Full Text of HB3424 102nd General Assembly
HB3424 102ND GENERAL ASSEMBLY |
| | 102ND GENERAL ASSEMBLY
State of Illinois
2021 and 2022 HB3424 Introduced 2/22/2021, by Rep. Will Guzzardi SYNOPSIS AS INTRODUCED: |
| 35 ILCS 5/304 | from Ch. 120, par. 3-304 |
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Amends the Illinois Income Tax Act. Provides that provisions concerning apportionment of income from federally regulated exchanges apply only for taxable years ending on or before December 31, 2021.
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| | | FISCAL NOTE ACT MAY APPLY | |
| | A BILL FOR |
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| 1 | | AN ACT concerning revenue.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Income Tax Act is amended by | 5 | | changing Section 304 as follows:
| 6 | | (35 ILCS 5/304) (from Ch. 120, par. 3-304)
| 7 | | Sec. 304. Business income of persons other than residents.
| 8 | | (a) In general. The business income of a person other than | 9 | | a
resident shall be allocated to this State if such person's | 10 | | business
income is derived solely from this State. If a person | 11 | | other than a
resident derives business income from this State | 12 | | and one or more other
states, then, for tax years ending on or | 13 | | before December 30, 1998, and
except as otherwise provided by | 14 | | this Section, such
person's business income shall be | 15 | | apportioned to this State by
multiplying the income by a | 16 | | fraction, the numerator of which is the sum
of the property | 17 | | factor (if any), the payroll factor (if any) and 200% of the
| 18 | | sales factor (if any), and the denominator of which is 4 | 19 | | reduced by the
number of factors other than the sales factor | 20 | | which have a denominator
of zero and by an additional 2 if the | 21 | | sales factor has a denominator of zero.
For tax years ending on | 22 | | or after December 31, 1998, and except as otherwise
provided | 23 | | by this Section, persons other than
residents who derive |
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| 1 | | business income from this State and one or more other
states | 2 | | shall compute their apportionment factor by weighting their | 3 | | property,
payroll, and sales factors as provided in
subsection | 4 | | (h) of this Section.
| 5 | | (1) Property factor.
| 6 | | (A) The property factor is a fraction, the numerator | 7 | | of which is the
average value of the person's real and | 8 | | tangible personal property owned
or rented and used in the | 9 | | trade or business in this State during the
taxable year | 10 | | and the denominator of which is the average value of all
| 11 | | the person's real and tangible personal property owned or | 12 | | rented and
used in the trade or business during the | 13 | | taxable year.
| 14 | | (B) Property owned by the person is valued at its | 15 | | original cost.
Property rented by the person is valued at | 16 | | 8 times the net annual rental
rate. Net annual rental rate | 17 | | is the annual rental rate paid by the
person less any | 18 | | annual rental rate received by the person from
| 19 | | sub-rentals.
| 20 | | (C) The average value of property shall be determined | 21 | | by averaging
the values at the beginning and ending of the | 22 | | taxable year but the
Director may require the averaging of | 23 | | monthly values during the taxable
year if reasonably | 24 | | required to reflect properly the average value of the
| 25 | | person's property.
| 26 | | (2) Payroll factor.
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| 1 | | (A) The payroll factor is a fraction, the numerator of | 2 | | which is the
total amount paid in this State during the | 3 | | taxable year by the person
for compensation, and the | 4 | | denominator of which is the total compensation
paid | 5 | | everywhere during the taxable year.
