Full Text of HB4381 99th General Assembly
HB4381ham001 99TH GENERAL ASSEMBLY | Rep. David McSweeney Filed: 3/23/2016
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| 1 | | AMENDMENT TO HOUSE BILL 4381
| 2 | | AMENDMENT NO. ______. Amend House Bill 4381 by replacing | 3 | | everything after the enacting clause with the following:
| 4 | | "Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Sections 202, 304, and 1501 and by adding Section | 6 | | 204.5 as follows:
| 7 | | (35 ILCS 5/202) (from Ch. 120, par. 2-202)
| 8 | | Sec. 202. Net Income Defined. In general. For purposes of | 9 | | this Act,
a taxpayer's net income for
a taxable year shall be | 10 | | that portion of his base income for such year which
is | 11 | | allocable to this State under the provisions of Article 3, less | 12 | | the
standard exemption allowed by Section 204 , the Illinois | 13 | | manufacturing deduction allowed by Section 204.5, and the | 14 | | deduction allowed by Section
207.
| 15 | | (Source: P.A. 92-846, eff. 8-23-02.)
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| 1 | | (35 ILCS 5/204.5 new) | 2 | | Sec. 204.5. Illinois manufacturing deduction. | 3 | | (a) Allowance of deduction. For taxable years ending on and | 4 | | after December 31, 2016, in computing net income under this | 5 | | Act, there shall be allowed the Illinois manufacturing | 6 | | deduction in an amount equal to the taxpayer's net income from | 7 | | manufacturing multiplied by a fraction, the numerator of which | 8 | | is the sum of the manufacturing property factor (if any) and | 9 | | the manufacturing payroll factor (if any), and the denominator | 10 | | of which is 2 reduced by the number of factors which have a | 11 | | denominator of zero. For taxable years ending on or after | 12 | | December 31, 2016 and ending prior to December 31, 2018, the | 13 | | amount of the Illinois manufacturing deduction shall be | 14 | | modified as provided in subsection (b). | 15 | | (b) Notwithstanding any other provision of law: (i) for | 16 | | taxable years ending on or after December 31, 2016 and ending | 17 | | prior to December 31, 2017, the amount of the Illinois | 18 | | manufacturing deduction shall be one-third of the amount | 19 | | calculated under subsection (a); (ii) for taxable years ending | 20 | | on or after December 31, 2017 and ending prior to December 31, | 21 | | 2018, the amount of the Illinois manufacturing deduction shall | 22 | | be two-thirds of the amount calculated under subsection (a); | 23 | | and (iii) for taxable years ending on or after December 31, | 24 | | 2018, the Illinois manufacturing deduction shall be the amount | 25 | | calculated under subsection (a). | 26 | | (c) As used in this Section: |
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| 1 | | "Manufacturing" and "tangible personal property" have the | 2 | | same meanings as provided in paragraph (3) of subsection (e) of | 3 | | Section 201. | 4 | | "Manufacturing property factor" means a fraction, the | 5 | | numerator of which is the average value of the taxpayer's real | 6 | | and tangible personal property owned or rented and used by the | 7 | | taxpayer in manufacturing in this State, and the denominator of | 8 | | which is the average value of all of the taxpayer's real and | 9 | | tangible personal property owned or rented and used by the | 10 | | taxpayer in manufacturing. For purposes of this paragraph, the | 11 | | average value of the taxpayer's property shall be determined by | 12 | | applying the provisions of subparagraphs (B) and (C) of | 13 | | paragraph (1) of subsection (a) of Section 304 of this Act. | 14 | | "Manufacturing payroll factor" means a fraction, the | 15 | | numerator of which is the total amount paid by the taxpayer in | 16 | | this State as compensation that is a direct cost of | 17 | | manufacturing, and the denominator of which is the total | 18 | | compensation paid by the taxpayer everywhere that is a direct | 19 | | cost of manufacturing. | 20 | | "Net income from manufacturing" means the taxpayer's net | 21 | | income for the taxable year (computed without regard to the | 22 | | exemption under Section 204 or the deduction under Section | 23 | | 207), multiplied by a fraction, the numerator of which is the | 24 | | total sales of tangible personal property manufactured by the | 25 | | taxpayer, and the denominator of which is the total sales of | 26 | | the taxpayer for the taxable year. |
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| 1 | | (d) Unitary business groups. In the case of a taxpayer that | 2 | | is a member of a unitary business group (as defined in | 3 | | paragraph (27) of subsection (a) of Section 1501), consistent | 4 | | with rules adopted by the Department, the deduction under this | 5 | | Section shall be computed in a manner consistent with the | 6 | | combined apportionment method required under subsection (e) of | 7 | | Section 304. | 8 | | (e) Multiple trades or businesses. The Department shall | 9 | | adopt rules consistent with the provisions of this Section to | 10 | | determine the deduction in the case of a taxpayer that operates | 11 | | more than one separate and distinct trade or business. | 12 | | (f) Sunset exemption. This Section is exempt from the | 13 | | provisions of Section 250.
| 14 | | (35 ILCS 5/304) (from Ch. 120, par. 3-304)
| 15 | | Sec. 304. Business income of persons other than residents.
| 16 | | (a) In general. The business income of a person other than | 17 | | a
resident shall be allocated to this State if such person's | 18 | | business
income is derived solely from this State. If a person | 19 | | other than a
resident derives business income from this State | 20 | | and one or more other
states, then, for tax years ending on or | 21 | | before December 30, 1998, and
except as otherwise provided by | 22 | | this Section, such
person's business income shall be | 23 | | apportioned to this State by
multiplying the income by a | 24 | | fraction, the numerator of which is the sum
of the property | 25 | | factor (if any), the payroll factor (if any) and 200% of the
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| 1 | | sales factor (if any), and the denominator of which is 4 | 2 | | reduced by the
number of factors other than the sales factor | 3 | | which have a denominator
of zero and by an additional 2 if the | 4 | | sales factor has a denominator of zero.
For tax years ending on | 5 | | or after December 31, 1998, and except as otherwise
provided by | 6 | | this Section, persons other than
residents who derive business | 7 | | income from this State and one or more other
states shall | 8 | | compute their apportionment factor by weighting their | 9 | | property,
payroll, and sales factors as provided in
subsection | 10 | | (h) of this Section.
| 11 | | (1) Property factor.
| 12 | | (A) The property factor is a fraction, the numerator of | 13 | | which is the
average value of the person's real and | 14 | | tangible personal property owned
or rented and used in the | 15 | | trade or business in this State during the
taxable year and | 16 | | the denominator of which is the average value of all
the | 17 | | person's real and tangible personal property owned or | 18 | | rented and
used in the trade or business during the taxable | 19 | | year.
| 20 | | (B) Property owned by the person is valued at its | 21 | | original cost.
Property rented by the person is valued at 8 | 22 | | times the net annual rental
rate. Net annual rental rate is | 23 | | the annual rental rate paid by the
person less any annual | 24 | | rental rate received by the person from
sub-rentals.
| 25 | | (C) The average value of property shall be determined | 26 | | by averaging
the values at the beginning and ending of the |
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| 1 | | taxable year but the
Director may require the averaging of | 2 | | monthly values during the taxable
year if reasonably | 3 | | required to reflect properly the average value of the
| 4 | | person's property.
| 5 | | (2) Payroll factor.
| 6 | | (A) The payroll factor is a fraction, the numerator of | 7 | | which is the
total amount paid in this State during the | 8 | | taxable year by the person
for compensation, and the | 9 | | denominator of which is the total compensation
paid | 10 | | everywhere during the taxable year.
| 11 | | (B) Compensation is paid in this State if:
| 12 | | (i) The individual's service is performed entirely | 13 | | within this
State;
| 14 | | (ii) The individual's service is performed both | 15 | | within and without
this State, but the service | 16 | | performed without this State is incidental
to the | 17 | | individual's service performed within this State; or
| 18 | | (iii) Some of the service is performed within this | 19 | | State and either
the base of operations, or if there is | 20 | | no base of operations, the place
from which the service | 21 | | is directed or controlled is within this State,
or the | 22 | | base of operations or the place from which the service | 23 | | is
directed or controlled is not in any state in which | 24 | | some part of the
service is performed, but the | 25 | | individual's residence is in this State.
| 26 | | (iv) Compensation paid to nonresident professional |
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| 1 | | athletes. | 2 | | (a) General. The Illinois source income of a | 3 | | nonresident individual who is a member of a | 4 | | professional athletic team includes the portion of the | 5 | | individual's total compensation for services performed | 6 | | as a member of a professional athletic team during the | 7 | | taxable year which the number of duty days spent within | 8 | | this State performing services for the team in any | 9 | | manner during the taxable year bears to the total | 10 | | number of duty days spent both within and without this | 11 | | State during the taxable year. | 12 | | (b) Travel days. Travel days that do not involve | 13 | | either a game, practice, team meeting, or other similar | 14 | | team event are not considered duty days spent in this | 15 | | State. However, such travel days are considered in the | 16 | | total duty days spent both within and without this | 17 | | State. | 18 | | (c) Definitions. For purposes of this subpart | 19 | | (iv): | 20 | | (1) The term "professional athletic team" | 21 | | includes, but is not limited to, any professional | 22 | | baseball, basketball, football, soccer, or hockey | 23 | | team. | 24 | | (2) The term "member of a professional | 25 | | athletic team" includes those employees who are | 26 | | active players, players on the disabled list, and |
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| 1 | | any other persons required to travel and who travel | 2 | | with and perform services on behalf of a | 3 | | professional athletic team on a regular basis. | 4 | | This includes, but is not limited to, coaches, | 5 | | managers, and trainers. | 6 | | (3) Except as provided in items (C) and (D) of | 7 | | this subpart (3), the term "duty days" means all | 8 | | days during the taxable year from the beginning of | 9 | | the professional athletic team's official | 10 | | pre-season training period through the last game | 11 | | in which the team competes or is scheduled to | 12 | | compete. Duty days shall be counted for the year in | 13 | | which they occur, including where a team's | 14 | | official pre-season training period through the | 15 | | last game in which the team competes or is | 16 | | scheduled to compete, occurs during more than one | 17 | | tax year. | 18 | | (A) Duty days shall also include days on | 19 | | which a member of a professional athletic team | 20 | | performs service for a team on a date that does | 21 | | not fall within the foregoing period (e.g., | 22 | | participation in instructional leagues, the | 23 | | "All Star Game", or promotional "caravans"). | 24 | | Performing a service for a professional | 25 | | athletic team includes conducting training and | 26 | | rehabilitation activities, when such |
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| 1 | | activities are conducted at team facilities. | 2 | | (B) Also included in duty days are game | 3 | | days, practice days, days spent at team | 4 | | meetings, promotional caravans, preseason | 5 | | training camps, and days served with the team | 6 | | through all post-season games in which the team | 7 | | competes or is scheduled to compete. | 8 | | (C) Duty days for any person who joins a | 9 | | team during the period from the beginning of | 10 | | the professional athletic team's official | 11 | | pre-season training period through the last | 12 | | game in which the team competes, or is | 13 | | scheduled to compete, shall begin on the day | 14 | | that person joins the team. Conversely, duty | 15 | | days for any person who leaves a team during | 16 | | this period shall end on the day that person | 17 | | leaves the team. Where a person switches teams | 18 | | during a taxable year, a separate duty-day | 19 | | calculation shall be made for the period the | 20 | | person was with each team. | 21 | | (D) Days for which a member of a | 22 | | professional athletic team is not compensated | 23 | | and is not performing services for the team in | 24 | | any manner, including days when such member of | 25 | | a professional athletic team has been | 26 | | suspended without pay and prohibited from |
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| 1 | | performing any services for the team, shall not | 2 | | be treated as duty days. | 3 | | (E) Days for which a member of a | 4 | | professional athletic team is on the disabled | 5 | | list and does not conduct rehabilitation | 6 | | activities at facilities of the team, and is | 7 | | not otherwise performing services for the team | 8 | | in Illinois, shall not be considered duty days | 9 | | spent in this State. All days on the disabled | 10 | | list, however, are considered to be included in | 11 | | total duty days spent both within and without | 12 | | this State. | 13 | | (4) The term "total compensation for services | 14 | | performed as a member of a professional athletic | 15 | | team" means the total compensation received during | 16 | | the taxable year for services performed: | 17 | | (A) from the beginning of the official | 18 | | pre-season training period through the last | 19 | | game in which the team competes or is scheduled | 20 | | to compete during that taxable year; and | 21 | | (B) during the taxable year on a date which | 22 | | does not fall within the foregoing period | 23 | | (e.g., participation in instructional leagues, | 24 | | the "All Star Game", or promotional caravans). | 25 | | This compensation shall include, but is not | 26 | | limited to, salaries, wages, bonuses as described |
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| 1 | | in this subpart, and any other type of compensation | 2 | | paid during the taxable year to a member of a | 3 | | professional athletic team for services performed | 4 | | in that year. This compensation does not include | 5 | | strike benefits, severance pay, termination pay, | 6 | | contract or option year buy-out payments, | 7 | | expansion or relocation payments, or any other | 8 | | payments not related to services performed for the | 9 | | team. | 10 | | For purposes of this subparagraph, "bonuses" | 11 | | included in "total compensation for services | 12 | | performed as a member of a professional athletic | 13 | | team" subject to the allocation described in | 14 | | Section 302(c)(1) are: bonuses earned as a result | 15 | | of play (i.e., performance bonuses) during the | 16 | | season, including bonuses paid for championship, | 17 | | playoff or "bowl" games played by a team, or for | 18 | | selection to all-star league or other honorary | 19 | | positions; and bonuses paid for signing a | 20 | | contract, unless the payment of the signing bonus | 21 | | is not conditional upon the signee playing any | 22 | | games for the team or performing any subsequent | 23 | | services for the team or even making the team, the | 24 | | signing bonus is payable separately from the | 25 | | salary and any other compensation, and the signing | 26 | | bonus is nonrefundable.
