on or after December 31, 2003.
2     If an unused credit is carried forward to a given year from
3 2 or more earlier years, that credit arising in the earliest
4 year will be applied first against the tax liability for the
5 given year. If a tax liability for the given year still
6 remains, the credit from the next earliest year will then be
7 applied, and so on, until all credits have been used or no tax
8 liability for the given year remains. Any remaining unused
9 credit or credits then will be carried forward to the next
10 following year in which a tax liability is incurred, except
11 that no credit can be carried forward to a year which is more
12 than 5 years after the year in which the expense for which the
13 credit is given was incurred.
14     No inference shall be drawn from this amendatory Act of the
15 91st General Assembly in construing this Section for taxable
16 years beginning before January 1, 1999.
17     (l) Environmental Remediation Tax Credit.
18         (i) For tax years ending after December 31, 1997 and on
19     or before December 31, 2001, a taxpayer shall be allowed a
20     credit against the tax imposed by subsections (a) and (b)
21     of this Section for certain amounts paid for unreimbursed
22     eligible remediation costs, as specified in this
23     subsection. For purposes of this Section, "unreimbursed
24     eligible remediation costs" means costs approved by the
25     Illinois Environmental Protection Agency ("Agency") under
26     Section 58.14 of the Environmental Protection Act that were

 

 

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

 

 

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1     remediation costs in excess of $100,000 per site, except
2     that the $100,000 threshold shall not apply to any site
3     contained in an enterprise zone as determined by the
4     Department of Commerce and Community Affairs (now
5     Department of Commerce and Economic Opportunity). The
6     total credit allowed shall not exceed $40,000 per year with
7     a maximum total of $150,000 per site. For partners and
8     shareholders of subchapter S corporations, there shall be
9     allowed a credit under this subsection to be determined in
10     accordance with the determination of income and
11     distributive share of income under Sections 702 and 704 and
12     subchapter S of the Internal Revenue Code.
13         (ii) A credit allowed under this subsection that is
14     unused in the year the credit is earned may be carried
15     forward to each of the 5 taxable years following the year
16     for which the credit is first earned until it is used. The
17     term "unused credit" does not include any amounts of
18     unreimbursed eligible remediation costs in excess of the
19     maximum credit per site authorized under paragraph (i).
20     This credit shall be applied first to the earliest year for
21     which there is a liability. If there is a credit under this
22     subsection from more than one tax year that is available to
23     offset a liability, the earliest credit arising under this
24     subsection shall be applied first. A credit allowed under
25     this subsection may be sold to a buyer as part of a sale of
26     all or part of the remediation site for which the credit

 

 

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1     was granted. The purchaser of a remediation site and the
2     tax credit shall succeed to the unused credit and remaining
3     carry-forward period of the seller. To perfect the
4     transfer, the assignor shall record the transfer in the
5     chain of title for the site and provide written notice to
6     the Director of the Illinois Department of Revenue of the
7     assignor's intent to sell the remediation site and the
8     amount of the tax credit to be transferred as a portion of
9     the sale. In no event may a credit be transferred to any
10     taxpayer if the taxpayer or a related party would not be
11     eligible under the provisions of subsection (i).
12         (iii) For purposes of this Section, the term "site"
13     shall have the same meaning as under Section 58.2 of the
14     Environmental Protection Act.
15     (m) Education expense credit. Beginning with tax years
16 ending after December 31, 1999, a taxpayer who is the custodian
17 of one or more qualifying pupils shall be allowed a credit
18 against the tax imposed by subsections (a) and (b) of this
19 Section for qualified education expenses incurred on behalf of
20 the qualifying pupils. The credit shall be equal to 25% of
21 qualified education expenses, but in no event may the total
22 credit under this subsection claimed by a family that is the
23 custodian of qualifying pupils exceed $500. In no event shall a
24 credit under this subsection reduce the taxpayer's liability
25 under this Act to less than zero. This subsection is exempt
26 from the provisions of Section 250 of this Act.

 

 

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1     For purposes of this subsection:
2     "Qualifying pupils" means individuals who (i) are
3 residents of the State of Illinois, (ii) are under the age of
4 21 at the close of the school year for which a credit is
5 sought, and (iii) during the school year for which a credit is
6 sought were full-time pupils enrolled in a kindergarten through
7 twelfth grade education program at any school, as defined in
8 this subsection.
9     "Qualified education expense" means the amount incurred on
10 behalf of a qualifying pupil in excess of $250 for tuition,
11 book fees, and lab fees at the school in which the pupil is
12 enrolled during the regular school year.
13     "School" means any public or nonpublic elementary or
14 secondary school in Illinois that is in compliance with Title
15 VI of the Civil Rights Act of 1964 and attendance at which
16 satisfies the requirements of Section 26-1 of the School Code,
17 except that nothing shall be construed to require a child to
18 attend any particular public or nonpublic school to qualify for
19 the credit under this Section.
20     "Custodian" means, with respect to qualifying pupils, an
21 Illinois resident who is a parent, the parents, a legal
22 guardian, or the legal guardians of the qualifying pupils.
23     (n) River Edge Redevelopment Zone site remediation tax
24 credit.
25         (i) For tax years ending on or after December 31, 2006,
26     a taxpayer shall be allowed a credit against the tax

 

 

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

 

 

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1     Internal Revenue Code and "related party" includes the
2     persons disallowed a deduction for losses by paragraphs
3     (b), (c), and (f)(1) of Section 267 of the Internal Revenue
4     Code by virtue of being a related taxpayer, as well as any
5     of its partners. The credit allowed against the tax imposed
6     by subsections (a) and (b) shall be equal to 25% of the
7     unreimbursed eligible remediation costs in excess of
8     $100,000 per site.
9         (ii) A credit allowed under this subsection that is
10     unused in the year the credit is earned may be carried
11     forward to each of the 5 taxable years following the year
12     for which the credit is first earned until it is used. This
13     credit shall be applied first to the earliest year for
14     which there is a liability. If there is a credit under this
15     subsection from more than one tax year that is available to
16     offset a liability, the earliest credit arising under this
17     subsection shall be applied first. A credit allowed under
18     this subsection may be sold to a buyer as part of a sale of
19     all or part of the remediation site for which the credit
20     was granted. The purchaser of a remediation site and the
21     tax credit shall succeed to the unused credit and remaining
22     carry-forward period of the seller. To perfect the
23     transfer, the assignor shall record the transfer in the
24     chain of title for the site and provide written notice to
25     the Director of the Illinois Department of Revenue of the
26     assignor's intent to sell the remediation site and the

 

 

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1     amount of the tax credit to be transferred as a portion of
2     the sale. In no event may a credit be transferred to any
3     taxpayer if the taxpayer or a related party would not be
4     eligible under the provisions of subsection (i).
5         (iii) For purposes of this Section, the term "site"
6     shall have the same meaning as under Section 58.2 of the
7     Environmental Protection Act.
8         (iv) This subsection is exempt from the provisions of
9     Section 250.
10 (Source: P.A. 94-1021, eff. 7-12-06; 95-454, eff. 8-27-07.)
 
11     Section 99. Effective date. This Act takes effect upon
12 becoming law.