Illinois General Assembly - Full Text of HB3590
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Full Text of HB3590  101st General Assembly

HB3590 101ST GENERAL ASSEMBLY

  
  

 


 
101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020
HB3590

 

Introduced , by Rep. Sam Yingling

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/303  from Ch. 120, par. 3-303
35 ILCS 5/304  from Ch. 120, par. 3-304
35 ILCS 5/710  from Ch. 120, par. 7-710

    Amends the Illinois Income Tax Act. Provides that winnings from pari-mutuel wagering conducted at a wagering facility licensed under the Illinois Horse Racing Act of 1975 or from winnings from gambling games conducted on a riverboat licensed under the Riverboat Gambling Act are taxable as income in this State, for both residents and nonresidents. Provides that such winners must withhold Illinois income tax from their winnings, if the payment of winnings must be reported to the Internal Revenue Service by the person making the payment. Effective immediately.


LRB101 10559 HLH 55665 b

 

 

A BILL FOR

 

HB3590LRB101 10559 HLH 55665 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Sections 303, 304, and 710 as follows:
 
6    (35 ILCS 5/303)  (from Ch. 120, par. 3-303)
7    Sec. 303. (a) In general. Any item of capital gain or loss,
8and any item of income from rents or royalties from real or
9tangible personal property, interest, dividends, and patent or
10copyright royalties, and prizes awarded under the Illinois
11Lottery Law, and, for taxable years ending on or after December
1231, 2018, wagering and gambling winnings from Illinois sources
13as set forth in subsection (e), to the extent such item
14constitutes nonbusiness income, together with any item of
15deduction directly allocable thereto, shall be allocated by any
16person other than a resident as provided in this Section.
17    (b) Capital gains and losses.
18        (1) Real property. Capital gains and losses from sales
19    or exchanges of real property are allocable to this State
20    if the property is located in this State.
21        (2) Tangible personal property. Capital gains and
22    losses from sales or exchanges of tangible personal
23    property are allocable to this State if, at the time of

 

 

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1    such sale or exchange:
2            (A) The property had its situs in this State; or
3            (B) The taxpayer had its commercial domicile in
4        this State and was not taxable in the state in which
5        the property had its situs.
6        (3) Intangibles. Capital gains and losses from sales or
7    exchanges of intangible personal property are allocable to
8    this State if the taxpayer had its commercial domicile in
9    this State at the time of such sale or exchange.
10    (c) Rents and royalties.
11        (1) Real property. Rents and royalties from real
12    property are allocable to this State if the property is
13    located in this State.
14        (2) Tangible personal property. Rents and royalties
15    from tangible personal property are allocable to this
16    State:
17            (A) If and to the extent that the property is
18        utilized in this State; or
19            (B) In their entirety if, at the time such rents or
20        royalties were paid or accrued, the taxpayer had its
21        commercial domicile in this State and was not organized
22        under the laws of or taxable with respect to such rents
23        or royalties in the state in which the property was
24        utilized. The extent of utilization of tangible
25        personal property in a state is determined by
26        multiplying the rents or royalties derived from such

 

 

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1        property by a fraction, the numerator of which is the
2        number of days of physical location of the property in
3        the state during the rental or royalty period in the
4        taxable year and the denominator of which is the number
5        of days of physical location of the property everywhere
6        during all rental or royalty periods in the taxable
7        year. If the physical location of the property during
8        the rental or royalty period is unknown or
9        unascertainable by the taxpayer, tangible personal
10        property is utilized in the state in which the property
11        was located at the time the rental or royalty payer
12        obtained possession.
13    (d) Patent and copyright royalties.
14        (1) Allocation. Patent and copyright royalties are
15    allocable to this State:
16            (A) If and to the extent that the patent or
17        copyright is utilized by the payer in this State; or
18            (B) If and to the extent that the patent or
19        copyright is utilized by the payer in a state in which
20        the taxpayer is not taxable with respect to such
21        royalties and, at the time such royalties were paid or
22        accrued, the taxpayer had its commercial domicile in
23        this State.
24        (2) Utilization.
25            (A) A patent is utilized in a state to the extent
26        that it is employed in production, fabrication,