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| 1 | | (3) Sales factor.
| 2 | | (A) The sales factor is a fraction, the numerator of | 3 | | which is the
total sales of the person in this State during | 4 | | the taxable year, and the
denominator of which is the total | 5 | | sales of the person everywhere during
the taxable 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, store, | 13 | | warehouse,
factory or other place of storage in this | 14 | | State and either the purchaser
is the United States | 15 | | government or the person is not taxable in the
state of | 16 | | the purchaser; provided, however, that premises owned | 17 | | or leased
by a person who has independently contracted | 18 | | with the seller for the printing
of newspapers, | 19 | | periodicals or books shall not be deemed to be an | 20 | | office,
store, warehouse, factory or other place of | 21 | | storage for purposes of this
Section.
Sales of tangible | 22 | | personal property are not in this State if the
seller | 23 | | and purchaser would be members of the same unitary | 24 | | business group
but for the fact that either the seller | 25 | | or purchaser is a person with 80%
or more of total | 26 | | business activity outside of the United States and the
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| 1 | | property is purchased for resale.
| 2 | | (B-1) Patents, copyrights, trademarks, and similar | 3 | | items of intangible
personal property.
| 4 | | (i) Gross receipts from the licensing, sale, or | 5 | | other disposition of a
patent, copyright, trademark, | 6 | | or similar item of intangible personal property, other | 7 | | than gross receipts governed by paragraph (B-7) of this | 8 | | item (3),
are in this State to the extent the item is | 9 | | utilized in this State during the
year the gross | 10 | | receipts are included in gross income.
| 11 | | (ii) Place of utilization.
| 12 | | (I) A patent is utilized in a state to the | 13 | | extent that it is employed
in production, | 14 | | fabrication, manufacturing, or other processing in | 15 | | the state or
to the extent that a patented product | 16 | | is produced in the state. If a patent is
utilized | 17 | | in
more than one state, the extent to which it is | 18 | | utilized in any one state shall
be a fraction equal | 19 | | to the gross receipts of the licensee or purchaser | 20 | | from
sales or leases of items produced, | 21 | | fabricated, manufactured, or processed
within that | 22 | | state using the patent and of patented items | 23 | | produced within that
state, divided by the total of | 24 | | such gross receipts for all states in which the
| 25 | | patent is utilized.
| 26 | | (II) A copyright is utilized in a state to the |
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| 1 | | extent that printing or
other publication | 2 | | originates in the state. If a copyright is utilized | 3 | | in more
than one state, the extent to which it is | 4 | | utilized in any one state shall be a
fraction equal | 5 | | to the gross receipts from sales or licenses of | 6 | | materials
printed or published in that state | 7 | | divided by the total of such gross receipts
for all | 8 | | states in which the copyright is utilized.
| 9 | | (III) Trademarks and other items of intangible | 10 | | personal property
governed by this paragraph (B-1) | 11 | | are utilized in the state in which the
commercial | 12 | | domicile of the licensee or purchaser is located.
| 13 | | (iii) If the state of utilization of an item of | 14 | | property governed by
this paragraph (B-1) cannot be | 15 | | determined from the taxpayer's books and
records or | 16 | | from the books and records of any person related to the | 17 | | taxpayer
within the meaning of Section 267(b) of the | 18 | | Internal Revenue Code, 26 U.S.C.
267, the gross
| 19 | | receipts attributable to that item shall be excluded | 20 | | from both the numerator
and the denominator of the | 21 | | sales factor.
| 22 | | (B-2) Gross receipts from the license, sale, or other | 23 | | disposition of
patents, copyrights, trademarks, and | 24 | | similar items of intangible personal
property, other than | 25 | | gross receipts governed by paragraph (B-7) of this item | 26 | | (3), may be included in the numerator or denominator of the |
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| 1 | | sales factor
only if gross receipts from licenses, sales, | 2 | | or other disposition of such items
comprise more than 50% | 3 | | of the taxpayer's total gross receipts included in gross
| 4 | | income during the tax year and during each of the 2 | 5 | | immediately preceding tax
years; provided that, when a | 6 | | taxpayer is a member of a unitary business group,
such | 7 | | determination shall be made on the basis of the gross | 8 | | receipts of the
entire unitary business group.
| 9 | | (B-5) For taxable years ending on or after December 31, | 10 | | 2008, except as provided in subsections (ii) through (vii), | 11 | | receipts from the sale of telecommunications service or | 12 | | mobile telecommunications service are in this State if the | 13 | | customer's service address is in this State. | 14 | | (i) For purposes of this subparagraph (B-5), the | 15 | | following terms have the following meanings: | 16 | | "Ancillary services" means services that are | 17 | | associated with or incidental to the provision of | 18 | | "telecommunications services", including but not | 19 | | limited to "detailed telecommunications billing", | 20 | | "directory assistance", "vertical service", and "voice | 21 | | mail services". | 22 | | "Air-to-Ground Radiotelephone service" means a | 23 | | radio service, as that term is defined in 47 CFR 22.99, | 24 | | in which common carriers are authorized to offer and | 25 | | provide radio telecommunications service for hire to | 26 | | subscribers in aircraft. |
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| 1 | | "Call-by-call Basis" means any method of charging | 2 | | for telecommunications services where the price is | 3 | | measured by individual calls. | 4 | | "Communications Channel" means a physical or | 5 | | virtual path of communications over which signals are | 6 | | transmitted between or among customer channel | 7 | | termination points. | 8 | | "Conference bridging service" means an "ancillary | 9 | | service" that links two or more participants of an | 10 | | audio or video conference call and may include the | 11 | | provision of a telephone number. "Conference bridging | 12 | | service" does not include the "telecommunications | 13 | | services" used to reach the conference bridge. | 14 | | "Customer Channel Termination Point" means the | 15 | | location where the customer either inputs or receives | 16 | | the communications. | 17 | | "Detailed telecommunications billing service" | 18 | | means an "ancillary service" of separately stating | 19 | | information pertaining to individual calls on a | 20 | | customer's billing statement. | 21 | | "Directory assistance" means an "ancillary | 22 | | service" of providing telephone number information, | 23 | | and/or address information. | 24 | | "Home service provider" means the facilities based | 25 | | carrier or reseller with which the customer contracts | 26 | | for the provision of mobile telecommunications |
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| 1 | | services. | 2 | | "Mobile telecommunications service" means | 3 | | commercial mobile radio service, as defined in Section | 4 | | 20.3 of Title 47 of the Code of Federal Regulations as | 5 | | in effect on June 1, 1999. | 6 | | "Place of primary use" means the street address | 7 | | representative of where the customer's use of the | 8 | | telecommunications service primarily occurs, which | 9 | | must be the residential street address or the primary | 10 | | business street address of the customer. In the case of | 11 | | mobile telecommunications services, "place of primary | 12 | | use" must be within the licensed service area of the | 13 | | home service provider. | 14 | | "Post-paid telecommunication service" means the | 15 | | telecommunications service obtained by making a | 16 | | payment on a call-by-call basis either through the use | 17 | | of a credit card or payment mechanism such as a bank | 18 | | card, travel card, credit card, or debit card, or by | 19 | | charge made to a telephone number which is not | 20 | | associated with the origination or termination of the | 21 | | telecommunications service. A post-paid calling | 22 | | service includes telecommunications service, except a | 23 | | prepaid wireless calling service, that would be a | 24 | | prepaid calling service except it is not exclusively a | 25 | | telecommunication service. | 26 | | "Prepaid telecommunication service" means the |
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| 1 | | right to access exclusively telecommunications | 2 | | services, which must be paid for in advance and which | 3 | | enables the origination of calls using an access number | 4 | | or authorization code, whether manually or | 5 | | electronically dialed, and that is sold in | 6 | | predetermined units or dollars of which the number | 7 | | declines with use in a known amount. | 8 | | "Prepaid Mobile telecommunication service" means a | 9 | | telecommunications service that provides the right to | 10 | | utilize mobile wireless service as well as other | 11 | | non-telecommunication services, including but not | 12 | | limited to ancillary services, which must be paid for | 13 | | in advance that is sold in predetermined units or | 14 | | dollars of which the number declines with use in a | 15 | | known amount. | 16 | | "Private communication service" means a | 17 | | telecommunication service that entitles the customer | 18 | | to exclusive or priority use of a communications | 19 | | channel or group of channels between or among | 20 | | termination points, regardless of the manner in which | 21 | | such channel or channels are connected, and includes | 22 | | switching capacity, extension lines, stations, and any | 23 | | other associated services that are provided in | 24 | | connection with the use of such channel or channels. | 25 | | "Service address" means: | 26 | | (a) The location of the telecommunications |
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| 1 | | equipment to which a customer's call is charged and | 2 | | from which the call originates or terminates, | 3 | | regardless of where the call is billed or paid; | 4 | | (b) If the location in line (a) is not known, | 5 | | service address means the origination point of the | 6 | | signal of the telecommunications services first | 7 | | identified by either the seller's | 8 | | telecommunications system or in information | 9 | | received by the seller from its service provider | 10 | | where the system used to transport such signals is | 11 | | not that of the seller; and | 12 | | (c) If the locations in line (a) and line (b) | 13 | | are not known, the service address means the | 14 | | location of the customer's place of primary use. | 15 | | "Telecommunications service" means the electronic | 16 | | transmission, conveyance, or routing of voice, data, | 17 | | audio, video, or any other information or signals to a | 18 | | point, or between or among points. The term | 19 | | "telecommunications service" includes such | 20 | | transmission, conveyance, or routing in which computer | 21 | | processing applications are used to act on the form, | 22 | | code or protocol of the content for purposes of | 23 | | transmission, conveyance or routing without regard to | 24 | | whether such service is referred to as voice over | 25 | | Internet protocol services or is classified by the | 26 | | Federal Communications Commission as enhanced or value |
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| 1 | | added. "Telecommunications service" does not include: | 2 | | (a) Data processing and information services | 3 | | that allow data to be generated, acquired, stored, | 4 | | processed, or retrieved and delivered by an | 5 | | electronic transmission to a purchaser when such | 6 | | purchaser's primary purpose for the underlying | 7 | | transaction is the processed data or information; | 8 | | (b) Installation or maintenance of wiring or | 9 | | equipment on a customer's premises; | 10 | | (c) Tangible personal property; | 11 | | (d) Advertising, including but not limited to | 12 | | directory advertising. | 13 | | (e) Billing and collection services provided | 14 | | to third parties; | 15 | | (f) Internet access service; | 16 | | (g) Radio and television audio and video | 17 | | programming services, regardless of the medium, | 18 | | including the furnishing of transmission, | 19 | | conveyance and routing of such services by the | 20 | | programming service provider. Radio and television | 21 | | audio and video programming services shall include | 22 | | but not be limited to cable service as defined in | 23 | | 47 USC 522(6) and audio and video programming | 24 | | services delivered by commercial mobile radio | 25 | | service providers, as defined in 47 CFR 20.3; | 26 | | (h) "Ancillary services"; or |
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| 1 | | (i) Digital products "delivered | 2 | | electronically", including but not limited to | 3 | | software, music, video, reading materials or ring | 4 | | tones. | 5 | | "Vertical service" means an "ancillary service" | 6 | | that is offered in connection with one or more | 7 | | "telecommunications services", which offers advanced | 8 | | calling features that allow customers to identify | 9 | | callers and to manage multiple calls and call | 10 | | connections, including "conference bridging services". | 11 | | "Voice mail service" means an "ancillary service" | 12 | | that enables the customer to store, send or receive | 13 | | recorded messages. "Voice mail service" does not | 14 | | include any "vertical services" that the customer may | 15 | | be required to have in order to utilize the "voice mail | 16 | | service". | 17 | | (ii) Receipts from the sale of telecommunications | 18 | | service sold on an individual call-by-call basis are in | 19 | | this State if either of the following applies: | 20 | | (a) The call both originates and terminates in | 21 | | this State. | 22 | | (b) The call either originates or terminates | 23 | | in this State and the service address is located in | 24 | | this State. | 25 | | (iii) Receipts from the sale of postpaid | 26 | | telecommunications service at retail are in this State |
