Illinois General Assembly - Full Text of HB1171
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Full Text of HB1171  97th General Assembly



State of Illinois
2011 and 2012


Introduced 02/08/11, by Rep. Greg Harris


New Act
35 ILCS 5/221 new
215 ILCS 5/409  from Ch. 73, par. 1021

    Creates the Historic Rehabilitation Tax Credit Act. Authorizes tax credits against Illinois income taxes and insurance company privilege taxes for 25% of the costs of rehabilitating eligible historic property. Allows excess credits to be carried back and forward. Allows credits to be transferred, sold, or assigned. Provides that the credit is administered by the Department of Commerce and Economic Opportunity. Sets forth application and award procedures. Makes related changes in the Illinois Income Tax Act and the Illinois Insurance Code. Effective July 1, 2011.

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



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1    Section 10. Rehabilitation of eligible property. Any
2person, firm, partnership, trust, estate, corporation, or
3association incurring costs and expenses for the
4rehabilitation of eligible property, when that eligible
5property is a certified historic structure or a structure in a
6certified historic district, is entitled to a credit against
7the taxes imposed under the Illinois Income Tax Act (35 ILCS
85/), except Article 7 of that Act, and under Section 409 of the
9Illinois Insurance Code (215 ILCS 5/409) in an amount equal to
1025% of the total costs and expenses of rehabilitation incurred
11after July 1, 2011. Expenses of rehabilitation include, but are
12not limited to, qualified rehabilitation expenditures as
13defined under Section 47(c)(2)(A) of the Internal Revenue Code
14of 1986, as amended, and the related regulations thereunder,
15provided the rehabilitation costs associated with
16rehabilitation and the expenses exceed 50% of the total basis
17in the property and the rehabilitation meets standards
18consistent with the standards of the Secretary of the United
19States Department of the Interior for rehabilitation as
20determined by the Department of Commerce and Economic
21Opportunity in consultation with the State Historic
22Preservation Officer.
23    Section 15. Use of tax credits, carried forward or carried
24back, assignment.
25    (a) If the amount of the credit exceeds the total tax



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



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



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1impact to the State from the rehabilitation of eligible
3    (c) The Department of Commerce and Economic Opportunity is
4granted and has all powers necessary or convenient to carry out
5the provisions of this Act, including, but not limited to, the
6power to adopt rules for the administration of this Act and the
7power to establish application forms and other agreements.
8    Section 50. The Illinois Income Tax Act is amended by
9adding Section 221 as follows:
10    (35 ILCS 5/221 new)
11    Sec. 221. Historic rehabilitation tax credit. A taxpayer
12who is awarded a credit under the Historic Rehabilitation Tax
13Credit Act is entitled to a credit against the taxes imposed
14under subsections (a) and (b) of Section 201 of this Act as
15provided in the Historic Rehabilitation Tax Credit Act. This
16Section is exempt from the provisions of Section 250.
17    Section 55. The Illinois Insurance Code is amended by
18changing Section 409 as follows:
19    (215 ILCS 5/409)  (from Ch. 73, par. 1021)
20    Sec. 409. Annual privilege tax payable by companies.
21    (1) As of January 1, 1999 for all health maintenance
22organization premiums written; as of July 1, 1998 for all



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1premiums written as accident and health business, voluntary
2health service plan business, dental service plan business, or
3limited health service organization business; and as of January
41, 1998 for all other types of insurance premiums written,
5every company doing any form of insurance business in this
6State, including, but not limited to, every risk retention
7group, and excluding all fraternal benefit societies, all farm
8mutual companies, all religious charitable risk pooling
9trusts, and excluding all statutory residual market and special
10purpose entities in which companies are statutorily required to
11participate, whether incorporated or otherwise, shall pay, for
12the privilege of doing business in this State, to the Director
13for the State treasury a State tax equal to 0.5% of the net
14taxable premium written, together with any amounts due under
15Section 444 of this Code, except that the tax to be paid on any
16premium derived from any accident and health insurance or on
17any insurance business written by any company operating as a
18health maintenance organization, voluntary health service
19plan, dental service plan, or limited health service
20organization shall be equal to 0.4% of such net taxable premium
21written, together with any amounts due under Section 444. Upon
22the failure of any company to pay any such tax due, the
23Director may, by order, revoke or suspend the company's
24certificate of authority after giving 20 days written notice to
25the company, or commence proceedings for the suspension of
26business in this State under the procedures set forth by



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1Section 401.1 of this Code. The gross taxable premium written
2shall be the gross amount of premiums received on direct
3business during the calendar year on contracts covering risks
4in this State, except premiums on annuities, premiums on which
5State premium taxes are prohibited by federal law, premiums
6paid by the State for health care coverage for Medicaid
7eligible insureds as described in Section 5-2 of the Illinois
8Public Aid Code, premiums paid for health care services
9included as an element of tuition charges at any university or
10college owned and operated by the State of Illinois, premiums
11on group insurance contracts under the State Employees Group
12Insurance Act of 1971, and except premiums for deferred
13compensation plans for employees of the State, units of local
14government, or school districts. The net taxable premium shall
15be the gross taxable premium written reduced only by the
17        (a) the amount of premiums returned thereon which shall
18    be limited to premiums returned during the same preceding
19    calendar year and shall not include the return of cash
20    surrender values or death benefits on life policies
21    including annuities;
22        (b) dividends on such direct business that have been
23    paid in cash, applied in reduction of premiums or left to
24    accumulate to the credit of policyholders or annuitants. In
25    the case of life insurance, no deduction shall be made for
26    the payment of deferred dividends paid in cash to



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



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1of the tax imposed by this Section, be regarded as received,
2returned, or paid by the surviving or new company.
3    (4)(a) All companies subject to the provisions of this
4Section shall make an annual return for the preceding calendar
5year on or before March 15 setting forth such information on
6such forms as the Director may reasonably require. Payments of
7quarterly installments of the taxpayer's total estimated tax
8for the current calendar year shall be due on or before April
915, June 15, September 15, and December 15 of such year, except
10that all companies transacting insurance in this State whose
11annual tax for the immediately preceding calendar year was less
12than $5,000 shall make only an annual return. Failure of a
13company to make the annual payment, or to make the quarterly
14payments, if required, of at least 25% of either (i) the total
15tax paid during the previous calendar year or (ii) 80% of the
16actual tax for the current calendar year shall subject it to
17the penalty provisions set forth in Section 412 of this Code.
18    (b) Notwithstanding the foregoing provisions, no annual
19return shall be required or made on March 15, 1998, under this
20subsection. For the calendar year 1998:
21        (i) each health maintenance organization shall have no
22    estimated tax installments;
23        (ii) all companies subject to the tax as of July 1,
24    1998 as set forth in subsection (1) shall have estimated
25    tax installments due on September 15 and December 15 of
26    1998 which installments shall each amount to no less than



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



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1    (c) This Section is subject to the provisions of Section 10
2of the New Markets Development Program Act.
3    This Section is subject to the provisions of the Historic
4Rehabilitation Tax Credit Act.
5(Source: P.A. 95-1024, eff. 12-31-08.)
6    Section 99. Effective date. This Act takes effect July 1,