 

 

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1        manufacturing or other processing in the state or to
2        the extent that a patented product is produced in the
3        state. If the basis of receipts from patent royalties
4        does not permit allocation to states or if the
5        accounting procedures do not reflect states of
6        utilization, the patent is utilized in this State if
7        the taxpayer has its commercial domicile in this State.
8            (B) A copyright is utilized in a state to the
9        extent that printing or other publication originates
10        in the state. If the basis of receipts from copyright
11        royalties does not permit allocation to states or if
12        the accounting procedures do not reflect states of
13        utilization, the copyright is utilized in this State if
14        the taxpayer has its commercial domicile in this State.
15    (e) Illinois lottery; wagering and gambling winnings
16prizes. Prizes awarded under the Illinois Lottery Law are
17allocable to this State. Payments received in taxable years
18ending on or after December 31, 2013, from the assignment of a
19prize under Section 13.1 of the Illinois Lottery Law are
20allocable to this State. For taxable years ending on or after
21December 31, 2018, payments of winnings from pari-mutuel
22wagering conducted at a wagering facility licensed under the
23Illinois Horse Racing Act of 1975 and from gambling games
24conducted on a riverboat licensed under the Riverboat Gambling
25Act are allocable to this State.
26    (e-5) Unemployment benefits. Unemployment benefits paid by

 

 

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1the Illinois Department of Employment Security are allocable to
2this State.
3    (f) Taxability in other state. For purposes of allocation
4of income pursuant to this Section, a taxpayer is taxable in
5another state if:
6        (1) In that state he is subject to a net income tax, a
7    franchise tax measured by net income, a franchise tax for
8    the privilege of doing business, or a corporate stock tax;
9    or
10        (2) That state has jurisdiction to subject the taxpayer
11    to a net income tax regardless of whether, in fact, the
12    state does or does not.
13    (g) Cross references.
14        (1) For allocation of interest and dividends by persons
15    other than residents, see Section 301(c)(2).
16        (2) For allocation of nonbusiness income by residents,
17    see Section 301(a).
18(Source: P.A. 97-709, eff. 7-1-12; 98-496, eff. 1-1-14.)
 
19    (35 ILCS 5/304)  (from Ch. 120, par. 3-304)
20    Sec. 304. Business income of persons other than residents.
21    (a) In general. The business income of a person other than
22a resident shall be allocated to this State if such person's
23business income is derived solely from this State. If a person
24other than a resident derives business income from this State
25and one or more other states, then, for tax years ending on or

 

 

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1before December 30, 1998, and except as otherwise provided by
2this Section, such person's business income shall be
3apportioned to this State by multiplying the income by a
4fraction, the numerator of which is the sum of the property
5factor (if any), the payroll factor (if any) and 200% of the
6sales factor (if any), and the denominator of which is 4
7reduced by the number of factors other than the sales factor
8which have a denominator of zero and by an additional 2 if the
9sales factor has a denominator of zero. For tax years ending on
10or after December 31, 1998, and except as otherwise provided by
11this Section, persons other than residents who derive business
12income from this State and one or more other states shall
13compute their apportionment factor by weighting their
14property, payroll, and sales factors as provided in subsection
15(h) of this Section.
16    (1) Property factor.
17        (A) The property factor is a fraction, the numerator of
18    which is the average value of the person's real and
19    tangible personal property owned or rented and used in the
20    trade or business in this State during the taxable year and
21    the denominator of which is the average value of all the
22    person's real and tangible personal property owned or
23    rented and used in the trade or business during the taxable
24    year.
25        (B) Property owned by the person is valued at its
26    original cost. Property rented by the person is valued at 8

 

 