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| 1 | | if the origination point of the telecommunication | 2 | | signal, as first identified by the service provider's | 3 | | telecommunication system or as identified by | 4 | | information received by the seller from its service | 5 | | provider if the system used to transport | 6 | | telecommunication signals is not the seller's, is | 7 | | located in this State. | 8 | | (iv) Receipts from the sale of prepaid | 9 | | telecommunications service or prepaid mobile | 10 | | telecommunications service at retail are in this State | 11 | | if the purchaser obtains the prepaid card or similar | 12 | | means of conveyance at a location in this State. | 13 | | Receipts from recharging a prepaid telecommunications | 14 | | service or mobile telecommunications service is in | 15 | | this State if the purchaser's billing information | 16 | | indicates a location in this State. | 17 | | (v) Receipts from the sale of private | 18 | | communication services are in this State as follows: | 19 | | (a) 100% of receipts from charges imposed at | 20 | | each channel termination point in this State. | 21 | | (b) 100% of receipts from charges for the total | 22 | | channel mileage between each channel termination | 23 | | point in this State. | 24 | | (c) 50% of the total receipts from charges for | 25 | | service segments when those segments are between 2 | 26 | | customer channel termination points, 1 of which is |
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| 1 | | located in this State and the other is located | 2 | | outside of this State, which segments are | 3 | | separately charged. | 4 | | (d) The receipts from charges for service | 5 | | segments with a channel termination point located | 6 | | in this State and in two or more other states, and | 7 | | which segments are not separately billed, are in | 8 | | this State based on a percentage determined by | 9 | | dividing the number of customer channel | 10 | | termination points in this State by the total | 11 | | number of customer channel termination points. | 12 | | (vi) Receipts from charges for ancillary services | 13 | | for telecommunications service sold to customers at | 14 | | retail are in this State if the customer's primary | 15 | | place of use of telecommunications services associated | 16 | | with those ancillary services is in this State. If the | 17 | | seller of those ancillary services cannot determine | 18 | | where the associated telecommunications are located, | 19 | | then the ancillary services shall be based on the | 20 | | location of the purchaser. | 21 | | (vii) Receipts to access a carrier's network or | 22 | | from the sale of telecommunication services or | 23 | | ancillary services for resale are in this State as | 24 | | follows: | 25 | | (a) 100% of the receipts from access fees | 26 | | attributable to intrastate telecommunications |
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| 1 | | service that both originates and terminates in | 2 | | this State. | 3 | | (b) 50% of the receipts from access fees | 4 | | attributable to interstate telecommunications | 5 | | service if the interstate call either originates | 6 | | or terminates in this State. | 7 | | (c) 100% of the receipts from interstate end | 8 | | user access line charges, if the customer's | 9 | | service address is in this State. As used in this | 10 | | subdivision, "interstate end user access line | 11 | | charges" includes, but is not limited to, the | 12 | | surcharge approved by the federal communications | 13 | | commission and levied pursuant to 47 CFR 69. | 14 | | (d) Gross receipts from sales of | 15 | | telecommunication services or from ancillary | 16 | | services for telecommunications services sold to | 17 | | other telecommunication service providers for | 18 | | resale shall be sourced to this State using the | 19 | | apportionment concepts used for non-resale | 20 | | receipts of telecommunications services if the | 21 | | information is readily available to make that | 22 | | determination. If the information is not readily | 23 | | available, then the taxpayer may use any other | 24 | | reasonable and consistent method. | 25 | | (B-7) For taxable years ending on or after December 31, | 26 | | 2008, receipts from the sale of broadcasting services are |
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| 1 | | in this State if the broadcasting services are received in | 2 | | this State. For purposes of this paragraph (B-7), the | 3 | | following terms have the following meanings: | 4 | | "Advertising revenue" means consideration received | 5 | | by the taxpayer in exchange for broadcasting services | 6 | | or allowing the broadcasting of commercials or | 7 | | announcements in connection with the broadcasting of | 8 | | film or radio programming, from sponsorships of the | 9 | | programming, or from product placements in the | 10 | | programming. | 11 | | "Audience factor" means the ratio that the | 12 | | audience or subscribers located in this State of a | 13 | | station, a network, or a cable system bears to the | 14 | | total audience or total subscribers for that station, | 15 | | network, or cable system. The audience factor for film | 16 | | or radio programming shall be determined by reference | 17 | | to the books and records of the taxpayer or by | 18 | | reference to published rating statistics provided the | 19 | | method used by the taxpayer is consistently used from | 20 | | year to year for this purpose and fairly represents the | 21 | | taxpayer's activity in this State. | 22 | | "Broadcast" or "broadcasting" or "broadcasting | 23 | | services" means the transmission or provision of film | 24 | | or radio programming, whether through the public | 25 | | airwaves, by cable, by direct or indirect satellite | 26 | | transmission, or by any other means of communication, |
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| 1 | | either through a station, a network, or a cable system. | 2 | | "Film" or "film programming" means the broadcast | 3 | | on television of any and all performances, events, or | 4 | | productions, including but not limited to news, | 5 | | sporting events, plays, stories, or other literary, | 6 | | commercial, educational, or artistic works, either | 7 | | live or through the use of video tape, disc, or any | 8 | | other type of format or medium. Each episode of a | 9 | | series of films produced for television shall | 10 | | constitute separate "film" notwithstanding that the | 11 | | series relates to the same principal subject and is | 12 | | produced during one or more tax periods. | 13 | | "Radio" or "radio programming" means the broadcast | 14 | | on radio of any and all performances, events, or | 15 | | productions, including but not limited to news, | 16 | | sporting events, plays, stories, or other literary, | 17 | | commercial, educational, or artistic works, either | 18 | | live or through the use of an audio tape, disc, or any | 19 | | other format or medium. Each episode in a series of | 20 | | radio programming produced for radio broadcast shall | 21 | | constitute a separate "radio programming" | 22 | | notwithstanding that the series relates to the same | 23 | | principal subject and is produced during one or more | 24 | | tax periods. | 25 | | (i) In the case of advertising revenue from | 26 | | broadcasting, the customer is the advertiser and |
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| 1 | | the service is received in this State if the | 2 | | commercial domicile of the advertiser is in this | 3 | | State. | 4 | | (ii) In the case where film or radio | 5 | | programming is broadcast by a station, a network, | 6 | | or a cable system for a fee or other remuneration | 7 | | received from the recipient of the broadcast, the | 8 | | portion of the service that is received in this | 9 | | State is measured by the portion of the recipients | 10 | | of the broadcast located in this State. | 11 | | Accordingly, the fee or other remuneration for | 12 | | such service that is included in the Illinois | 13 | | numerator of the sales factor is the total of those | 14 | | fees or other remuneration received from | 15 | | recipients in Illinois. For purposes of this | 16 | | paragraph, a taxpayer may determine the location | 17 | | of the recipients of its broadcast using the | 18 | | address of the recipient shown in its contracts | 19 | | with the recipient or using the billing address of | 20 | | the recipient in the taxpayer's records. | 21 | | (iii) In the case where film or radio | 22 | | programming is broadcast by a station, a network, | 23 | | or a cable system for a fee or other remuneration | 24 | | from the person providing the programming, the | 25 | | portion of the broadcast service that is received | 26 | | by such station, network, or cable system in this |
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| 1 | | State is measured by the portion of recipients of | 2 | | the broadcast located in this State. Accordingly, | 3 | | the amount of revenue related to such an | 4 | | arrangement that is included in the Illinois | 5 | | numerator of the sales factor is the total fee or | 6 | | other total remuneration from the person providing | 7 | | the programming related to that broadcast | 8 | | multiplied by the Illinois audience factor for | 9 | | that broadcast. | 10 | | (iv) In the case where film or radio | 11 | | programming is provided by a taxpayer that is a | 12 | | network or station to a customer for broadcast in | 13 | | exchange for a fee or other remuneration from that | 14 | | customer the broadcasting service is received at | 15 | | the location of the office of the customer from | 16 | | which the services were ordered in the regular | 17 | | course of the customer's trade or business. | 18 | | Accordingly, in such a case the revenue derived by | 19 | | the taxpayer that is included in the taxpayer's | 20 | | Illinois numerator of the sales factor is the | 21 | | revenue from such customers who receive the | 22 | | broadcasting service in Illinois. | 23 | | (v) In the case where film or radio programming | 24 | | is provided by a taxpayer that is not a network or | 25 | | station to another person for broadcasting in | 26 | | exchange for a fee or other remuneration from that |
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| 1 | | person, the broadcasting service is received at | 2 | | the location of the office of the customer from | 3 | | which the services were ordered in the regular | 4 | | course of the customer's trade or business. | 5 | | Accordingly, in such a case the revenue derived by | 6 | | the taxpayer that is included in the taxpayer's | 7 | | Illinois numerator of the sales factor is the | 8 | | revenue from such customers who receive the | 9 | | broadcasting service in Illinois. | 10 | | (B-8) Gross receipts from winnings under the Illinois | 11 | | Lottery Law from the assignment of a prize under Section | 12 | | 13.1 13-1 of the Illinois Lottery Law are received in this | 13 | | State. This paragraph (B-8) applies only to taxable years | 14 | | ending on or after December 31, 2013.
| 15 | | (C) For taxable years ending before December 31, 2008, | 16 | | sales, other than sales governed by paragraphs (B), (B-1), | 17 | | (B-2), and (B-8) are in
this State if:
| 18 | | (i) The income-producing activity is performed in | 19 | | this State; or
| 20 | | (ii) The income-producing activity is performed | 21 | | both within and
without this State and a greater | 22 | | proportion of the income-producing
activity is | 23 | | performed within this State than without this State, | 24 | | based
on performance costs.
| 25 | | (C-5) For taxable years ending on or after December 31, | 26 | | 2008, sales, other than sales governed by paragraphs (B), |
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| 1 | | (B-1), (B-2), (B-5), and (B-7), are in this State if any of | 2 | | the following criteria are met: | 3 | | (i) Sales from the sale or lease of real property | 4 | | are in this State if the property is located in this | 5 | | State. | 6 | | (ii) Sales from the lease or rental of tangible | 7 | | personal property are in this State if the property is | 8 | | located in this State during the rental period. Sales | 9 | | from the lease or rental of tangible personal property | 10 | | that is characteristically moving property, including, | 11 | | but not limited to, motor vehicles, rolling stock, | 12 | | aircraft, vessels, or mobile equipment are in this | 13 | | State to the extent that the property is used in this | 14 | | State. | 15 | | (iii) In the case of interest, net gains (but not | 16 | | less than zero) and other items of income from | 17 | | intangible personal property, the sale is in this State | 18 | | if: | 19 | | (a) in the case of a taxpayer who is a dealer | 20 | | in the item of intangible personal property within | 21 | | the meaning of Section 475 of the Internal Revenue | 22 | | Code, the income or gain is received from a | 23 | | customer in this State. For purposes of this | 24 | | subparagraph, a customer is in this State if the | 25 | | customer is an individual, trust or estate who is a | 26 | | resident of this State and, for all other |
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| 1 | | customers, if the customer's commercial domicile | 2 | | is in this State. Unless the dealer has actual | 3 | | knowledge of the residence or commercial domicile | 4 | | of a customer during a taxable year, the customer | 5 | | shall be deemed to be a customer in this State if | 6 | | the billing address of the customer, as shown in | 7 | | the records of the dealer, is in this State; or | 8 | | (b) in all other cases, if the | 9 | | income-producing activity of the taxpayer is | 10 | | performed in this State or, if the | 11 | | income-producing activity of the taxpayer is | 12 | | performed both within and without this State, if a | 13 | | greater proportion of the income-producing | 14 | | activity of the taxpayer is performed within this | 15 | | State than in any other state, based on performance | 16 | | costs. | 17 | | (iv) Sales of services are in this State if the | 18 | | services are received in this State. For the purposes | 19 | | of this section, gross receipts from the performance of | 20 | | services provided to a corporation, partnership, or | 21 | | trust may only be attributed to a state where that | 22 | | corporation, partnership, or trust has a fixed place of | 23 | | business. If the state where the services are received | 24 | | is not readily determinable or is a state where the | 25 | | corporation, partnership, or trust receiving the | 26 | | service does not have a fixed place of business, the |
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| 1 | | services shall be deemed to be received at the location | 2 | | of the office of the customer from which the services | 3 | | were ordered in the regular course of the customer's | 4 | | trade or business. If the ordering office cannot be | 5 | | determined, the services shall be deemed to be received | 6 | | at the office of the customer to which the services are | 7 | | billed. If the taxpayer is not taxable in the state in | 8 | | which the services are received, the sale must be | 9 | | excluded from both the numerator and the denominator of | 10 | | the sales factor. The Department shall adopt rules | 11 | | prescribing where specific types of service are | 12 | | received, including, but not limited to, publishing, | 13 | | and utility service.
| 14 | | (D) For taxable years ending on or after December 31, | 15 | | 1995, the following
items of income shall not be included | 16 | | in the numerator or denominator of the
sales factor: | 17 | | dividends; amounts included under Section 78 of the | 18 | | Internal
Revenue Code; and Subpart F income as defined in | 19 | | Section 952 of the Internal
Revenue Code.