| 6 | | (B) Compensation is paid in this State if:
| 7 | | (i) The individual's service is performed entirely | 8 | | within this
State;
| 9 | | (ii) The individual's service is performed both | 10 | | within and without
this State, but the service | 11 | | performed without this State is incidental
to the | 12 | | individual's service performed within this State; or
| 13 | | (iii) For tax years ending prior to December 31, | 14 | | 2020, some of the service is performed within this | 15 | | State and either
the base of operations, or if there is | 16 | | no base of operations, the place
from which the | 17 | | service is directed or controlled is within this | 18 | | State,
or the base of operations or the place from | 19 | | which the service is
directed or controlled is not in | 20 | | any state in which some part of the
service is | 21 | | performed, but the individual's residence is in this | 22 | | State. For tax years ending on or after December 31, | 23 | | 2020, compensation is paid in this State if some of the | 24 | | individual's service is performed within this State, | 25 | | the individual's service performed within this State | 26 | | is nonincidental to the individual's service performed |
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| 1 | | without this State, and the individual's service is | 2 | | performed within this State for more than 30 working | 3 | | days during the tax year. The amount of compensation | 4 | | paid in this State shall include the portion of the | 5 | | individual's total compensation for services performed | 6 | | on behalf of his or her employer during the tax year | 7 | | which the number of working days spent within this | 8 | | State during the tax year bears to the total number of | 9 | | working days spent both within and without this State | 10 | | during the tax year. For purposes of this paragraph:
| 11 | | (a) The term "working day" means all days | 12 | | during the tax year in which the individual | 13 | | performs duties on behalf of his or her employer. | 14 | | All days in which the individual performs no | 15 | | duties on behalf of his or her employer (e.g., | 16 | | weekends, vacation days, sick days, and holidays) | 17 | | are not working days. | 18 | | (b) A working day is spent within this State | 19 | | if: | 20 | | (1) the individual performs service on | 21 | | behalf of the employer and a greater amount of | 22 | | time on that day is spent by the individual | 23 | | performing duties on behalf of the employer | 24 | | within this State, without regard to time | 25 | | spent traveling, than is spent performing | 26 | | duties on behalf of the employer without this |
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| 1 | | State; or | 2 | | (2) the only service the individual | 3 | | performs on behalf of the employer on that day | 4 | | is traveling to a destination within this | 5 | | State, and the individual arrives on that day. | 6 | | (c) Working days spent within this State do | 7 | | not include any day in which the employee is | 8 | | performing services in this State during a | 9 | | disaster period solely in response to a request | 10 | | made to his or her employer by the government of | 11 | | this State, by any political subdivision of this | 12 | | State, or by a person conducting business in this | 13 | | State to perform disaster or emergency-related | 14 | | services in this State. For purposes of this item | 15 | | (c): | 16 | | "Declared State disaster or emergency" | 17 | | means a disaster or emergency event (i) for | 18 | | which a Governor's proclamation of a state of | 19 | | emergency has been issued or (ii) for which a | 20 | | Presidential declaration of a federal major | 21 | | disaster or emergency has been issued. | 22 | | "Disaster period" means a period that | 23 | | begins 10 days prior to the date of the | 24 | | Governor's proclamation or the President's | 25 | | declaration (whichever is earlier) and extends | 26 | | for a period of 60 calendar days after the end |
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| 1 | | of the declared disaster or emergency period. | 2 | | "Disaster or emergency-related services" | 3 | | means repairing, renovating, installing, | 4 | | building, or rendering services or conducting | 5 | | other business activities that relate to | 6 | | infrastructure that has been damaged, | 7 | | impaired, or destroyed by the declared State | 8 | | disaster or emergency. | 9 | | "Infrastructure" means property and | 10 | | equipment owned or used by a public utility, | 11 | | communications network, broadband and internet | 12 | | service provider, cable and video service | 13 | | provider, electric or gas distribution system, | 14 | | or water pipeline that provides service to | 15 | | more than one customer or person, including | 16 | | related support facilities. "Infrastructure" | 17 | | includes, but is not limited to, real and | 18 | | personal property such as buildings, offices, | 19 | | power lines, cable lines, poles, | 20 | | communications lines, pipes, structures, and | 21 | | equipment. | 22 | | (iv) Compensation paid to nonresident professional | 23 | | athletes. | 24 | | (a) General. The Illinois source income of a | 25 | | nonresident individual who is a member of a | 26 | | professional athletic team includes the portion of the |
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| 1 | | individual's total compensation for services performed | 2 | | as a member of a professional athletic team during the | 3 | | taxable year which the number of duty days spent | 4 | | within this State performing services for the team in | 5 | | any manner during the taxable year bears to the total | 6 | | number of duty days spent both within and without this | 7 | | State during the taxable year. | 8 | | (b) Travel days. Travel days that do not involve | 9 | | either a game, practice, team meeting, or other | 10 | | similar team event are not considered duty days spent | 11 | | in this State. However, such travel days are | 12 | | considered in the total duty days spent both within | 13 | | and without this State. | 14 | | (c) Definitions. For purposes of this subpart | 15 | | (iv): | 16 | | (1) The term "professional athletic team" | 17 | | includes, but is not limited to, any professional | 18 | | baseball, basketball, football, soccer, or hockey | 19 | | team. | 20 | | (2) The term "member of a professional | 21 | | athletic team" includes those employees who are | 22 | | active players, players on the disabled list, and | 23 | | any other persons required to travel and who | 24 | | travel with and perform services on behalf of a | 25 | | professional athletic team on a regular basis. | 26 | | This includes, but is not limited to, coaches, |