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1    times the net annual rental rate. Net annual rental rate is
2    the annual rental rate paid by the person less any annual
3    rental rate received by the person from sub-rentals.
4        (C) The average value of property shall be determined
5    by averaging the values at the beginning and ending of the
6    taxable year but the Director may require the averaging of
7    monthly values during the taxable year if reasonably
8    required to reflect properly the average value of the
9    person's property.
10    (2) Payroll factor.
11        (A) The payroll factor is a fraction, the numerator of
12    which is the total amount paid in this State during the
13    taxable year by the person for compensation, and the
14    denominator of which is the total compensation paid
15    everywhere during the taxable year.
16        (B) Compensation is paid in this State if:
17            (i) The individual's service is performed entirely
18        within this State;
19            (ii) The individual's service is performed both
20        within and without this State, but the service
21        performed without this State is incidental to the
22        individual's service performed within this State; or
23            (iii) Some of the service is performed within this
24        State and either the base of operations, or if there is
25        no base of operations, the place from which the service
26        is directed or controlled is within this State, or the

 

 

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1        base of operations or the place from which the service
2        is directed or controlled is not in any state in which
3        some part of the service is performed, but the
4        individual's residence is in this State.
5            (iv) Compensation paid to nonresident professional
6        athletes.
7            (a) General. The Illinois source income of a
8        nonresident individual who is a member of a
9        professional athletic team includes the portion of the
10        individual's total compensation for services performed
11        as a member of a professional athletic team during the
12        taxable year which the number of duty days spent within
13        this State performing services for the team in any
14        manner during the taxable year bears to the total
15        number of duty days spent both within and without this
16        State during the taxable year.
17            (b) Travel days. Travel days that do not involve
18        either a game, practice, team meeting, or other similar
19        team event are not considered duty days spent in this
20        State. However, such travel days are considered in the
21        total duty days spent both within and without this
22        State.
23            (c) Definitions. For purposes of this subpart
24        (iv):
25                (1) The term "professional athletic team"
26            includes, but is not limited to, any professional

 

 

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1            baseball, basketball, football, soccer, or hockey
2            team.
3                (2) The term "member of a professional
4            athletic team" includes those employees who are
5            active players, players on the disabled list, and
6            any other persons required to travel and who travel
7            with and perform services on behalf of a
8            professional athletic team on a regular basis.
9            This includes, but is not limited to, coaches,
10            managers, and trainers.
11                (3) Except as provided in items (C) and (D) of
12            this subpart (3), the term "duty days" means all
13            days during the taxable year from the beginning of
14            the professional athletic team's official
15            pre-season training period through the last game
16            in which the team competes or is scheduled to
17            compete. Duty days shall be counted for the year in
18            which they occur, including where a team's
19            official pre-season training period through the
20            last game in which the team competes or is
21            scheduled to compete, occurs during more than one
22            tax year.
23                    (A) Duty days shall also include days on
24                which a member of a professional athletic team
25                performs service for a team on a date that does
26                not fall within the foregoing period (e.g.,

 

 

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1                participation in instructional leagues, the
2                "All Star Game", or promotional "caravans").
3                Performing a service for a professional
4                athletic team includes conducting training and
5                rehabilitation activities, when such
6                activities are conducted at team facilities.
7                    (B) Also included in duty days are game
8                days, practice days, days spent at team
9                meetings, promotional caravans, preseason
10                training camps, and days served with the team
11                through all post-season games in which the team
12                competes or is scheduled to compete.
13                    (C) Duty days for any person who joins a
14                team during the period from the beginning of
15                the professional athletic team's official
16                pre-season training period through the last
17                game in which the team competes, or is
18                scheduled to compete, shall begin on the day
19                that person joins the team. Conversely, duty
20                days for any person who leaves a team during
21                this period shall end on the day that person
22                leaves the team. Where a person switches teams
23                during a taxable year, a separate duty-day
24                calculation shall be made for the period the
25                person was with each team.
26                    (D) Days for which a member of a