No inference | 20 | | shall be drawn from the enactment of this paragraph (D) in
| 21 | | construing this Section for taxable years ending before | 22 | | December 31, 1995.
| 23 | | (E) Paragraphs (B-1) and (B-2) shall apply to tax years | 24 | | ending on or
after December 31, 1999, provided that a | 25 | | taxpayer may elect to apply the
provisions of these | 26 | | paragraphs to prior tax years. Such election shall be made
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| 1 | | in the form and manner prescribed by the Department, shall | 2 | | be irrevocable, and
shall apply to all tax years; provided | 3 | | that, if a taxpayer's Illinois income
tax liability for any | 4 | | tax year, as assessed under Section 903 prior to January
1, | 5 | | 1999, was computed in a manner contrary to the provisions | 6 | | of paragraphs
(B-1) or (B-2), no refund shall be payable to | 7 | | the taxpayer for that tax year to
the extent such refund is | 8 | | the result of applying the provisions of paragraph
(B-1) or | 9 | | (B-2) retroactively. In the case of a unitary business | 10 | | group, such
election shall apply to all members of such | 11 | | group for every tax year such group
is in existence, but | 12 | | shall not apply to any taxpayer for any period during
which | 13 | | that taxpayer is not a member of such group.
| 14 | | (b) Insurance companies.
| 15 | | (1) In general. Except as otherwise
provided by | 16 | | paragraph (2), business income of an insurance company for | 17 | | a
taxable year shall be apportioned to this State by | 18 | | multiplying such
income by a fraction, the numerator of | 19 | | which is the direct premiums
written for insurance upon | 20 | | property or risk in this State, and the
denominator of | 21 | | which is the direct premiums written for insurance upon
| 22 | | property or risk everywhere. For purposes of this | 23 | | subsection, the term
"direct premiums written" means the | 24 | | total amount of direct premiums
written, assessments and | 25 | | annuity considerations as reported for the
taxable year on | 26 | | the annual statement filed by the company with the
Illinois |
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| 1 | | Director of Insurance in the form approved by the National
| 2 | | Convention of Insurance Commissioners
or such other form as | 3 | | may be
prescribed in lieu thereof.
| 4 | | (2) Reinsurance. If the principal source of premiums | 5 | | written by an
insurance company consists of premiums for | 6 | | reinsurance accepted by it,
the business income of such | 7 | | company shall be apportioned to this State
by multiplying | 8 | | such income by a fraction, the numerator of which is the
| 9 | | sum of (i) direct premiums written for insurance upon | 10 | | property or risk
in this State, plus (ii) premiums written | 11 | | for reinsurance accepted in
respect of property or risk in | 12 | | this State, and the denominator of which
is the sum of | 13 | | (iii) direct premiums written for insurance upon property
| 14 | | or risk everywhere, plus (iv) premiums written for | 15 | | reinsurance accepted
in respect of property or risk | 16 | | everywhere. For purposes of this
paragraph, premiums | 17 | | written for reinsurance accepted in respect of
property or | 18 | | risk in this State, whether or not otherwise determinable,
| 19 | | may, at the election of the company, be determined on the | 20 | | basis of the
proportion which premiums written for | 21 | | reinsurance accepted from
companies commercially domiciled | 22 | | in Illinois bears to premiums written
for reinsurance | 23 | | accepted from all sources, or, alternatively, in the
| 24 | | proportion which the sum of the direct premiums written for | 25 | | insurance
upon property or risk in this State by each | 26 | | ceding company from which
reinsurance is accepted bears to |
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| 1 | | the sum of the total direct premiums
written by each such | 2 | | ceding company for the taxable year. The election made by a | 3 | | company under this paragraph for its first taxable year | 4 | | ending on or after December 31, 2011, shall be binding for | 5 | | that company for that taxable year and for all subsequent | 6 | | taxable years, and may be altered only with the written | 7 | | permission of the Department, which shall not be | 8 | | unreasonably withheld.
| 9 | | (c) Financial organizations.
| 10 | | (1) In general. For taxable years ending before | 11 | | December 31, 2008, business income of a financial
| 12 | | organization shall be apportioned to this State by | 13 | | multiplying such
income by a fraction, the numerator of | 14 | | which is its business income from
sources within this | 15 | | State, and the denominator of which is its business
income | 16 | | from all sources. For the purposes of this subsection, the
| 17 | | business income of a financial organization from sources | 18 | | within this
State is the sum of the amounts referred to in | 19 | | subparagraphs (A) through
(E) following, but excluding the | 20 | | adjusted income of an international banking
facility as | 21 | | determined in paragraph (2):
| 22 | | (A) Fees, commissions or other compensation for | 23 | | financial services
rendered within this State;
| 24 | | (B) Gross profits from trading in stocks, bonds or | 25 | | other securities
managed within this State;
| 26 | | (C) Dividends, and interest from Illinois |
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| 1 | | customers, which are received
within this State;
| 2 | | (D) Interest charged to customers at places of | 3 | | business maintained
within this State for carrying | 4 | | debit balances of margin accounts,
without deduction | 5 | | of any costs incurred in carrying such accounts; and
| 6 | | (E) Any other gross income resulting from the | 7 | | operation as a
financial organization within this | 8 | | State. In computing the amounts
referred to in | 9 | | paragraphs (A) through (E) of this subsection, any | 10 | | amount
received by a member of an affiliated group | 11 | | (determined under Section
1504(a) of the Internal | 12 | | Revenue Code but without reference to whether
any such | 13 | | corporation is an "includible corporation" under | 14 | | Section
1504(b) of the Internal Revenue Code) from | 15 | | another member of such group
shall be included only to | 16 | | the extent such amount exceeds expenses of the
| 17 | | recipient directly related thereto.
| 18 | | (2) International Banking Facility. For taxable years | 19 | | ending before December 31, 2008:
| 20 | | (A) Adjusted Income. The adjusted income of an | 21 | | international banking
facility is its income reduced | 22 | | by the amount of the floor amount.
| 23 | | (B) Floor Amount. The floor amount shall be the | 24 | | amount, if any,
determined
by multiplying the income of | 25 | | the international banking facility by a fraction,
not | 26 | | greater than one, which is determined as follows:
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| 1 | | (i) The numerator shall be:
| 2 | | The average aggregate, determined on a | 3 | | quarterly basis, of the
financial
organization's | 4 | | loans to banks in foreign countries, to foreign | 5 | | domiciled
borrowers (except where secured | 6 | | primarily by real estate) and to foreign
| 7 | | governments and other foreign official | 8 | | institutions, as reported for its
branches, | 9 | | agencies and offices within the state on its | 10 | | "Consolidated Report
of Condition", Schedule A, | 11 | | Lines 2.c., 5.b., and 7.a., which was filed with
| 12 | | the Federal Deposit Insurance Corporation and | 13 | | other regulatory authorities,
for the year 1980, | 14 | | minus
| 15 | | The average aggregate, determined on a | 16 | | quarterly basis, of such loans
(other
than loans of | 17 | | an international banking facility), as reported by | 18 | | the financial
institution for its branches, | 19 | | agencies and offices within the state, on
the | 20 | | corresponding Schedule and lines of the | 21 | | Consolidated Report of Condition
for the current | 22 | | taxable year, provided, however, that in no case | 23 | | shall the
amount determined in this clause (the | 24 | | subtrahend) exceed the amount determined
in the | 25 | | preceding clause (the minuend); and
| 26 | | (ii) the denominator shall be the average |
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| 1 | | aggregate, determined on a
quarterly basis, of the | 2 | | international banking facility's loans to banks in
| 3 | | foreign countries, to foreign domiciled borrowers | 4 | | (except where secured
primarily by real estate) | 5 | | and to foreign governments and other foreign
| 6 | | official institutions, which were recorded in its | 7 | | financial accounts for
the current taxable year.
| 8 | | (C) Change to Consolidated Report of Condition and | 9 | | in Qualification.
In the event the Consolidated Report | 10 | | of Condition which is filed with the
Federal Deposit | 11 | | Insurance Corporation and other regulatory authorities | 12 | | is
altered so that the information required for | 13 | | determining the floor amount
is not found on Schedule | 14 | | A, lines 2.c., 5.b. and 7.a., the financial
institution | 15 | | shall notify the Department and the Department may, by
| 16 | | regulations or otherwise, prescribe or authorize the | 17 | | use of an alternative
source for such information. The | 18 | | financial institution shall also notify
the Department | 19 | | should its international banking facility fail to | 20 | | qualify as
such, in whole or in part, or should there | 21 | | be any amendment or change to
the Consolidated Report | 22 | | of Condition, as originally filed, to the extent
such | 23 | | amendment or change alters the information used in | 24 | | determining the floor
amount.
| 25 | | (3) For taxable years ending on or after December 31, | 26 | | 2008, the business income of a financial organization shall |
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| 1 | | be apportioned to this State by multiplying such income by | 2 | | a fraction, the numerator of which is its gross receipts | 3 | | from sources in this State or otherwise attributable to | 4 | | this State's marketplace and the denominator of which is | 5 | | its gross receipts everywhere during the taxable year. | 6 | | "Gross receipts" for purposes of this subparagraph (3) | 7 | | means gross income, including net taxable gain on | 8 | | disposition of assets, including securities and money | 9 | | market instruments, when derived from transactions and | 10 | | activities in the regular course of the financial | 11 | | organization's trade or business. The following examples | 12 | | are illustrative:
| 13 | | (i) Receipts from the lease or rental of real or | 14 | | tangible personal property are in this State if the | 15 | | property is located in this State during the rental | 16 | | period. Receipts from the lease or rental of tangible | 17 | | personal property that is characteristically moving | 18 | | property, including, but not limited to, motor | 19 | | vehicles, rolling stock, aircraft, vessels, or mobile | 20 | | equipment are from sources in this State to the extent | 21 | | that the property is used in this State. | 22 | | (ii) Interest income, commissions, fees, gains on | 23 | | disposition, and other receipts from assets in the | 24 | | nature of loans that are secured primarily by real | 25 | | estate or tangible personal property are from sources | 26 | | in this State if the security is located in this State. |
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| 1 | | (iii) Interest income, commissions, fees, gains on | 2 | | disposition, and other receipts from consumer loans | 3 | | that are not secured by real or tangible personal | 4 | | property are from sources in this State if the debtor | 5 | | is a resident of this State. | 6 | | (iv) Interest income, commissions, fees, gains on | 7 | | disposition, and other receipts from commercial loans | 8 | | and installment obligations that are not secured by | 9 | | real or tangible personal property are from sources in | 10 | | this State if the proceeds of the loan are to be | 11 | | applied in this State. If it cannot be determined where | 12 | | the funds are to be applied, the income and receipts | 13 | | are from sources in this State if the office of the | 14 | | borrower from which the loan was negotiated in the | 15 | | regular course of business is located in this State. If | 16 | | the location of this office cannot be determined, the | 17 | | income and receipts shall be excluded from the | 18 | | numerator and denominator of the sales factor.
