Full Text of SB3051 94th General Assembly
SB3051 94TH GENERAL ASSEMBLY
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94TH GENERAL ASSEMBLY
State of Illinois
2005 and 2006 SB3051
Introduced 1/20/2006, by Sen. Cheryl Axley SYNOPSIS AS INTRODUCED: |
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35 ILCS 5/502 |
from Ch. 120, par. 5-502 |
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Amends the Illinois Income Tax Act. Re-enacts the provisions of Section 502 of the Illinois Income Tax Act. This Section was amended by Public Act 88-669, which has been held to be unconstitutional as a violation of the single subject clause of the Illinois Constitution. Includes validation provisions. Effective immediately.
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A BILL FOR
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SB3051 |
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LRB094 18774 EFG 54168 b |
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| AN ACT concerning revenue.
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| Be it enacted by the People of the State of Illinois,
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| represented in the General Assembly:
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| Section 1. Findings; purpose; validation. | 5 |
| (a) The General Assembly finds and declares that: | 6 |
| (1) Public Act 88-669, effective November 29, 1994, | 7 |
| amended Section 502 of the Illinois Income Tax Act. It made | 8 |
| a change relating to determining eligibility for innocent | 9 |
| spouse status. Public Act 88-669 also contained other | 10 |
| provisions. | 11 |
| (2) The Illinois Supreme Court declared Public Act | 12 |
| 88-669 to be unconstitutional as a violation of the single | 13 |
| subject clause of the Illinois Constitution in People v. | 14 |
| Olender , Docket No. 98932, opinion filed December 15, 2005. | 15 |
| (b) The purpose of this Act is to re-enact the provisions | 16 |
| of Section 502 of the Illinois Income Tax Act and to minimize | 17 |
| or prevent any problems concerning those provisions that may | 18 |
| arise from the unconstitutionality of Public Act 88-669. This | 19 |
| re-enactment is intended to remove any question as to the | 20 |
| validity and content of those provisions; it is not intended to | 21 |
| supersede any other Public Act that amends the provisions | 22 |
| re-enacted in this Act. The re-enacted material is shown in | 23 |
| this Act as existing text (i.e., without underscoring) and | 24 |
| includes changes made by subsequent amendments. | 25 |
| (c) The re-enactment of the provisions of Section 502 of | 26 |
| the Illinois Income Tax Act by this Act is not intended, and | 27 |
| shall not be construed, to impair any legal argument concerning | 28 |
| whether those provisions were substantially re-enacted by any | 29 |
| other Public Act. | 30 |
| (d) All otherwise lawful actions taken before the effective | 31 |
| date of this Act in reliance on or pursuant to the provisions | 32 |
| re-enacted by this Act, as those provisions were set forth in | 33 |
| Public Act 88-669 or as subsequently amended, by any officer, |
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| employee, or agency of State government or by any other person | 2 |
| or entity, are hereby validated, except to the extent | 3 |
| prohibited under the Illinois or United States Constitution. | 4 |
| (e) This Act applies, without limitation, to actions | 5 |
| pending on or after the effective date of this Act, except to | 6 |
| the extent prohibited under the Illinois or United States | 7 |
| Constitution. | 8 |
| Section 5. The Illinois Income Tax Act is amended by | 9 |
| changing Section 502 as follows:
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| (35 ILCS 5/502) (from Ch. 120, par. 5-502)
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| Sec. 502. Returns and notices.
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| (a) In general. A return with respect to the taxes imposed | 13 |
| by this
Act shall be made by every person for any taxable year:
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| (1) for which such person is liable for a tax imposed | 15 |
| by this Act,
or
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| (2) in the case of a resident or in the case of a | 17 |
| corporation which
is qualified to do business in this | 18 |
| State, for which such person is
required to make a federal | 19 |
| income tax return, regardless of whether such
person is | 20 |
| liable for a tax imposed by this Act. However, this | 21 |
| paragraph
shall not require a resident to make a return if | 22 |
| such person has
an
Illinois base income of the basic amount | 23 |
| in Section 204(b) or
less and is either claimed as a | 24 |
| dependent on
another person's tax return under the Internal | 25 |
| Revenue Code of 1986, or is
claimed as a dependent on | 26 |
| another person's tax return under this Act.