 

 

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1                professional athletic team is not compensated
2                and is not performing services for the team in
3                any manner, including days when such member of
4                a professional athletic team has been
5                suspended without pay and prohibited from
6                performing any services for the team, shall not
7                be treated as duty days.
8                    (E) Days for which a member of a
9                professional athletic team is on the disabled
10                list and does not conduct rehabilitation
11                activities at facilities of the team, and is
12                not otherwise performing services for the team
13                in Illinois, shall not be considered duty days
14                spent in this State. All days on the disabled
15                list, however, are considered to be included in
16                total duty days spent both within and without
17                this State.
18                (4) The term "total compensation for services
19            performed as a member of a professional athletic
20            team" means the total compensation received during
21            the taxable year for services performed:
22                    (A) from the beginning of the official
23                pre-season training period through the last
24                game in which the team competes or is scheduled
25                to compete during that taxable year; and
26                    (B) during the taxable year on a date which

 

 

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1                does not fall within the foregoing period
2                (e.g., participation in instructional leagues,
3                the "All Star Game", or promotional caravans).
4                This compensation shall include, but is not
5            limited to, salaries, wages, bonuses as described
6            in this subpart, and any other type of compensation
7            paid during the taxable year to a member of a
8            professional athletic team for services performed
9            in that year. This compensation does not include
10            strike benefits, severance pay, termination pay,
11            contract or option year buy-out payments,
12            expansion or relocation payments, or any other
13            payments not related to services performed for the
14            team.
15                For purposes of this subparagraph, "bonuses"
16            included in "total compensation for services
17            performed as a member of a professional athletic
18            team" subject to the allocation described in
19            Section 302(c)(1) are: bonuses earned as a result
20            of play (i.e., performance bonuses) during the
21            season, including bonuses paid for championship,
22            playoff or "bowl" games played by a team, or for
23            selection to all-star league or other honorary
24            positions; and bonuses paid for signing a
25            contract, unless the payment of the signing bonus
26            is not conditional upon the signee playing any

 

 

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

 

 

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1        personal property are not in this State if the seller
2        and purchaser would be members of the same unitary
3        business group but for the fact that either the seller
4        or purchaser is a person with 80% or more of total
5        business activity outside of the United States and the
6        property is purchased for resale.
7        (B-1) Patents, copyrights, trademarks, and similar
8    items of intangible personal property.
9            (i) Gross receipts from the licensing, sale, or
10        other disposition of a patent, copyright, trademark,
11        or similar item of intangible personal property, other
12        than gross receipts governed by paragraph (B-7) of this
13        item (3), are in this State to the extent the item is
14        utilized in this State during the year the gross
15        receipts are included in gross income.
16            (ii) Place of utilization.
17                (I) A patent is utilized in a state to the
18            extent that it is employed in production,
19            fabrication, manufacturing, or other processing in
20            the state or to the extent that a patented product
21            is produced in the state. If a patent is utilized
22            in more than one state, the extent to which it is
23            utilized in any one state shall be a fraction equal
24            to the gross receipts of the licensee or purchaser
25            from sales or leases of items produced,
26            fabricated, manufactured, or processed within that

 

 

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

 

 

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

 

 

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1            "Air-to-Ground Radiotelephone service" means a
2        radio service, as that term is defined in 47 CFR 22.99,
3        in which common carriers are authorized to offer and
4        provide radio telecommunications service for hire to
5        subscribers in aircraft.
6            "Call-by-call Basis" means any method of charging
7        for telecommunications services where the price is
8        measured by individual calls.
9            "Communications Channel" means a physical or
10        virtual path of communications over which signals are
11        transmitted between or among customer channel
12        termination points.
13            "Conference bridging service" means an "ancillary
14        service" that links two or more participants of an
15        audio or video conference call and may include the
16        provision of a telephone number. "Conference bridging
17        service" does not include the "telecommunications
18        services" used to reach the conference bridge.
19            "Customer Channel Termination Point" means the
20        location where the customer either inputs or receives
21        the communications.
22            "Detailed telecommunications billing service"
23        means an "ancillary service" of separately stating
24        information pertaining to individual calls on a
25        customer's billing statement.
26            "Directory assistance" means an "ancillary