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| 1 | | managers, and trainers. | 2 | | (3) Except as provided in items (C) and (D) of | 3 | | this subpart (3), the term "duty days" means all | 4 | | days during the taxable year from the beginning of | 5 | | the professional athletic team's official | 6 | | pre-season training period through the last game | 7 | | in which the team competes or is scheduled to | 8 | | compete. Duty days shall be counted for the year | 9 | | in which they occur, including where a team's | 10 | | official pre-season training period through the | 11 | | last game in which the team competes or is | 12 | | scheduled to compete, occurs during more than one | 13 | | tax year. | 14 | | (A) Duty days shall also include days on | 15 | | which a member of a professional athletic team | 16 | | performs service for a team on a date that | 17 | | does not fall within the foregoing period | 18 | | (e.g., participation in instructional leagues, | 19 | | the "All Star Game", or promotional | 20 | | "caravans"). Performing a service for a | 21 | | professional athletic team includes conducting | 22 | | training and rehabilitation activities, when | 23 | | such activities are conducted at team | 24 | | facilities. | 25 | | (B) Also included in duty days are game | 26 | | days, practice days, days spent at team |
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| 1 | | meetings, promotional caravans, preseason | 2 | | training camps, and days served with the team | 3 | | through all post-season games in which the | 4 | | team competes or is scheduled to compete. | 5 | | (C) Duty days for any person who joins a | 6 | | team during the period from the beginning of | 7 | | the professional athletic team's official | 8 | | pre-season training period through the last | 9 | | game in which the team competes, or is | 10 | | scheduled to compete, shall begin on the day | 11 | | that person joins the team. Conversely, duty | 12 | | days for any person who leaves a team during | 13 | | this period shall end on the day that person | 14 | | leaves the team. Where a person switches teams | 15 | | during a taxable year, a separate duty-day | 16 | | calculation shall be made for the period the | 17 | | person was with each team. | 18 | | (D) Days for which a member of a | 19 | | professional athletic team is not compensated | 20 | | and is not performing services for the team in | 21 | | any manner, including days when such member of | 22 | | a professional athletic team has been | 23 | | suspended without pay and prohibited from | 24 | | performing any services for the team, shall | 25 | | not be treated as duty days. | 26 | | (E) Days for which a member of a |
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| 1 | | professional athletic team is on the disabled | 2 | | list and does not conduct rehabilitation | 3 | | activities at facilities of the team, and is | 4 | | not otherwise performing services for the team | 5 | | in Illinois, shall not be considered duty days | 6 | | spent in this State. All days on the disabled | 7 | | list, however, are considered to be included | 8 | | in total duty days spent both within and | 9 | | without this State. | 10 | | (4) The term "total compensation for services | 11 | | performed as a member of a professional athletic | 12 | | team" means the total compensation received during | 13 | | the taxable year for services performed: | 14 | | (A) from the beginning of the official | 15 | | pre-season training period through the last | 16 | | game in which the team competes or is | 17 | | scheduled to compete during that taxable year; | 18 | | and | 19 | | (B) during the taxable year on a date | 20 | | which does not fall within the foregoing | 21 | | period (e.g., participation in instructional | 22 | | leagues, the "All Star Game", or promotional | 23 | | caravans). | 24 | | This compensation shall include, but is not | 25 | | limited to, salaries, wages, bonuses as described | 26 | | in this subpart, and any other type of |
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| 1 | | compensation paid during the taxable year to a | 2 | | member of a professional athletic team for | 3 | | services performed in that year. This compensation | 4 | | does not include strike benefits, severance pay, | 5 | | termination pay, contract or option year buy-out | 6 | | payments, expansion or relocation payments, or any | 7 | | other payments not related to services performed | 8 | | for the team. | 9 | | For purposes of this subparagraph, "bonuses" | 10 | | included in "total compensation for services | 11 | | performed as a member of a professional athletic | 12 | | team" subject to the allocation described in | 13 | | Section 302(c)(1) are: bonuses earned as a result | 14 | | of play (i.e., performance bonuses) during the | 15 | | season, including bonuses paid for championship, | 16 | | playoff or "bowl" games played by a team, or for | 17 | | selection to all-star league or other honorary | 18 | | positions; and bonuses paid for signing a | 19 | | contract, unless the payment of the signing bonus | 20 | | is not conditional upon the signee playing any | 21 | | games for the team or performing any subsequent | 22 | | services for the team or even making the team, the | 23 | | signing bonus is payable separately from the | 24 | | salary and any other compensation, and the signing | 25 | | bonus is nonrefundable.