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| (b) Fiduciaries and receivers.
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| (1) Decedents. If an individual is deceased, any return | 29 |
| or notice
required of such individual under this Act shall | 30 |
| be made by his
executor, administrator, or other person | 31 |
| charged with the property of
such decedent.
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| (2) Individuals under a disability. If an individual is | 33 |
| unable
to make a return or notice required under this Act, | 34 |
| the return or notice
required of such individual shall be |
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| made by his duly authorized agent,
guardian, fiduciary or | 2 |
| other person charged with the care
of the person or | 3 |
| property of such individual.
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| (3) Estates and trusts. Returns or notices required of | 5 |
| an estate
or a trust shall be made by the fiduciary | 6 |
| thereof.
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| (4) Receivers, trustees and assignees for | 8 |
| corporations. In a
case where a receiver, trustee in | 9 |
| bankruptcy, or assignee, by order of a
court of competent | 10 |
| jurisdiction, by operation of law, or otherwise, has
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| possession of or holds title to all or substantially all | 12 |
| the property or
business of a corporation, whether or not | 13 |
| such property or business is
being operated, such receiver, | 14 |
| trustee, or assignee shall make the
returns and notices | 15 |
| required of such corporation in the same manner and
form as | 16 |
| corporations are required to make such returns and notices.
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| (c) Joint returns by husband and wife.
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| (1) Except as provided in paragraph (3), if a husband | 19 |
| and wife file a
joint federal income tax return for a | 20 |
| taxable year they shall file a joint
return under this Act | 21 |
| for such taxable year and their liabilities shall be
joint | 22 |
| and several, but if the federal income tax liability of | 23 |
| either spouse is
determined on a separate federal income | 24 |
| tax return, they shall file separate
returns under this | 25 |
| Act.
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| (2) If neither spouse is required to file a federal | 27 |
| income tax
return and either or both are required to file a | 28 |
| return under this Act,
they may elect to file separate or | 29 |
| joint returns and pursuant to such
election their | 30 |
| liabilities shall be separate or joint and several.
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| (3) If either husband or wife is a resident and the | 32 |
| other is a
nonresident, they shall file separate returns in | 33 |
| this State on such
forms as may be required by the | 34 |
| Department in which event their tax
liabilities shall be | 35 |
| separate; but they may elect to determine their
joint net | 36 |
| income and file a joint return as if both were residents |
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| and
in such case, their liabilities shall be joint and | 2 |
| several.
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| (4) Innocent spouses.
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| (A) However, for tax liabilities arising and paid | 5 |
| prior to August 13,
1999, an innocent spouse shall be | 6 |
| relieved of
liability for tax
(including interest and | 7 |
| penalties) for any taxable year for which a joint
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| return has been made, upon submission of proof that the | 9 |
| Internal Revenue
Service has made a determination | 10 |
| under Section 6013(e) of the Internal
Revenue Code, for | 11 |
| the same taxable year, which determination relieved | 12 |
| the
spouse from liability for federal income taxes.
If | 13 |
| there is no federal income tax liability at issue for | 14 |
| the
same taxable year, the Department shall rely on the | 15 |
| provisions of Section
6013(e) to determine whether the | 16 |
| person requesting innocent spouse abatement of
tax, | 17 |
| penalty, and interest is entitled to that relief.
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| (B) For tax liabilities arising on and after August | 19 |
| 13, 1999 or which arose prior to that date, but remain | 20 |
| unpaid as of that date, if
an individual
who filed a | 21 |
| joint return for any taxable year has made an election | 22 |
| under this
paragraph, the individual's liability for | 23 |
| any tax shown on the joint return
shall not exceed the | 24 |
| individual's separate return amount and the | 25 |
| individual's
liability for any deficiency assessed for | 26 |
| that taxable year shall not exceed
the portion of the | 27 |
| deficiency properly allocable to the individual. For
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| purposes of this paragraph:
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| (i) An election properly made pursuant to | 30 |
| Section 6015 of the Internal
Revenue Code shall | 31 |
| constitute an election under this paragraph, | 32 |
| provided that
the election shall not be effective | 33 |
| until the individual has notified the
Department | 34 |
| of the election in the form and manner prescribed | 35 |
| by the Department.