 

 

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

 

 

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

 

 

HB3590- 20 -LRB101 10559 HLH 55665 b

1        switching capacity, extension lines, stations, and any
2        other associated services that are provided in
3        connection with the use of such channel or channels.
4            "Service address" means:
5                (a) The location of the telecommunications
6            equipment to which a customer's call is charged and
7            from which the call originates or terminates,
8            regardless of where the call is billed or paid;
9                (b) If the location in line (a) is not known,
10            service address means the origination point of the
11            signal of the telecommunications services first
12            identified by either the seller's
13            telecommunications system or in information
14            received by the seller from its service provider
15            where the system used to transport such signals is
16            not that of the seller; and
17                (c) If the locations in line (a) and line (b)
18            are not known, the service address means the
19            location of the customer's place of primary use.
20            "Telecommunications service" means the electronic
21        transmission, conveyance, or routing of voice, data,
22        audio, video, or any other information or signals to a
23        point, or between or among points. The term
24        "telecommunications service" includes such
25        transmission, conveyance, or routing in which computer
26        processing applications are used to act on the form,

 

 

HB3590- 21 -LRB101 10559 HLH 55665 b

1        code or protocol of the content for purposes of
2        transmission, conveyance or routing without regard to
3        whether such service is referred to as voice over
4        Internet protocol services or is classified by the
5        Federal Communications Commission as enhanced or value
6        added. "Telecommunications service" does not include:
7                (a) Data processing and information services
8            that allow data to be generated, acquired, stored,
9            processed, or retrieved and delivered by an
10            electronic transmission to a purchaser when such
11            purchaser's primary purpose for the underlying
12            transaction is the processed data or information;
13                (b) Installation or maintenance of wiring or
14            equipment on a customer's premises;
15                (c) Tangible personal property;
16                (d) Advertising, including but not limited to
17            directory advertising;
18                (e) Billing and collection services provided
19            to third parties;
20                (f) Internet access service;
21                (g) Radio and television audio and video
22            programming services, regardless of the medium,
23            including the furnishing of transmission,
24            conveyance and routing of such services by the
25            programming service provider. Radio and television
26            audio and video programming services shall include

 

 

HB3590- 22 -LRB101 10559 HLH 55665 b

1            but not be limited to cable service as defined in
2            47 USC 522(6) and audio and video programming
3            services delivered by commercial mobile radio
4            service providers, as defined in 47 CFR 20.3;
5                (h) "Ancillary services"; or
6                (i) Digital products "delivered
7            electronically", including but not limited to
8            software, music, video, reading materials or ring
9            tones.
10            "Vertical service" means an "ancillary service"
11        that is offered in connection with one or more
12        "telecommunications services", which offers advanced
13        calling features that allow customers to identify
14        callers and to manage multiple calls and call
15        connections, including "conference bridging services".
16            "Voice mail service" means an "ancillary service"
17        that enables the customer to store, send or receive
18        recorded messages. "Voice mail service" does not
19        include any "vertical services" that the customer may
20        be required to have in order to utilize the "voice mail
21        service".
22            (ii) Receipts from the sale of telecommunications
23        service sold on an individual call-by-call basis are in
24        this State if either of the following applies:
25                (a) The call both originates and terminates in
26            this State.