| 19 | | (v) Interest income, fees, gains on disposition, | 20 | | service charges, merchant discount income, and other | 21 | | receipts from credit card receivables are from sources | 22 | | in this State if the card charges are regularly billed | 23 | | to a customer in this State. | 24 | | (vi) Receipts from the performance of services, | 25 | | including, but not limited to, fiduciary, advisory, | 26 | | and brokerage services, are in this State if the |
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| 1 | | services are received in this State within the meaning | 2 | | of subparagraph (a)(3)(C-5)(iv) of this Section. | 3 | | (vii) Receipts from the issuance of travelers | 4 | | checks and money orders are from sources in this State | 5 | | if the checks and money orders are issued from a | 6 | | location within this State. | 7 | | (viii) Receipts from investment assets and | 8 | | activities and trading assets and activities are | 9 | | included in the receipts factor as follows: | 10 | | (1) Interest, dividends, net gains (but not | 11 | | less than zero) and other income from investment | 12 | | assets and activities from trading assets and | 13 | | activities shall be included in the receipts | 14 | | factor. Investment assets and activities and | 15 | | trading assets and activities include but are not | 16 | | limited to: investment securities; trading account | 17 | | assets; federal funds; securities purchased and | 18 | | sold under agreements to resell or repurchase; | 19 | | options; futures contracts; forward contracts; | 20 | | notional principal contracts such as swaps; | 21 | | equities; and foreign currency transactions. With | 22 | | respect to the investment and trading assets and | 23 | | activities described in subparagraphs (A) and (B) | 24 | | of this paragraph, the receipts factor shall | 25 | | include the amounts described in such | 26 | | subparagraphs. |
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| 1 | | (A) The receipts factor shall include the | 2 | | amount by which interest from federal funds | 3 | | sold and securities purchased under resale | 4 | | agreements exceeds interest expense on federal | 5 | | funds purchased and securities sold under | 6 | | repurchase agreements. | 7 | | (B) The receipts factor shall include the | 8 | | amount by which interest, dividends, gains and | 9 | | other income from trading assets and | 10 | | activities, including but not limited to | 11 | | assets and activities in the matched book, in | 12 | | the arbitrage book, and foreign currency | 13 | | transactions, exceed amounts paid in lieu of | 14 | | interest, amounts paid in lieu of dividends, | 15 | | and losses from such assets and activities. | 16 | | (2) The numerator of the receipts factor | 17 | | includes interest, dividends, net gains (but not | 18 | | less than zero), and other income from investment | 19 | | assets and activities and from trading assets and | 20 | | activities described in paragraph (1) of this | 21 | | subsection that are attributable to this State. | 22 | | (A) The amount of interest, dividends, net | 23 | | gains (but not less than zero), and other | 24 | | income from investment assets and activities | 25 | | in the investment account to be attributed to | 26 | | this State and included in the numerator is |
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| 1 | | determined by multiplying all such income from | 2 | | such assets and activities by a fraction, the | 3 | | numerator of which is the gross income from | 4 | | such assets and activities which are properly | 5 | | assigned to a fixed place of business of the | 6 | | taxpayer within this State and the denominator | 7 | | of which is the gross income from all such | 8 | | assets and activities. | 9 | | (B) The amount of interest from federal | 10 | | funds sold and purchased and from securities | 11 | | purchased under resale agreements and | 12 | | securities sold under repurchase agreements | 13 | | attributable to this State and included in the | 14 | | numerator is determined by multiplying the | 15 | | amount described in subparagraph (A) of | 16 | | paragraph (1) of this subsection from such | 17 | | funds and such securities by a fraction, the | 18 | | numerator of which is the gross income from | 19 | | such funds and such securities which are | 20 | | properly assigned to a fixed place of business | 21 | | of the taxpayer within this State and the | 22 | | denominator of which is the gross income from | 23 | | all such funds and such securities. | 24 | | (C) The amount of interest, dividends, | 25 | | gains, and other income from trading assets and | 26 | | activities, including but not limited to |
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| 1 | | assets and activities in the matched book, in | 2 | | the arbitrage book and foreign currency | 3 | | transactions (but excluding amounts described | 4 | | in subparagraphs (A) or (B) of this paragraph), | 5 | | attributable to this State and included in the | 6 | | numerator is determined by multiplying the | 7 | | amount described in subparagraph (B) of | 8 | | paragraph (1) of this subsection by a fraction, | 9 | | the numerator of which is the gross income from | 10 | | such trading assets and activities which are | 11 | | properly assigned to a fixed place of business | 12 | | of the taxpayer within this State and the | 13 | | denominator of which is the gross income from | 14 | | all such assets and activities. | 15 | | (D) Properly assigned, for purposes of | 16 | | this paragraph (2) of this subsection, means | 17 | | the investment or trading asset or activity is | 18 | | assigned to the fixed place of business with | 19 | | which it has a preponderance of substantive | 20 | | contacts. An investment or trading asset or | 21 | | activity assigned by the taxpayer to a fixed | 22 | | place of business without the State shall be | 23 | | presumed to have been properly assigned if: | 24 | | (i) the taxpayer has assigned, in the | 25 | | regular course of its business, such asset | 26 | | or activity on its records to a fixed place |
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| 1 | | of business consistent with federal or | 2 | | state regulatory requirements; | 3 | | (ii) such assignment on its records is | 4 | | based upon substantive contacts of the | 5 | | asset or activity to such fixed place of | 6 | | business; and | 7 | | (iii) the taxpayer uses such records | 8 | | reflecting assignment of such assets or | 9 | | activities for the filing of all state and | 10 | | local tax returns for which an assignment | 11 | | of such assets or activities to a fixed | 12 | | place of business is required. | 13 | | (E) The presumption of proper assignment | 14 | | of an investment or trading asset or activity | 15 | | provided in subparagraph (D) of paragraph (2) | 16 | | of this subsection may be rebutted upon a | 17 | | showing by the Department, supported by a | 18 | | preponderance of the evidence, that the | 19 | | preponderance of substantive contacts | 20 | | regarding such asset or activity did not occur | 21 | | at the fixed place of business to which it was | 22 | | assigned on the taxpayer's records. If the | 23 | | fixed place of business that has a | 24 | | preponderance of substantive contacts cannot | 25 | | be determined for an investment or trading | 26 | | asset or activity to which the presumption in |
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| 1 | | subparagraph (D) of paragraph (2) of this | 2 | | subsection does not apply or with respect to | 3 | | which that presumption has been rebutted, that | 4 | | asset or activity is properly assigned to the | 5 | | state in which the taxpayer's commercial | 6 | | domicile is located. For purposes of this | 7 | | subparagraph (E), it shall be presumed, | 8 | | subject to rebuttal, that taxpayer's | 9 | | commercial domicile is in the state of the | 10 | | United States or the District of Columbia to | 11 | | which the greatest number of employees are | 12 | | regularly connected with the management of the | 13 | | investment or trading income or out of which | 14 | | they are working, irrespective of where the | 15 | | services of such employees are performed, as of | 16 | | the last day of the taxable year.
| 17 | | (4) (Blank). | 18 | | (5) (Blank). | 19 | | (c-1) Federally regulated exchanges. For taxable years | 20 | | ending on or after December 31, 2012, business income of a | 21 | | federally regulated exchange shall, at the option of the | 22 | | federally regulated exchange, be apportioned to this State by | 23 | | multiplying such income by a fraction, the numerator of which | 24 | | is its business income from sources within this State, and the | 25 | | denominator of which is its business income from all sources. | 26 | | For purposes of this subsection, the business income within |
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| 1 | | this State of a federally regulated exchange is the sum of the | 2 | | following: | 3 | | (1) Receipts attributable to transactions executed on | 4 | | a physical trading floor if that physical trading floor is | 5 | | located in this State. | 6 | | (2) Receipts attributable to all other matching, | 7 | | execution, or clearing transactions, including without | 8 | | limitation receipts from the provision of matching, | 9 | | execution, or clearing services to another entity, | 10 | | multiplied by (i) for taxable years ending on or after | 11 | | December 31, 2012 but before December 31, 2013, 63.77%; and | 12 | | (ii) for taxable years ending on or after December 31, | 13 | | 2013, 27.54%. | 14 | | (3) All other receipts not governed by subparagraphs | 15 | | (1) or (2) of this subsection (c-1), to the extent the | 16 | | receipts would be characterized as "sales in this State" | 17 | | under item (3) of subsection (a) of this Section. | 18 | | "Federally regulated exchange" means (i) a "registered | 19 | | entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B), | 20 | | or (C), (ii) an "exchange" or "clearing agency" within the | 21 | | meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such | 22 | | entities regulated under any successor regulatory structure to | 23 | | the foregoing, and (iv) all taxpayers who are members of the | 24 | | same unitary business group as a federally regulated exchange, | 25 | | determined without regard to the prohibition in Section | 26 | | 1501(a)(27) of this Act against including in a unitary business |
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| 1 | | group taxpayers who are ordinarily required to apportion | 2 | | business income under different subsections of this Section; | 3 | | provided that this subparagraph (iv) shall apply only if 50% or | 4 | | more of the business receipts of the unitary business group | 5 | | determined by application of this subparagraph (iv) for the | 6 | | taxable year are attributable to the matching, execution, or | 7 | | clearing of transactions conducted by an entity described in | 8 | | subparagraph (i), (ii), or (iii) of this paragraph. | 9 | | In no event shall the Illinois apportionment percentage | 10 | | computed in accordance with this subsection (c-1) for any | 11 | | taxpayer for any tax year be less than the Illinois | 12 | | apportionment percentage computed under this subsection (c-1) | 13 | | for that taxpayer for the first full tax year ending on or | 14 | | after December 31, 2013 for which this subsection (c-1) applied | 15 | | to the taxpayer. | 16 | | (d) Transportation services. For taxable years ending | 17 | | before December 31, 2008, business income derived from | 18 | | furnishing
transportation services shall be apportioned to | 19 | | this State in accordance
with paragraphs (1) and (2):
| 20 | | (1) Such business income (other than that derived from
| 21 | | transportation by pipeline) shall be apportioned to this | 22 | | State by
multiplying such income by a fraction, the | 23 | | numerator of which is the
revenue miles of the person in | 24 | | this State, and the denominator of which
is the revenue | 25 | | miles of the person everywhere. For purposes of this
| 26 | | paragraph, a revenue mile is the transportation of 1 |
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| 1 | | passenger or 1 net
ton of freight the distance of 1 mile | 2 | | for a consideration. Where a
person is engaged in the | 3 | | transportation of both passengers and freight,
the | 4 | | fraction above referred to shall be determined by means of | 5 | | an
average of the passenger revenue mile fraction and the | 6 | | freight revenue
mile fraction, weighted to reflect the | 7 | | person's
| 8 | | (A) relative railway operating income from total | 9 | | passenger and total
freight service, as reported to the | 10 | | Interstate Commerce Commission, in
the case of | 11 | | transportation by railroad, and
| 12 | | (B) relative gross receipts from passenger and | 13 | | freight
transportation, in case of transportation | 14 | | other than by railroad.
| 15 | | (2) Such business income derived from transportation | 16 | | by pipeline
shall be apportioned to this State by | 17 | | multiplying such income by a
fraction, the numerator of | 18 | | which is the revenue miles of the person in
this State, and | 19 | | the denominator of which is the revenue miles of the
person | 20 | | everywhere. For the purposes of this paragraph, a revenue | 21 | | mile is
the transportation by pipeline of 1 barrel of oil, | 22 | | 1,000 cubic feet of
gas, or of any specified quantity of | 23 | | any other substance, the distance
of 1 mile for a | 24 | | consideration.
| 25 | | (3) For taxable years ending on or after December 31, | 26 | | 2008, business income derived from providing |
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| 1 | | transportation services other than airline services shall | 2 | | be apportioned to this State by using a fraction, (a) the | 3 | | numerator of which shall be (i) all receipts from any | 4 | | movement or shipment of people, goods, mail, oil, gas, or | 5 | | any other substance (other than by airline) that both | 6 | | originates and terminates in this State, plus (ii) that | 7 | | portion of the person's gross receipts from movements or | 8 | | shipments of people, goods, mail, oil, gas, or any other | 9 | | substance (other than by airline) that originates in one | 10 | | state or jurisdiction and terminates in another state or | 11 | | jurisdiction, that is determined by the ratio that the | 12 | | miles traveled in this State bears to total miles | 13 | | everywhere and (b) the denominator of which shall be all | 14 | | revenue derived from the movement or shipment of people, | 15 | | goods, mail, oil, gas, or any other substance (other than | 16 | | by airline). Where a taxpayer is engaged in the | 17 | | transportation of both passengers and freight, the | 18 | | fraction above referred to shall first be determined | 19 | | separately for passenger miles and freight miles. Then an | 20 | | average of the passenger miles fraction and the freight | 21 | | miles fraction shall be weighted to reflect the taxpayer's: | 22 | | (A) relative railway operating income from total | 23 | | passenger and total freight service, as reported to the | 24 | | Surface Transportation Board, in the case of | 25 | | transportation by railroad; and
| 26 | | (B) relative gross receipts from passenger and |
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| 1 | | freight transportation, in case of transportation | 2 | | other than by railroad.
| 3 | | (4) For taxable years ending on or after December 31, | 4 | | 2008, business income derived from furnishing airline
| 5 | | transportation services shall be apportioned to this State | 6 | | by
multiplying such income by a fraction, the numerator of | 7 | | which is the
revenue miles of the person in this State, and | 8 | | the denominator of which
is the revenue miles of the person | 9 | | everywhere. For purposes of this
paragraph, a revenue mile | 10 | | is the transportation of one passenger or one net
ton of | 11 | | freight the distance of one mile for a consideration. If a
| 12 | | person is engaged in the transportation of both passengers | 13 | | and freight,
the fraction above referred to shall be | 14 | | determined by means of an
average of the passenger revenue | 15 | | mile fraction and the freight revenue
mile fraction, | 16 | | weighted to reflect the person's relative gross receipts | 17 | | from passenger and freight
airline transportation.
| 18 | | (e) Combined apportionment. Where 2 or more persons are | 19 | | engaged in
a unitary business as described in subsection | 20 | | (a)(27) of
Section 1501,
a part of which is conducted in this | 21 | | State by one or more members of the
group, the business income | 22 | | attributable to this State by any such member
or members shall | 23 | | be apportioned by means of the combined apportionment method. | 24 | | Notwithstanding any other provision of law, for taxable years | 25 | | ending on or after December 31, 2016 and ending prior to | 26 | | December 31, 2017, for the purposes of determining the business |
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| 1 | | income attributable to this State by a member of a unitary | 2 | | business group, the business income of any member of the | 3 | | unitary business group that is derived from an area over which | 4 | | the United States has asserted jurisdiction or claimed | 5 | | exclusive rights with respect to the exploration for or | 6 | | exploitation of natural resources, other than the 50 states and | 7 | | the District of Columbia, shall be reduced by two-thirds. | 8 | | Notwithstanding any other provision of law, for taxable years | 9 | | ending on or after December 31, 2017 and ending prior to | 10 | | December 31, 2018, for the purposes of determining the business | 11 | | income attributable to this State by a member of a unitary | 12 | | business group, the total business income of any member of the | 13 | | unitary business group that is derived from an area over which | 14 | | the United States has asserted jurisdiction or claimed | 15 | | exclusive rights with respect to the exploration for or | 16 | | exploitation of natural resources, other than the 50 states and | 17 | | the District of Columbia, shall be reduced by one-third.