| 26 | | (3) Sales factor.
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| 1 | | (A) The sales factor is a fraction, the numerator of | 2 | | which is the
total sales of the person in this State during | 3 | | the taxable year, and the
denominator of which is the | 4 | | total sales of the person everywhere during
the taxable | 5 | | 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, | 13 | | store, warehouse,
factory or other place of storage in | 14 | | this State and either the purchaser
is the United | 15 | | States government or the person is not taxable in the
| 16 | | state of the purchaser; provided, however, that | 17 | | premises owned or leased
by a person who has | 18 | | independently contracted with the seller for the | 19 | | printing
of newspapers, periodicals or books shall not | 20 | | be deemed to be an office,
store, warehouse, factory | 21 | | or other place of storage for purposes of this
| 22 | | Section.
Sales of tangible personal property are not | 23 | | in this State if the
seller and purchaser would be | 24 | | members of the same unitary business group
but for the | 25 | | fact that either the seller or purchaser is a person | 26 | | with 80%
or more of total business activity outside of |
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| 1 | | the United States and the
property is purchased for | 2 | | resale.
| 3 | | (B-1) Patents, copyrights, trademarks, and similar | 4 | | items of intangible
personal property.
| 5 | | (i) Gross receipts from the licensing, sale, or | 6 | | other disposition of a
patent, copyright, trademark, | 7 | | or similar item of intangible personal property, other | 8 | | than gross receipts governed by paragraph (B-7) of | 9 | | this item (3),
are in this State to the extent the item | 10 | | is utilized in this State during the
year the gross | 11 | | receipts are included in gross income.
| 12 | | (ii) Place of utilization.
| 13 | | (I) A patent is utilized in a state to the | 14 | | extent that it is employed
in production, | 15 | | fabrication, manufacturing, or other processing in | 16 | | the state or
to the extent that a patented product | 17 | | is produced in the state. If a patent is
utilized | 18 | | in
more than one state, the extent to which it is | 19 | | utilized in any one state shall
be a fraction | 20 | | equal to the gross receipts of the licensee or | 21 | | purchaser from
sales or leases of items produced, | 22 | | fabricated, manufactured, or processed
within that | 23 | | state using the patent and of patented items | 24 | | produced within that
state, divided by the total | 25 | | of such gross receipts for all states in which the
| 26 | | patent is utilized.
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| 1 | | (II) A copyright is utilized in a state to the | 2 | | extent that printing or
other publication | 3 | | originates in the state. If a copyright is | 4 | | utilized in more
than one state, the extent to | 5 | | which it is utilized in any one state shall be a
| 6 | | fraction equal to the gross receipts from sales or | 7 | | licenses of materials
printed or published in that | 8 | | state divided by the total of such gross receipts
| 9 | | for all states in which the copyright is utilized.
| 10 | | (III) Trademarks and other items of intangible | 11 | | personal property
governed by this paragraph (B-1) | 12 | | are utilized in the state in which the
commercial | 13 | | domicile of the licensee or purchaser is located.
| 14 | | (iii) If the state of utilization of an item of | 15 | | property governed by
this paragraph (B-1) cannot be | 16 | | determined from the taxpayer's books and
records or | 17 | | from the books and records of any person related to the | 18 | | taxpayer
within the meaning of Section 267(b) of the | 19 | | Internal Revenue Code, 26 U.S.C.