 

 

HB3590- 23 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 24 -LRB101 10559 HLH 55665 b

1            channel mileage between each channel termination
2            point in this State.
3                (c) 50% of the total receipts from charges for
4            service segments when those segments are between 2
5            customer channel termination points, 1 of which is
6            located in this State and the other is located
7            outside of this State, which segments are
8            separately charged.
9                (d) The receipts from charges for service
10            segments with a channel termination point located
11            in this State and in two or more other states, and
12            which segments are not separately billed, are in
13            this State based on a percentage determined by
14            dividing the number of customer channel
15            termination points in this State by the total
16            number of customer channel termination points.
17            (vi) Receipts from charges for ancillary services
18        for telecommunications service sold to customers at
19        retail are in this State if the customer's primary
20        place of use of telecommunications services associated
21        with those ancillary services is in this State. If the
22        seller of those ancillary services cannot determine
23        where the associated telecommunications are located,
24        then the ancillary services shall be based on the
25        location of the purchaser.
26            (vii) Receipts to access a carrier's network or

 

 

HB3590- 25 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 26 -LRB101 10559 HLH 55665 b

1            determination. If the information is not readily
2            available, then the taxpayer may use any other
3            reasonable and consistent method.
4        (B-7) For taxable years ending on or after December 31,
5    2008, receipts from the sale of broadcasting services are
6    in this State if the broadcasting services are received in
7    this State. For purposes of this paragraph (B-7), the
8    following terms have the following meanings:
9            "Advertising revenue" means consideration received
10        by the taxpayer in exchange for broadcasting services
11        or allowing the broadcasting of commercials or
12        announcements in connection with the broadcasting of
13        film or radio programming, from sponsorships of the
14        programming, or from product placements in the
15        programming.
16            "Audience factor" means the ratio that the
17        audience or subscribers located in this State of a
18        station, a network, or a cable system bears to the
19        total audience or total subscribers for that station,
20        network, or cable system. The audience factor for film
21        or radio programming shall be determined by reference
22        to the books and records of the taxpayer or by
23        reference to published rating statistics provided the
24        method used by the taxpayer is consistently used from
25        year to year for this purpose and fairly represents the
26        taxpayer's activity in this State.

 

 

HB3590- 27 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 28 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 29 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 30 -LRB101 10559 HLH 55665 b

1            broadcasting service in Illinois.
2                (v) In the case where film or radio programming
3            is provided by a taxpayer that is not a network or
4            station to another person for broadcasting in
5            exchange for a fee or other remuneration from that
6            person, the broadcasting service is received at
7            the location of the office of the customer from
8            which the services were ordered in the regular
9            course of the customer's trade or business.
10            Accordingly, in such a case the revenue derived by
11            the taxpayer that is included in the taxpayer's
12            Illinois numerator of the sales factor is the
13            revenue from such customers who receive the
14            broadcasting service in Illinois.
15        (B-8) Gross receipts from winnings under the Illinois
16    Lottery Law from the assignment of a prize under Section
17    13.1 of the Illinois Lottery Law are received in this
18    State. This paragraph (B-8) applies only to taxable years
19    ending on or after December 31, 2013.
20        (B-9) Gross receipts from winnings from pari-mutuel
21    wagering conducted at a wagering facility licensed under
22    the Illinois Horse Racing Act of 1975 or from winnings from
23    gambling games conducted on a riverboat licensed under the
24    Riverboat Gambling Act are in this State. This paragraph
25    (B-9) applies only to taxable years ending on or after
26    December 31, 2018.

 

 

HB3590- 31 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 32 -LRB101 10559 HLH 55665 b

1            (iii) In the case of interest, net gains (but not
2        less than zero) and other items of income from
3        intangible personal property, the sale is in this State
4        if:
5                (a) in the case of a taxpayer who is a dealer
6            in the item of intangible personal property within
7            the meaning of Section 475 of the Internal Revenue
8            Code, the income or gain is received from a
9            customer in this State. For purposes of this
10            subparagraph, a customer is in this State if the
11            customer is an individual, trust or estate who is a
12            resident of this State and, for all other
13            customers, if the customer's commercial domicile
14            is in this State. Unless the dealer has actual
15            knowledge of the residence or commercial domicile
16            of a customer during a taxable year, the customer
17            shall be deemed to be a customer in this State if
18            the billing address of the customer, as shown in
19            the records of the dealer, is in this State; or
20                (b) in all other cases, if the
21            income-producing activity of the taxpayer is
22            performed in this State or, if the
23            income-producing activity of the taxpayer is
24            performed both within and without this State, if a
25            greater proportion of the income-producing
26            activity of the taxpayer is performed within this