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| (ii) If no election has been made under Section |
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| 6015, the individual
may make an election under | 2 |
| this paragraph in the form and manner prescribed by
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| the Department, provided that no election may be | 4 |
| made if the Department finds
that assets were | 5 |
| transferred
between individuals filing a joint | 6 |
| return as part of a scheme by such
individuals to | 7 |
| avoid payment of Illinois income tax and the | 8 |
| election shall not
eliminate the individual's | 9 |
| liability for any portion of a deficiency
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| attributable to an error on the return of which the | 11 |
| individual had actual
knowledge as of the date of | 12 |
| filing.
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| (iii) In determining the separate return | 14 |
| amount or portion of any
deficiency attributable | 15 |
| to an individual, the Department shall follow the
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| provisions in subsections (c) and (d) of Section | 17 |
| 6015 of the Internal Revenue Code.
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| (iv) In determining the validity of an | 19 |
| individual's election under
subparagraph (ii) and | 20 |
| in determining an electing individual's separate | 21 |
| return
amount or portion of any deficiency under | 22 |
| subparagraph (iii), any determination
made by the | 23 |
| Secretary of the Treasury, by the United States Tax | 24 |
| Court on
petition for review of a determination by | 25 |
| the Secretary of the Treasury, or on
appeal from | 26 |
| the United States Tax Court under Section 6015 of
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| the Internal
Revenue Code regarding criteria for | 28 |
| eligibility or under subsection (d) of
Section | 29 |
| 6015
of the Internal Revenue Code regarding the | 30 |
| allocation of any item of income,
deduction, | 31 |
| payment, or credit between an individual making | 32 |
| the federal election
and that individual's spouse | 33 |
| shall be conclusively presumed to be correct.
With | 34 |
| respect to any item that is not the subject of a | 35 |
| determination by the
Secretary of the Treasury or | 36 |
| the federal courts, in any proceeding
involving |
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| this subsection, the
individual making the | 2 |
| election shall have the burden of proof with | 3 |
| respect to
any item except that the Department | 4 |
| shall have the burden of proof with respect
to | 5 |
| items in subdivision (ii).
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| (v) Any election made by an individual under | 7 |
| this subsection shall
apply to all years for which | 8 |
| that individual and the spouse named in the
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| election have filed a joint return.
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| (vi) After receiving a notice that the federal | 11 |
| election has been made
or after receiving an | 12 |
| election under subdivision (ii), the Department | 13 |
| shall
take no collection action against the | 14 |
| electing individual for any liability
arising from | 15 |
| a joint return covered by the election until the | 16 |
| Department has
notified the electing individual in | 17 |
| writing that the election is invalid or of
the | 18 |
| portion of the liability the Department has | 19 |
| allocated to the electing
individual. Within 60 | 20 |
| days (150 days if the individual is outside the | 21 |
| United
States) after the issuance of such | 22 |
| notification, the individual may file a
written | 23 |
| protest of the denial of the election or of the | 24 |
| Department's
determination of the liability | 25 |
| allocated to him or her and shall be granted a
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| hearing within the Department under the provisions | 27 |
| of Section 908. If a
protest is filed, the | 28 |
| Department shall take no collection action against | 29 |
| the
electing individual until the decision | 30 |
| regarding the protest has become final
under | 31 |
| subsection (d) of Section 908 or, if | 32 |
| administrative review of the
Department's decision
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| is requested under Section 1201, until the | 34 |
| decision of the court becomes
final.
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| (d) Partnerships. Every partnership having any base income
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| allocable to this State in accordance with section 305(c) shall |
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| retain
information concerning all items of income, gain, loss | 2 |
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deduction; the names and addresses of all of the partners, | 3 |
| or names and
addresses of members of a limited liability | 4 |
| company, or other
persons who would be entitled to share in the | 5 |
| base income of the
partnership if distributed; the amount of | 6 |
| the distributive share of
each; and such other pertinent | 7 |
| information as the Department may by
forms or regulations | 8 |
| prescribe. The partnership shall make that information
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| available to the Department when requested by the Department.