| 18 | | (f) Alternative allocation. If the allocation and | 19 | | apportionment
provisions of subsections (a) through (e) and of | 20 | | subsection (h) do not, for taxable years ending before December | 21 | | 31, 2008, fairly represent the
extent of a person's business | 22 | | activity in this State, or, for taxable years ending on or | 23 | | after December 31, 2008, fairly represent the market for the | 24 | | person's goods, services, or other sources of business income, | 25 | | the person may
petition for, or the Director may, without a | 26 | | petition, permit or require, in respect of all or any part
of |
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| 1 | | the person's business activity, if reasonable:
| 2 | | (1) Separate accounting;
| 3 | | (2) The exclusion of any one or more factors;
| 4 | | (3) The inclusion of one or more additional factors | 5 | | which will
fairly represent the person's business | 6 | | activities or market in this State; or
| 7 | | (4) The employment of any other method to effectuate an | 8 | | equitable
allocation and apportionment of the person's | 9 | | business income.
| 10 | | (g) Cross reference. For allocation of business income by | 11 | | residents,
see Section 301(a).
| 12 | | (h) For tax years ending on or after December 31, 1998, the | 13 | | apportionment
factor of persons who apportion their business | 14 | | income to this State under
subsection (a) shall be equal to:
| 15 | | (1) for tax years ending on or after December 31, 1998 | 16 | | and before December
31, 1999, 16 2/3% of the property | 17 | | factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | 18 | | the sales factor;
| 19 | | (2) for tax years ending on or after December 31, 1999 | 20 | | and before December
31,
2000, 8 1/3% of the property factor | 21 | | plus 8 1/3% of the payroll factor plus 83
1/3%
of the sales | 22 | | factor;
| 23 | | (3) for tax years ending on or after December 31, 2000, | 24 | | the sales factor.
| 25 | | If, in any tax year ending on or after December 31, 1998 and | 26 | | before December
31, 2000, the denominator of the payroll, |
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| 1 | | property, or sales factor is zero,
the apportionment
factor | 2 | | computed in paragraph (1) or (2) of this subsection for that | 3 | | year shall
be divided by an amount equal to 100% minus the | 4 | | percentage weight given to each
factor whose denominator is | 5 | | equal to zero.
| 6 | | (Source: P.A. 97-507, eff. 8-23-11; 97-636, eff. 6-1-12; | 7 | | 98-478, eff. 1-1-14; 98-496, eff. 1-1-14; 98-756, eff. 7-16-14; | 8 | | revised 10-19-15.)
| 9 | | (35 ILCS 5/1501) (from Ch. 120, par. 15-1501)
| 10 | | Sec. 1501. Definitions.
| 11 | | (a) In general. When used in this Act, where not
otherwise | 12 | | distinctly expressed or manifestly incompatible with the | 13 | | intent
thereof:
| 14 | | (1) Business income. The term "business income" means | 15 | | all income that may be treated as apportionable business | 16 | | income under the Constitution of the United States. | 17 | | Business income is net of the deductions allocable thereto. | 18 | | Such term does not include compensation
or the deductions | 19 | | allocable thereto.
For each taxable year beginning on or | 20 | | after January 1, 2003, a taxpayer may
elect to treat all | 21 | | income other than compensation as business income. This
| 22 | | election shall be made in accordance with rules adopted by | 23 | | the Department and,
once made, shall be irrevocable.
| 24 | | (1.5) Captive real estate investment trust:
| 25 | | (A) The term "captive real estate investment |
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| 1 | | trust" means a corporation, trust, or association:
| 2 | | (i) that is considered a real estate | 3 | | investment trust for the taxable year under | 4 | | Section 856 of the Internal Revenue Code;
| 5 | | (ii) the certificates of beneficial interest | 6 | | or shares of which are not regularly traded on an | 7 | | established securities market; and | 8 | | (iii) of which more than 50% of the voting | 9 | | power or value of the beneficial interest or | 10 | | shares, at any time during the last half of the | 11 | | taxable year, is owned or controlled, directly, | 12 | | indirectly, or constructively, by a single | 13 | | corporation. | 14 | | (B) The term "captive real estate investment | 15 | | trust" does not include: | 16 | | (i) a real estate investment trust of which | 17 | | more than 50% of the voting power or value of the | 18 | | beneficial interest or shares is owned or | 19 | | controlled, directly, indirectly, or | 20 | | constructively, by: | 21 | | (a) a real estate investment trust, other | 22 | | than a captive real estate investment trust; | 23 | | (b) a person who is exempt from taxation | 24 | | under Section 501 of the Internal Revenue Code, | 25 | | and who is not required to treat income | 26 | | received from the real estate investment trust |
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| 1 | | as unrelated business taxable income under | 2 | | Section 512 of the Internal Revenue Code; | 3 | | (c) a listed Australian property trust, if | 4 | | no more than 50% of the voting power or value | 5 | | of the beneficial interest or shares of that | 6 | | trust, at any time during the last half of the | 7 | | taxable year, is owned or controlled, directly | 8 | | or indirectly, by a single person; | 9 | | (d) an entity organized as a trust, | 10 | | provided a listed Australian property trust | 11 | | described in subparagraph (c) owns or | 12 | | controls, directly or indirectly, or | 13 | | constructively, 75% or more of the voting power | 14 | | or value of the beneficial interests or shares | 15 | | of such entity; or | 16 | | (e) an entity that is organized outside of | 17 | | the laws of the United States and that | 18 | | satisfies all of the following criteria: | 19 | | (1) at least 75% of the entity's total | 20 | | asset value at the close of its taxable | 21 | | year is represented by real estate assets | 22 | | (as defined in Section 856(c)(5)(B) of the | 23 | | Internal Revenue Code, thereby including | 24 | | shares or certificates of beneficial | 25 | | interest in any real estate investment | 26 | | trust), cash and cash equivalents, and |
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| 1 | | U.S. Government securities; | 2 | | (2) the entity is not subject to tax on | 3 | | amounts that are distributed to its | 4 | | beneficial owners or is exempt from | 5 | | entity-level taxation; | 6 | | (3) the entity distributes at least | 7 | | 85% of its taxable income (as computed in | 8 | | the jurisdiction in which it is organized) | 9 | | to the holders of its shares or | 10 | | certificates of beneficial interest on an | 11 | | annual basis; | 12 | | (4) either (i) the shares or | 13 | | beneficial interests of the entity are | 14 | | regularly traded on an established | 15 | | securities market or (ii) not more than 10% | 16 | | of the voting power or value in the entity | 17 | | is held, directly, indirectly, or | 18 | | constructively, by a single entity or | 19 | | individual; and | 20 | | (5) the entity is organized in a | 21 | | country that has entered into a tax treaty | 22 | | with the United States; or | 23 | | (ii) during its first taxable year for which it | 24 | | elects to be treated as a real estate investment | 25 | | trust under Section 856(c)(1) of the Internal | 26 | | Revenue Code, a real estate investment trust the |
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| 1 | | certificates of beneficial interest or shares of | 2 | | which are not regularly traded on an established | 3 | | securities market, but only if the certificates of | 4 | | beneficial interest or shares of the real estate | 5 | | investment trust are regularly traded on an | 6 | | established securities market prior to the earlier | 7 | | of the due date (including extensions) for filing | 8 | | its return under this Act for that first taxable | 9 | | year or the date it actually files that return. | 10 | | (C) For the purposes of this subsection (1.5), the | 11 | | constructive ownership rules prescribed under Section | 12 | | 318(a) of the Internal Revenue Code, as modified by | 13 | | Section 856(d)(5) of the Internal Revenue Code, apply | 14 | | in determining the ownership of stock, assets, or net | 15 | | profits of any person.
| 16 | | (D) For the purposes of this item (1.5), for | 17 | | taxable years ending on or after August 16, 2007, the | 18 | | voting power or value of the beneficial interest or | 19 | | shares of a real estate investment trust does not | 20 | | include any voting power or value of beneficial | 21 | | interest or shares in a real estate investment trust | 22 | | held directly or indirectly in a segregated asset | 23 | | account by a life insurance company (as described in | 24 | | Section 817 of the Internal Revenue Code) to the extent | 25 | | such voting power or value is for the benefit of | 26 | | entities or persons who are either immune from taxation |
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| 1 | | or exempt from taxation under subtitle A of the | 2 | | Internal Revenue Code.
| 3 | | (2) Commercial domicile. The term "commercial | 4 | | domicile" means the
principal
place from which the trade or | 5 | | business of the taxpayer is directed or managed.
| 6 | | (3) Compensation. The term "compensation" means wages, | 7 | | salaries,
commissions
and any other form of remuneration | 8 | | paid to employees for personal services.
| 9 | | (4) Corporation. The term "corporation" includes | 10 | | associations, joint-stock
companies, insurance companies | 11 | | and cooperatives. Any entity, including a
limited | 12 | | liability company formed under the Illinois Limited | 13 | | Liability Company
Act, shall be treated as a corporation if | 14 | | it is so classified for federal
income tax purposes.
| 15 | | (5) Department. The term "Department" means the | 16 | | Department of Revenue of
this State.
| 17 | | (6) Director. The term "Director" means the Director of | 18 | | Revenue of this
State.
| 19 | | (7) Fiduciary. The term "fiduciary" means a guardian, | 20 | | trustee, executor,
administrator, receiver, or any person | 21 | | acting in any fiduciary capacity for any
person.
| 22 | | (8) Financial organization.
| 23 | | (A) The term "financial organization" means
any
| 24 | | bank, bank holding company, trust company, savings | 25 | | bank, industrial bank,
land bank, safe deposit | 26 | | company, private banker, savings and loan association,
|
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| 1 | | building and loan association, credit union, currency | 2 | | exchange, cooperative
bank, small loan company, sales | 3 | | finance company, investment company, or any
person | 4 | | which is owned by a bank or bank holding company. For | 5 | | the purpose of
this Section a "person" will include | 6 | | only those persons which a bank holding
company may | 7 | | acquire and hold an interest in, directly or | 8 | | indirectly, under the
provisions of the Bank Holding | 9 | | Company Act of 1956 (12 U.S.C. 1841, et seq.),
except | 10 | | where interests in any person must be disposed of | 11 | | within certain
required time limits under the Bank | 12 | | Holding Company Act of 1956.
| 13 | | (B) For purposes of subparagraph (A) of this | 14 | | paragraph, the term
"bank" includes (i) any entity that | 15 | | is regulated by the Comptroller of the
Currency under | 16 | | the National Bank Act, or by the Federal Reserve Board, | 17 | | or by
the
Federal Deposit Insurance Corporation and | 18 | | (ii) any federally or State chartered
bank
operating as | 19 | | a credit card bank.
| 20 | | (C) For purposes of subparagraph (A) of this | 21 | | paragraph, the term
"sales finance company" has the | 22 | | meaning provided in the following item (i) or
(ii):
| 23 | | (i) A person primarily engaged in one or more | 24 | | of the following
businesses: the business of | 25 | | purchasing customer receivables, the business
of | 26 | | making loans upon the security of customer |
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| 1 | | receivables, the
business of making loans for the | 2 | | express purpose of funding purchases of
tangible | 3 | | personal property or services by the borrower, or | 4 | | the business of
finance leasing. For purposes of | 5 | | this item (i), "customer receivable"
means:
| 6 | | (a) a retail installment contract or | 7 | | retail charge agreement within
the
meaning
of | 8 | | the Sales Finance Agency Act, the Retail | 9 | | Installment Sales Act, or the
Motor Vehicle | 10 | | Retail Installment Sales Act;
| 11 | | (b) an installment, charge, credit, or | 12 | | similar contract or agreement
arising from
the | 13 | | sale of tangible personal property or services | 14 | | in a transaction involving
a deferred payment | 15 | | price payable in one or more installments | 16 | | subsequent
to the sale; or
| 17 | | (c) the outstanding balance of a contract | 18 | | or agreement described in
provisions
(a) or (b) | 19 | | of this item (i).
| 20 | | A customer receivable need not provide for | 21 | | payment of interest on
deferred
payments. A sales | 22 | | finance company may purchase a customer receivable | 23 | | from, or
make a loan secured by a customer | 24 | | receivable to, the seller in the original
| 25 | | transaction or to a person who purchased the | 26 | | customer receivable directly or
indirectly from |
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| 1 | | that seller.
| 2 | | (ii) A corporation meeting each of the | 3 | | following criteria:
| 4 | | (a) the corporation must be a member of an | 5 | | "affiliated group" within
the
meaning of | 6 | | Section 1504(a) of the Internal Revenue Code, | 7 | | determined
without regard to Section 1504(b) | 8 | | of the Internal Revenue Code;
| 9 | | (b) more than 50% of the gross income of | 10 | | the corporation for the
taxable
year
must be | 11 | | interest income derived from qualifying loans. | 12 | | A "qualifying
loan" is a loan made to a member | 13 | | of the corporation's affiliated group that
| 14 | | originates customer receivables (within the | 15 | | meaning of item (i)) or to whom
customer | 16 | | receivables originated by a member of the | 17 | | affiliated group have been
transferred, to
the | 18 | | extent the average outstanding balance of | 19 | | loans from that corporation
to members of its | 20 | | affiliated group during the taxable year do not | 21 | | exceed
the limitation amount for that | 22 | | corporation. The "limitation amount" for a
| 23 | | corporation is the average outstanding | 24 | | balances during the taxable year of
customer | 25 | | receivables (within the meaning of item (i)) | 26 | | originated by
all members of the affiliated |
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| 1 | | group.