 

 

HB3590- 33 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 34 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 35 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 36 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 37 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 38 -LRB101 10559 HLH 55665 b

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

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

 

 

HB3590- 47 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 48 -LRB101 10559 HLH 55665 b

1                services of such employees are performed, as of
2                the last day of the taxable year.
3        (4) (Blank).
4        (5) (Blank).
5    (c-1) Federally regulated exchanges. For taxable years
6ending on or after December 31, 2012, business income of a
7federally regulated exchange shall, at the option of the
8federally regulated exchange, be apportioned to this State by
9multiplying such income by a fraction, the numerator of which
10is its business income from sources within this State, and the
11denominator of which is its business income from all sources.
12For purposes of this subsection, the business income within
13this State of a federally regulated exchange is the sum of the
14following:
15        (1) Receipts attributable to transactions executed on
16    a physical trading floor if that physical trading floor is
17    located in this State.
18        (2) Receipts attributable to all other matching,
19    execution, or clearing transactions, including without
20    limitation receipts from the provision of matching,
21    execution, or clearing services to another entity,
22    multiplied by (i) for taxable years ending on or after
23    December 31, 2012 but before December 31, 2013, 63.77%; and
24    (ii) for taxable years ending on or after December 31,
25    2013, 27.54%.
26        (3) All other receipts not governed by subparagraphs

 

 

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1    (1) or (2) of this subsection (c-1), to the extent the
2    receipts would be characterized as "sales in this State"
3    under item (3) of subsection (a) of this Section.
4    "Federally regulated exchange" means (i) a "registered
5entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B),
6or (C), (ii) an "exchange" or "clearing agency" within the
7meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such
8entities regulated under any successor regulatory structure to
9the foregoing, and (iv) all taxpayers who are members of the
10same unitary business group as a federally regulated exchange,
11determined without regard to the prohibition in Section
121501(a)(27) of this Act against including in a unitary business
13group taxpayers who are ordinarily required to apportion
14business income under different subsections of this Section;
15provided that this subparagraph (iv) shall apply only if 50% or
16more of the business receipts of the unitary business group
17determined by application of this subparagraph (iv) for the
18taxable year are attributable to the matching, execution, or
19clearing of transactions conducted by an entity described in
20subparagraph (i), (ii), or (iii) of this paragraph.
21    In no event shall the Illinois apportionment percentage
22computed in accordance with this subsection (c-1) for any
23taxpayer for any tax year be less than the Illinois
24apportionment percentage computed under this subsection (c-1)
25for that taxpayer for the first full tax year ending on or
26after December 31, 2013 for which this subsection (c-1) applied

 

 

HB3590- 50 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 51 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 52 -LRB101 10559 HLH 55665 b

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

 

 

HB3590- 53 -LRB101 10559 HLH 55665 b

1    mile fraction and the freight revenue mile fraction,
2    weighted to reflect the person's relative gross receipts
3    from passenger and freight airline transportation.
4    (e) Combined apportionment. Where 2 or more persons are
5engaged in a unitary business as described in subsection
6(a)(27) of Section 1501, a part of which is conducted in this
7State by one or more members of the group, the business income
8attributable to this State by any such member or members shall
9be apportioned by means of the combined apportionment method.
10    (f) Alternative allocation. If the allocation and
11apportionment provisions of subsections (a) through (e) and of
12subsection (h) do not, for taxable years ending before December
1331, 2008, fairly represent the extent of a person's business
14activity in this State, or, for taxable years ending on or
15after December 31, 2008, fairly represent the market for the
16person's goods, services, or other sources of business income,
17the person may petition for, or the Director may, without a
18petition, permit or require, in respect of all or any part of
19the person's business activity, if reasonable:
20        (1) Separate accounting;
21        (2) The exclusion of any one or more factors;
22        (3) The inclusion of one or more additional factors
23    which will fairly represent the person's business
24    activities or market in this State; or
25        (4) The employment of any other method to effectuate an
26    equitable allocation and apportionment of the person's