267, the gross
| 20 | | receipts attributable to that item shall be excluded | 21 | | from both the numerator
and the denominator of the | 22 | | sales factor.
| 23 | | (B-2) Gross receipts from the license, sale, or other | 24 | | disposition of
patents, copyrights, trademarks, and | 25 | | similar items of intangible personal
property, other than | 26 | | gross receipts governed by paragraph (B-7) of this item |
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| 1 | | (3), may be included in the numerator or denominator of | 2 | | the sales factor
only if gross receipts from licenses, | 3 | | sales, or other disposition of such items
comprise more | 4 | | than 50% of the taxpayer's total gross receipts included | 5 | | in gross
income during the tax year and during each of the | 6 | | 2 immediately preceding tax
years; provided that, when a | 7 | | taxpayer is a member of a unitary business group,
such | 8 | | determination shall be made on the basis of the gross | 9 | | receipts of the
entire unitary business group.
| 10 | | (B-5) For taxable years ending on or after December | 11 | | 31, 2008, except as provided in subsections (ii) through | 12 | | (vii), receipts from the sale of telecommunications | 13 | | service or mobile telecommunications service are in this | 14 | | State if the customer's service address is in this State. | 15 | | (i) For purposes of this subparagraph (B-5), the | 16 | | following terms have the following meanings: | 17 | | "Ancillary services" means services that are | 18 | | associated with or incidental to the provision of | 19 | | "telecommunications services", including , but not | 20 | | limited to , "detailed telecommunications billing", | 21 | | "directory assistance", "vertical service", and "voice | 22 | | mail services". | 23 | | "Air-to-Ground Radiotelephone service" means a | 24 | | radio service, as that term is defined in 47 CFR 22.99, | 25 | | in which common carriers are authorized to offer and | 26 | | provide radio telecommunications service for hire to |
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| 1 | | subscribers in aircraft. | 2 | | "Call-by-call Basis" means any method of charging | 3 | | for telecommunications services where the price is | 4 | | measured by individual calls. | 5 | | "Communications Channel" means a physical or | 6 | | virtual path of communications over which signals are | 7 | | transmitted between or among customer channel | 8 | | termination points. | 9 | | "Conference bridging service" means an "ancillary | 10 | | service" that links two or more participants of an | 11 | | audio or video conference call and may include the | 12 | | provision of a telephone number. "Conference bridging | 13 | | service" does not include the "telecommunications | 14 | | services" used to reach the conference bridge. | 15 | | "Customer Channel Termination Point" means the | 16 | | location where the customer either inputs or receives | 17 | | the communications. | 18 | | "Detailed telecommunications billing service" | 19 | | means an "ancillary service" of separately stating | 20 | | information pertaining to individual calls on a | 21 | | customer's billing statement. | 22 | | "Directory assistance" means an "ancillary | 23 | | service" of providing telephone number information, | 24 | | and/or address information. | 25 | | "Home service provider" means the facilities based | 26 | | carrier or reseller with which the customer contracts |
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| 1 | | for the provision of mobile telecommunications | 2 | | services. | 3 | | "Mobile telecommunications service" means | 4 | | commercial mobile radio service, as defined in Section | 5 | | 20.3 of Title 47 of the Code of Federal Regulations as | 6 | | in effect on June 1, 1999. | 7 | | "Place of primary use" means the street address | 8 | | representative of where the customer's use of the | 9 | | telecommunications service primarily occurs, which | 10 | | must be the residential street address or the primary | 11 | | business street address of the customer. In the case | 12 | | of mobile telecommunications services, "place of | 13 | | primary use" must be within the licensed service area | 14 | | of the home service provider. | 15 | | "Post-paid telecommunication service" means the | 16 | | telecommunications service obtained by making a | 17 | | payment on a call-by-call basis either through the use | 18 | | of a credit card or payment mechanism such as a bank | 19 | | card, travel card, credit card, or debit card, or by | 20 | | charge made to a telephone number which is not | 21 | | associated with the origination or termination of the | 22 | | telecommunications service. A post-paid calling | 23 | | service includes telecommunications service, except a | 24 | | prepaid wireless calling service, that would be a | 25 | | prepaid calling service except it is not exclusively a | 26 | | telecommunication service. |