If the average outstanding balances of | 2 | | the
loans made by a corporation to members of | 3 | | its affiliated group exceed the
limitation | 4 | | amount, the interest income of that | 5 | | corporation from qualifying
loans shall be | 6 | | equal to its interest income from loans to | 7 | | members of its
affiliated groups times a | 8 | | fraction equal to the limitation amount | 9 | | divided by
the average outstanding balances of | 10 | | the loans made by that corporation to
members | 11 | | of its affiliated group;
| 12 | | (c) the total of all shareholder's equity | 13 | | (including, without
limitation,
paid-in
| 14 | | capital on common and preferred stock and | 15 | | retained earnings) of the
corporation plus the | 16 | | total of all of its loans, advances, and other
| 17 | | obligations payable or owed to members of its | 18 | | affiliated group may not
exceed 20% of the | 19 | | total assets of the corporation at any time | 20 | | during the tax
year; and
| 21 | | (d) more than 50% of all interest-bearing | 22 | | obligations of the
affiliated group payable to | 23 | | persons outside the group determined in | 24 | | accordance
with generally accepted accounting | 25 | | principles must be obligations of the
| 26 | | corporation.
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| 1 | | This amendatory Act of the 91st General Assembly is | 2 | | declaratory of
existing
law.
| 3 | | (D) Subparagraphs
(B) and (C) of this paragraph are | 4 | | declaratory of
existing law and apply retroactively, | 5 | | for all tax years beginning on or before
December 31, | 6 | | 1996,
to all original returns, to all amended returns | 7 | | filed no later than 30
days after the effective date of | 8 | | this amendatory Act of 1996, and to all
notices issued | 9 | | on or before the effective date of this amendatory Act | 10 | | of 1996
under subsection (a) of Section 903, subsection | 11 | | (a) of Section 904,
subsection (e) of Section 909, or | 12 | | Section 912.
A taxpayer that is a "financial | 13 | | organization" that engages in any transaction
with an | 14 | | affiliate shall be a "financial organization" for all | 15 | | purposes of this
Act.
| 16 | | (E) For all tax years beginning on or
before | 17 | | December 31, 1996, a taxpayer that falls within the | 18 | | definition
of a
"financial organization" under | 19 | | subparagraphs (B) or (C) of this paragraph, but
who | 20 | | does
not fall within the definition of a "financial | 21 | | organization" under the Proposed
Regulations issued by | 22 | | the Department of Revenue on July 19, 1996, may
| 23 | | irrevocably elect to apply the Proposed Regulations | 24 | | for all of those years as
though the Proposed | 25 | | Regulations had been lawfully promulgated, adopted, | 26 | | and in
effect for all of those years. For purposes of |
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| 1 | | applying subparagraphs (B) or
(C) of
this
paragraph to | 2 | | all of those years, the election allowed by this | 3 | | subparagraph
applies only to the taxpayer making the | 4 | | election and to those members of the
taxpayer's unitary | 5 | | business group who are ordinarily required to | 6 | | apportion
business income under the same subsection of | 7 | | Section 304 of this Act as the
taxpayer making the | 8 | | election. No election allowed by this subparagraph | 9 | | shall
be made under a claim
filed under subsection (d) | 10 | | of Section 909 more than 30 days after the
effective | 11 | | date of this amendatory Act of 1996.
| 12 | | (F) Finance Leases. For purposes of this | 13 | | subsection, a finance lease
shall be treated as a loan | 14 | | or other extension of credit, rather than as a
lease,
| 15 | | regardless of how the transaction is characterized for | 16 | | any other purpose,
including the purposes of any | 17 | | regulatory agency to which the lessor is subject.
A | 18 | | finance lease is any transaction in the form of a lease | 19 | | in which the lessee
is treated as the owner of the | 20 | | leased asset entitled to any deduction for
| 21 | | depreciation allowed under Section 167 of the Internal | 22 | | Revenue Code.
| 23 | | (9) Fiscal year. The term "fiscal year" means an | 24 | | accounting period of
12 months ending on the last day of | 25 | | any month other than December.
| 26 | | (9.5) Fixed place of business. The term "fixed place of |
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| 1 | | business" has the same meaning as that term is given in | 2 | | Section 864 of the Internal Revenue Code and the related | 3 | | Treasury regulations.
| 4 | | (10) Includes and including. The terms "includes" and | 5 | | "including" when
used in a definition contained in this Act | 6 | | shall not be deemed to exclude
other things otherwise | 7 | | within the meaning of the term defined.
| 8 | | (11) Internal Revenue Code. The term "Internal Revenue | 9 | | Code" means the
United States Internal Revenue Code of 1954 | 10 | | or any successor law or laws
relating to federal income | 11 | | taxes in effect for the taxable year.
| 12 | | (11.5) Investment partnership. | 13 | | (A) The term "investment partnership" means any | 14 | | entity that is treated as a partnership for federal | 15 | | income tax purposes that meets the following | 16 | | requirements: | 17 | | (i) no less than 90% of the partnership's cost | 18 | | of its total assets consists of qualifying | 19 | | investment securities, deposits at banks or other | 20 | | financial institutions, and office space and | 21 | | equipment reasonably necessary to carry on its | 22 | | activities as an investment partnership; | 23 | | (ii) no less than 90% of its gross income | 24 | | consists of interest, dividends, and gains from | 25 | | the sale or exchange of qualifying investment | 26 | | securities; and
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| 1 | | (iii) the partnership is not a dealer in | 2 | | qualifying investment securities. | 3 | | (B) For purposes of this paragraph (11.5), the term | 4 | | "qualifying investment securities" includes all of the | 5 | | following:
| 6 | | (i) common stock, including preferred or debt | 7 | | securities convertible into common stock, and | 8 | | preferred stock; | 9 | | (ii) bonds, debentures, and other debt | 10 | | securities; | 11 | | (iii) foreign and domestic currency deposits | 12 | | secured by federal, state, or local governmental | 13 | | agencies; | 14 | | (iv) mortgage or asset-backed securities | 15 | | secured by federal, state, or local governmental | 16 | | agencies; | 17 | | (v) repurchase agreements and loan | 18 | | participations; | 19 | | (vi) foreign currency exchange contracts and | 20 | | forward and futures contracts on foreign | 21 | | currencies; | 22 | | (vii) stock and bond index securities and | 23 | | futures contracts and other similar financial | 24 | | securities and futures contracts on those | 25 | | securities;
| 26 | | (viii) options for the purchase or sale of any |
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| 1 | | of the securities, currencies, contracts, or | 2 | | financial instruments described in items (i) to | 3 | | (vii), inclusive;
| 4 | | (ix) regulated futures contracts;
| 5 | | (x) commodities (not described in Section | 6 | | 1221(a)(1) of the Internal Revenue Code) or | 7 | | futures, forwards, and options with respect to | 8 | | such commodities, provided, however, that any item | 9 | | of a physical commodity to which title is actually | 10 | | acquired in the partnership's capacity as a dealer | 11 | | in such commodity shall not be a qualifying | 12 | | investment security;
| 13 | | (xi) derivatives; and
| 14 | | (xii) a partnership interest in another | 15 | | partnership that is an investment partnership.
| 16 | | (12) Mathematical error. The term "mathematical error" | 17 | | includes the
following types of errors, omissions, or | 18 | | defects in a return filed by a
taxpayer which prevents | 19 | | acceptance of the return as filed for processing:
| 20 | | (A) arithmetic errors or incorrect computations on | 21 | | the return or
supporting schedules;
| 22 | | (B) entries on the wrong lines;
| 23 | | (C) omission of required supporting forms or | 24 | | schedules or the omission
of the information in whole | 25 | | or in part called for thereon; and
| 26 | | (D) an attempt to claim, exclude, deduct, or |
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| 1 | | improperly report, in a
manner
directly contrary to the | 2 | | provisions of the Act and regulations thereunder
any | 3 | | item of income, exemption, deduction, or credit.
| 4 | | (13) Nonbusiness income. The term "nonbusiness income" | 5 | | means all income
other than business income or | 6 | | compensation.
| 7 | | (14) Nonresident. The term "nonresident" means a | 8 | | person who is not a
resident.
| 9 | | (15) Paid, incurred and accrued. The terms "paid", | 10 | | "incurred" and
"accrued"
shall be construed according to | 11 | | the method of accounting upon the basis
of which the | 12 | | person's base income is computed under this Act.
| 13 | | (16) Partnership and partner. The term "partnership" | 14 | | includes a syndicate,
group, pool, joint venture or other | 15 | | unincorporated organization, through
or by means of which | 16 | | any business, financial operation, or venture is carried
| 17 | | on, and which is not, within the meaning of this Act, a | 18 | | trust or estate
or a corporation; and the term "partner" | 19 | | includes a member in such syndicate,
group, pool, joint | 20 | | venture or organization.
| 21 | | The term "partnership" includes any entity, including | 22 | | a limited
liability company formed under the Illinois
| 23 | | Limited Liability Company Act, classified as a partnership | 24 | | for federal income tax purposes.
| 25 | | The term "partnership" does not include a syndicate, | 26 | | group, pool,
joint venture, or other unincorporated |
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| 1 | | organization established for the
sole purpose of playing | 2 | | the Illinois State Lottery.
| 3 | | (17) Part-year resident. The term "part-year resident" | 4 | | means an individual
who became a resident during the | 5 | | taxable year or ceased to be a resident
during the taxable | 6 | | year. Under Section 1501(a)(20)(A)(i) residence
commences | 7 | | with presence in this State for other than a temporary or | 8 | | transitory
purpose and ceases with absence from this State | 9 | | for other than a temporary or
transitory purpose. Under | 10 | | Section 1501(a)(20)(A)(ii) residence commences
with the | 11 | | establishment of domicile in this State and ceases with the
| 12 | | establishment of domicile in another State.
| 13 | | (18) Person. The term "person" shall be construed to | 14 | | mean and include
an individual, a trust, estate, | 15 | | partnership, association, firm, company,
corporation, | 16 | | limited liability company, or fiduciary. For purposes of | 17 | | Section
1301 and 1302 of this Act, a "person" means (i) an | 18 | | individual, (ii) a
corporation, (iii) an officer, agent, or | 19 | | employee of a
corporation, (iv) a member, agent or employee | 20 | | of a partnership, or (v)
a member,
manager, employee, | 21 | | officer, director, or agent of a limited liability company
| 22 | | who in such capacity commits an offense specified in | 23 | | Section 1301 and 1302.
| 24 | | (18A) Records. The term "records" includes all data | 25 | | maintained by the
taxpayer, whether on paper, microfilm, | 26 | | microfiche, or any type of
machine-sensible data |
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| 1 | | compilation.
| 2 | | (19) Regulations. The term "regulations" includes | 3 | | rules promulgated and
forms prescribed by the Department.
| 4 | | (20) Resident. The term "resident" means:
| 5 | | (A) an individual (i) who is
in this State for | 6 | | other than a temporary or transitory purpose during the
| 7 | | taxable year; or (ii) who is domiciled in this State | 8 | | but is absent from
the State for a temporary or | 9 | | transitory purpose during the taxable year;
| 10 | | (B) The estate of a decedent who at his or her | 11 | | death was domiciled in
this
State;
| 12 | | (C) A trust created by a will of a decedent who at | 13 | | his death was
domiciled
in this State; and
| 14 | | (D) An irrevocable trust, the grantor of which was | 15 | | domiciled in this
State
at the time such trust became | 16 | | irrevocable. For purpose of this subparagraph,
a trust | 17 | | shall be considered irrevocable to the extent that the | 18 | | grantor is
not treated as the owner thereof under | 19 | | Sections 671 through 678 of the Internal
Revenue Code.
| 20 | | (21) Sales. The term "sales" means all gross receipts | 21 | | of the taxpayer
not allocated under Sections 301, 302 and | 22 | | 303.
| 23 | | (22) State. The term "state" when applied to a | 24 | | jurisdiction other than
this State means any state of the | 25 | | United States, the District of Columbia,
the Commonwealth | 26 | | of Puerto Rico, any Territory or Possession of the United
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| 1 | | States, and any foreign country, or any political | 2 | | subdivision of any of the
foregoing. For purposes of the | 3 | | foreign tax credit under Section 601, the
term "state" | 4 | | means any state of the United States, the District of | 5 | | Columbia,
the Commonwealth of Puerto Rico, and any | 6 | | territory or possession of the
United States, or any | 7 | | political subdivision of any of the foregoing,
effective | 8 | | for tax years ending on or after December 31, 1989.