 

 

HB3590- 54 -LRB101 10559 HLH 55665 b

1    business income.
2    (g) Cross reference. For allocation of business income by
3residents, see Section 301(a).
4    (h) For tax years ending on or after December 31, 1998, the
5apportionment factor of persons who apportion their business
6income to this State under subsection (a) shall be equal to:
7        (1) for tax years ending on or after December 31, 1998
8    and before December 31, 1999, 16 2/3% of the property
9    factor plus 16 2/3% of the payroll factor plus 66 2/3% of
10    the sales factor;
11        (2) for tax years ending on or after December 31, 1999
12    and before December 31, 2000, 8 1/3% of the property factor
13    plus 8 1/3% of the payroll factor plus 83 1/3% of the sales
14    factor;
15        (3) for tax years ending on or after December 31, 2000,
16    the sales factor.
17If, in any tax year ending on or after December 31, 1998 and
18before December 31, 2000, the denominator of the payroll,
19property, or sales factor is zero, the apportionment factor
20computed in paragraph (1) or (2) of this subsection for that
21year shall be divided by an amount equal to 100% minus the
22percentage weight given to each factor whose denominator is
23equal to zero.
24(Source: P.A. 99-642, eff. 7-28-16; 100-201, eff. 8-18-17.)
 
25    (35 ILCS 5/710)  (from Ch. 120, par. 7-710)

 

 

HB3590- 55 -LRB101 10559 HLH 55665 b

1    Sec. 710. Withholding from lottery, wagering and gambling
2winnings.
3    (a) In general.
4        (1) Any person making a payment to a resident or
5    nonresident of winnings under the Illinois Lottery Law and
6    not required to withhold Illinois income tax from such
7    payment under Subsection (b) of Section 701 of this Act
8    because those winnings are not subject to Federal income
9    tax withholding, must withhold Illinois income tax from
10    such payment at a rate equal to the percentage tax rate for
11    individuals provided in subsection (b) of Section 201,
12    provided that withholding is not required if such payment
13    of winnings is less than $1,000.
14        (2) In the case of an assignment of a lottery prize
15    under Section 13.1 of the Illinois Lottery Law, any person
16    making a payment of the purchase price after December 31,
17    2013, shall withhold from the amount of each payment at a
18    rate equal to the percentage tax rate for individuals
19    provided in subsection (b) of Section 201.
20        (3) Any person making a payment after December 31,
21    2018, to a resident or nonresident of winnings from
22    pari-mutuel wagering conducted at a wagering facility
23    licensed under the Illinois Horse Racing Act of 1975 or
24    from gambling games conducted on a riverboat licensed under
25    the Riverboat Gambling Act must withhold Illinois income
26    tax from such payment at a rate equal to the percentage tax

 

 

HB3590- 56 -LRB101 10559 HLH 55665 b

1    rate for individuals provided in subsection (b) of Section
2    201, provided that withholding is required only if the
3    payment must be reported to the Internal Revenue Service by
4    the person making the payment.
5    (b) Credit for taxes withheld. Any amount withheld under
6Subsection (a) shall be a credit against the Illinois income
7tax liability of the person to whom the payment of winnings was
8made for the taxable year in which that person incurred an
9Illinois income tax liability with respect to those winnings.
10(Source: P.A. 98-496, eff. 1-1-14.)
 
11    Section 99. Effective date. This Act takes effect upon
12becoming law.