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| (e) For taxable years ending on or after December 31, 1985, | 11 |
| and before
December 31, 1993, taxpayers
that are corporations | 12 |
| (other than Subchapter S corporations) having the
same taxable | 13 |
| year and that are members of the same unitary business group
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| may elect to be treated as one taxpayer for purposes of any | 15 |
| original return,
amended return which includes the same | 16 |
| taxpayers of the unitary group which
joined in the election to | 17 |
| file the original return, extension, claim for
refund, | 18 |
| assessment, collection and payment and determination of the
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| group's tax liability under this Act. This subsection (e) does | 20 |
| not permit the
election to be made for some, but not all, of | 21 |
| the purposes enumerated above.
For taxable years ending on or | 22 |
| after December 31, 1987, corporate members
(other than | 23 |
| Subchapter S corporations) of the same unitary business group
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| making this subsection (e) election are not required to have | 25 |
| the same taxable
year.
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| For taxable years ending on or after December 31, 1993, | 27 |
| taxpayers that are
corporations (other than Subchapter S | 28 |
| corporations) and that are members of
the same unitary business | 29 |
| group shall be treated as one taxpayer for purposes
of any | 30 |
| original return, amended return which includes the same | 31 |
| taxpayers of the
unitary group which joined in filing the | 32 |
| original return, extension, claim for
refund, assessment, | 33 |
| collection and payment and determination of the group's tax
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| liability under this Act.
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| (f) The Department may promulgate regulations to permit | 36 |
| nonresident
individual partners of the same partnership, |
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| nonresident Subchapter S
corporation shareholders of the same | 2 |
| Subchapter S corporation, and
nonresident individuals | 3 |
| transacting an insurance business in Illinois under
a Lloyds | 4 |
| plan of operation, and nonresident individual members of the | 5 |
| same
limited liability company that is treated as a partnership | 6 |
| under Section 1501
(a)(16) of this Act, to file composite | 7 |
| individual income tax returns
reflecting the composite income | 8 |
| of such individuals allocable to Illinois
and to make composite | 9 |
| individual income tax payments. The Department may
by | 10 |
| regulation also permit such composite returns to include the | 11 |
| income tax
owed by Illinois residents attributable to their | 12 |
| income from partnerships,
Subchapter S corporations, insurance | 13 |
| businesses organized under a Lloyds
plan of operation, or | 14 |
| limited liability companies that are treated as
partnership | 15 |
| under Section 1501(a)(16) of this Act, in which case such
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| Illinois residents will be permitted to claim credits on their | 17 |
| individual
returns for their shares of the composite tax | 18 |
| payments. This paragraph of
subsection (f) applies to taxable | 19 |
| years ending on or after December 31, 1987.
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| For taxable years ending on or after December 31, 1999, the | 21 |
| Department may,
by regulation, also permit any persons | 22 |
| transacting an insurance business
organized under a Lloyds plan | 23 |
| of operation to file composite returns reflecting
the income of | 24 |
| such persons allocable to Illinois and the tax rates applicable
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| to such persons under Section 201 and to make composite tax | 26 |
| payments and shall,
by regulation, also provide that the income | 27 |
| and apportionment factors
attributable to the transaction of an | 28 |
| insurance business organized under a
Lloyds plan of operation | 29 |
| by any person joining in the filing of a composite
return | 30 |
| shall, for purposes of allocating and apportioning income under | 31 |
| Article
3 of this Act and computing net income under Section | 32 |
| 202 of this Act, be
excluded from any other income and | 33 |
| apportionment factors of that person or of
any unitary business | 34 |
| group, as defined in subdivision (a)(27) of Section 1501,
to | 35 |
| which that person may belong.
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| (g) The Department may adopt rules to authorize the |
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| electronic filing of
any return required to be filed under this | 2 |
| Section.
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| (Source: P.A. 91-541, eff. 8-13-99; 91-913, eff. 1-1-01; | 4 |
| 92-846, eff.
8-23-02.)
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| Section 99. Effective date. This Act takes effect upon | 6 |
| becoming law.
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