| 9 | | (23) Taxable year. The term "taxable year" means the | 10 | | calendar year, or
the fiscal year ending during such | 11 | | calendar year, upon the basis of which
the base income is | 12 | | computed under this Act. "Taxable year" means, in the
case | 13 | | of a return made for a fractional part of a year under the | 14 | | provisions
of this Act, the period for which such return is | 15 | | made.
| 16 | | (24) Taxpayer. The term "taxpayer" means any person | 17 | | subject to the tax
imposed by this Act.
| 18 | | (25) International banking facility. The term | 19 | | international banking
facility shall have the same meaning | 20 | | as is set forth in the Illinois Banking
Act or as is set | 21 | | forth in the laws of the United States or regulations of
| 22 | | the Board of Governors of the Federal Reserve System.
| 23 | | (26) Income Tax Return Preparer.
| 24 | | (A) The term "income tax return preparer"
means any | 25 | | person who prepares for compensation, or who employs | 26 | | one or more
persons to prepare for compensation, any |
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| 1 | | return of tax imposed by this Act
or any claim for | 2 | | refund of tax imposed by this Act. The preparation of a
| 3 | | substantial portion of a return or claim for refund | 4 | | shall be treated as
the preparation of that return or | 5 | | claim for refund.
| 6 | | (B) A person is not an income tax return preparer | 7 | | if all he or she does
is
| 8 | | (i) furnish typing, reproducing, or other | 9 | | mechanical assistance;
| 10 | | (ii) prepare returns or claims for refunds for | 11 | | the employer by whom he
or she is regularly and | 12 | | continuously employed;
| 13 | | (iii) prepare as a fiduciary returns or claims | 14 | | for refunds for any
person; or
| 15 | | (iv) prepare claims for refunds for a taxpayer | 16 | | in response to any
notice
of deficiency issued to | 17 | | that taxpayer or in response to any waiver of
| 18 | | restriction after the commencement of an audit of | 19 | | that taxpayer or of another
taxpayer if a | 20 | | determination in the audit of the other taxpayer | 21 | | directly or
indirectly affects the tax liability | 22 | | of the taxpayer whose claims he or she is
| 23 | | preparing.
| 24 | | (27) Unitary business group. | 25 | | (A) The term "unitary business group" means
a group | 26 | | of persons related through common ownership whose |
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| 1 | | business activities
are integrated with, dependent | 2 | | upon and contribute to each other. The group
will not | 3 | | include those members whose business activity outside | 4 | | the United
States is 80% or more of any such member's | 5 | | total business activity; for
purposes of this | 6 | | paragraph and clause (a)(3)(B)(ii) of Section 304,
| 7 | | business
activity within the United States shall be | 8 | | measured by means of the factors
ordinarily applicable | 9 | | under subsections (a), (b), (c), (d), or (h)
of Section
| 10 | | 304 except that, in the case of members ordinarily | 11 | | required to apportion
business income by means of the 3 | 12 | | factor formula of property, payroll and sales
| 13 | | specified in subsection (a) of Section 304, including | 14 | | the
formula as weighted in subsection (h) of Section | 15 | | 304, such members shall
not use the sales factor in the | 16 | | computation and the results of the property
and payroll | 17 | | factor computations of subsection (a) of Section 304 | 18 | | shall be
divided by 2 (by one if either
the property or | 19 | | payroll factor has a denominator of zero). The | 20 | | computation
required by the preceding sentence shall, | 21 | | in each case, involve the division of
the member's | 22 | | property, payroll, or revenue miles in the United | 23 | | States,
insurance premiums on property or risk in the | 24 | | United States, or financial
organization business | 25 | | income from sources within the United States, as the
| 26 | | case may be, by the respective worldwide figures for |
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| 1 | | such items. Common
ownership in the case of | 2 | | corporations is the direct or indirect control or
| 3 | | ownership of more than 50% of the outstanding voting | 4 | | stock of the persons
carrying on unitary business | 5 | | activity. Unitary business activity can
ordinarily be | 6 | | illustrated where the activities of the members are: | 7 | | (1) in the
same general line (such as manufacturing, | 8 | | wholesaling, retailing of tangible
personal property, | 9 | | insurance, transportation or finance); or (2) are | 10 | | steps in a
vertically structured enterprise or process | 11 | | (such as the steps involved in the
production of | 12 | | natural resources, which might include exploration, | 13 | | mining,
refining, and marketing); and, in either | 14 | | instance, the members are functionally
integrated | 15 | | through the exercise of strong centralized management | 16 | | (where, for
example, authority over such matters as | 17 | | purchasing, financing, tax compliance,
product line, | 18 | | personnel, marketing and capital investment is not | 19 | | left to each
member).
| 20 | | (B) In no event, shall any
unitary business group | 21 | | include members
which are ordinarily required to | 22 | | apportion business income under different
subsections | 23 | | of Section 304 except that for tax years ending on or | 24 | | after
December 31, 1987 this prohibition shall not | 25 | | apply to a holding company that would otherwise be a | 26 | | member of a unitary business group with taxpayers that |
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| 1 | | apportion business income under any of subsections | 2 | | (b), (c), (c-1), or (d) of Section 304. If a unitary | 3 | | business
group would, but for the preceding sentence, | 4 | | include members that are
ordinarily required to | 5 | | apportion business income under different subsections | 6 | | of
Section 304, then for each subsection of Section 304 | 7 | | for which there are two or
more members, there shall be | 8 | | a separate unitary business group composed of such
| 9 | | members. For purposes of the preceding two sentences, a | 10 | | member is "ordinarily
required to apportion business | 11 | | income" under a particular subsection of Section
304 if | 12 | | it would be required to use the apportionment method | 13 | | prescribed by such
subsection except for the fact that | 14 | | it derives business income solely from
Illinois. As | 15 | | used in this paragraph, for taxable years ending before | 16 | | December 31, 2016, the phrase "United States" means | 17 | | only the 50 states and the District of Columbia, but | 18 | | does not include any territory or possession of the | 19 | | United States or any area over which the United States | 20 | | has asserted jurisdiction or claimed exclusive rights | 21 | | with respect to the exploration for or exploitation of | 22 | | natural resources.
For taxable years ending on or after | 23 | | December 31, 2016, the phrase "United States", as used | 24 | | in this paragraph, means only the 50 states, the | 25 | | District of Columbia, and any area over which the | 26 | | United States has asserted jurisdiction or claimed |
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| 1 | | exclusive rights with respect to the exploration for or | 2 | | exploitation of natural resources, but does not | 3 | | include any territory or possession of the United | 4 | | States. | 5 | | (C) Holding companies. | 6 | | (i) For purposes of this subparagraph, a | 7 | | "holding company" is a corporation (other than a | 8 | | corporation that is a financial organization under | 9 | | paragraph (8) of this subsection (a) of Section | 10 | | 1501 because it is a bank holding company under the | 11 | | provisions of the Bank Holding Company Act of 1956 | 12 | | (12 U.S.C. 1841, et seq.) or because it is owned by | 13 | | a bank or a bank holding company) that owns a | 14 | | controlling interest in one or more other | 15 | | taxpayers ("controlled taxpayers"); that, during | 16 | | the period that includes the taxable year and the 2 | 17 | | immediately preceding taxable years or, if the | 18 | | corporation was formed during the current or | 19 | | immediately preceding taxable year, the taxable | 20 | | years in which the corporation has been in | 21 | | existence, derived substantially all its gross | 22 | | income from dividends, interest, rents, royalties, | 23 | | fees or other charges received from controlled | 24 | | taxpayers for the provision of services, and gains | 25 | | on the sale or other disposition of interests in | 26 | | controlled taxpayers or in property leased or |
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| 1 | | licensed to controlled taxpayers or used by the | 2 | | taxpayer in providing services to controlled | 3 | | taxpayers; and that incurs no substantial expenses | 4 | | other than expenses (including interest and other | 5 | | costs of borrowing) incurred in connection with | 6 | | the acquisition and holding of interests in | 7 | | controlled taxpayers and in the provision of | 8 | | services to controlled taxpayers or in the leasing | 9 | | or licensing of property to controlled taxpayers. | 10 | | (ii) The income of a holding company which is a | 11 | | member of more than one unitary business group | 12 | | shall be included in each unitary business group of | 13 | | which it is a member on a pro rata basis, by | 14 | | including in each unitary business group that | 15 | | portion of the base income of the holding company | 16 | | that bears the same proportion to the total base | 17 | | income of the holding company as the gross receipts | 18 | | of the unitary business group bears to the combined | 19 | | gross receipts of all unitary business groups (in | 20 | | both cases without regard to the holding company) | 21 | | or on any other reasonable basis, consistently | 22 | | applied. | 23 | | (iii) A holding company shall apportion its | 24 | | business income under the subsection of Section | 25 | | 304 used by the other members of its unitary | 26 | | business group. The apportionment factors of a |
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| 1 | | holding company which would be a member of more | 2 | | than one unitary business group shall be included | 3 | | with the apportionment factors of each unitary | 4 | | business group of which it is a member on a pro | 5 | | rata basis using the same method used in clause | 6 | | (ii). | 7 | | (iv) The provisions of this subparagraph (C) | 8 | | are intended to clarify existing law. | 9 | | (D) If including the base income and factors of a | 10 | | holding company in more than one unitary business group | 11 | | under subparagraph (C) does not fairly reflect the | 12 | | degree of integration between the holding company and | 13 | | one or more of the unitary business groups, the | 14 | | dependence of the holding company and one or more of | 15 | | the unitary business groups upon each other, or the | 16 | | contributions between the holding company and one or | 17 | | more of the unitary business groups, the holding | 18 | | company may petition the Director, under the | 19 | | procedures provided under Section 304(f), for | 20 | | permission to include all base income and factors of | 21 | | the holding company only with members of a unitary | 22 | | business group apportioning their business income | 23 | | under one subsection of subsections (a), (b), (c), or | 24 | | (d) of Section 304. If the petition is granted, the | 25 | | holding company shall be included in a unitary business | 26 | | group only with persons apportioning their business |
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| 1 | | income under the selected subsection of Section 304 | 2 | | until the Director grants a petition of the holding | 3 | | company either to be included in more than one unitary | 4 | | business group under subparagraph (C) or to include its | 5 | | base income and factors only with members of a unitary | 6 | | business group apportioning their business income | 7 | | under a different subsection of Section 304. | 8 | | (E) If the unitary business group members' | 9 | | accounting periods differ,
the common parent's | 10 | | accounting period or, if there is no common parent, the
| 11 | | accounting period of the member that is expected to | 12 | | have, on a recurring basis,
the greatest Illinois | 13 | | income tax liability must be used to determine whether | 14 | | to
use the apportionment method provided in subsection | 15 | | (a) or subsection (h) of
Section 304. The
prohibition | 16 | | against membership in a unitary business group for | 17 | | taxpayers
ordinarily required to apportion income | 18 | | under different subsections of Section
304 does not | 19 | | apply to taxpayers required to apportion income under | 20 | | subsection
(a) and subsection (h) of Section
304. The | 21 | | provisions of this amendatory Act of 1998 apply to tax
| 22 | | years ending on or after December 31, 1998.
| 23 | | (28) Subchapter S corporation. The term "Subchapter S | 24 | | corporation"
means a corporation for which there is in | 25 | | effect an election under Section
1362 of the Internal | 26 | | Revenue Code, or for which there is a federal election
to |
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| 1 | | opt out of the provisions of the Subchapter S Revision Act | 2 | | of 1982 and
have applied instead the prior federal | 3 | | Subchapter S rules as in effect on July
1, 1982.
| 4 | | (30) Foreign person. The term "foreign person" means | 5 | | any person who is a nonresident alien individual and any | 6 | | nonindividual entity, regardless of where created or | 7 | | organized, whose business activity outside the United | 8 | | States is 80% or more of the entity's total business | 9 | | activity.
| 10 | | (b) Other definitions.
| 11 | | (1) Words denoting number, gender, and so forth,
when | 12 | | used in this Act, where not otherwise distinctly expressed | 13 | | or manifestly
incompatible with the intent thereof:
| 14 | | (A) Words importing the singular include and apply | 15 | | to several persons,
parties or things;
| 16 | | (B) Words importing the plural include the | 17 | | singular; and
| 18 | | (C) Words importing the masculine gender include | 19 | | the feminine as well.
| 20 | | (2) "Company" or "association" as including successors | 21 | | and assigns. The
word "company" or "association", when used | 22 | | in reference to a corporation,
shall be deemed to embrace | 23 | | the words "successors and assigns of such company
or | 24 | | association", and in like manner as if these last-named | 25 | | words, or words
of similar import, were expressed.
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| 1 | | (3) Other terms. Any term used in any Section of this | 2 | | Act with respect
to the application of, or in connection | 3 | | with, the provisions of any other
Section of this Act shall | 4 | | have the same meaning as in such other Section.
| 5 | | (Source: P.A. 99-213, eff. 7-31-15.)
| 6 | | Section 99. Effective date. This Act takes effect upon | 7 | | becoming law.".
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