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| 1 | | "Prepaid telecommunication service" means the | 2 | | right to access exclusively telecommunications | 3 | | services, which must be paid for in advance and which | 4 | | enables the origination of calls using an access | 5 | | number or authorization code, whether manually or | 6 | | electronically dialed, and that is sold in | 7 | | predetermined units or dollars of which the number | 8 | | declines with use in a known amount. | 9 | | "Prepaid Mobile telecommunication service" means a | 10 | | telecommunications service that provides the right to | 11 | | utilize mobile wireless service as well as other | 12 | | non-telecommunication services, including , but not | 13 | | limited to , ancillary services, which must be paid for | 14 | | in advance that is sold in predetermined units or | 15 | | dollars of which the number declines with use in a | 16 | | known amount. | 17 | | "Private communication service" means a | 18 | | telecommunication service that entitles the customer | 19 | | to exclusive or priority use of a communications | 20 | | channel or group of channels between or among | 21 | | termination points, regardless of the manner in which | 22 | | such channel or channels are connected, and includes | 23 | | switching capacity, extension lines, stations, and any | 24 | | other associated services that are provided in | 25 | | connection with the use of such channel or channels. | 26 | | "Service address" means: |
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| 1 | | (a) The location of the telecommunications | 2 | | equipment to which a customer's call is charged | 3 | | and from which the call originates or terminates, | 4 | | regardless of where the call is billed or paid; | 5 | | (b) If the location in line (a) is not known, | 6 | | service address means the origination point of the | 7 | | signal of the telecommunications services first | 8 | | identified by either the seller's | 9 | | telecommunications system or in information | 10 | | received by the seller from its service provider | 11 | | where the system used to transport such signals is | 12 | | not that of the seller; and | 13 | | (c) If the locations in line (a) and line (b) | 14 | | are not known, the service address means the | 15 | | location of the customer's place of primary use. | 16 | | "Telecommunications service" means the electronic | 17 | | transmission, conveyance, or routing of voice, data, | 18 | | audio, video, or any other information or signals to a | 19 | | point, or between or among points. The term | 20 | | "telecommunications service" includes such | 21 | | transmission, conveyance, or routing in which computer | 22 | | processing applications are used to act on the form, | 23 | | code or protocol of the content for purposes of | 24 | | transmission, conveyance or routing without regard to | 25 | | whether such service is referred to as voice over | 26 | | Internet protocol services or is classified by the |
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| 1 | | Federal Communications Commission as enhanced or value | 2 | | added. "Telecommunications service" does not include: | 3 | | (a) Data processing and information services | 4 | | that allow data to be generated, acquired, stored, | 5 | | processed, or retrieved and delivered by an | 6 | | electronic transmission to a purchaser when such | 7 | | purchaser's primary purpose for the underlying | 8 | | transaction is the processed data or information; | 9 | | (b) Installation or maintenance of wiring or | 10 | | equipment on a customer's premises; | 11 | | (c) Tangible personal property; | 12 | | (d) Advertising, including , but not limited | 13 | | to , directory advertising; | 14 | | (e) Billing and collection services provided | 15 | | to third parties; | 16 | | (f) Internet access service; | 17 | | (g) Radio and television audio and video | 18 | | programming services, regardless of the medium, | 19 | | including the furnishing of transmission, | 20 | | conveyance and routing of such services by the | 21 | | programming service provider. Radio and television | 22 | | audio and video programming services shall | 23 | | include , but not be limited to , cable service as | 24 | | defined in 47 USC 522(6) and audio and video | 25 | | programming services delivered by commercial | 26 | | mobile radio service providers, as defined in 47 |
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| 1 | | CFR 20.3; | 2 | | (h) "Ancillary services"; or | 3 | | (i) Digital products "delivered | 4 | | electronically", including , but not limited to , | 5 | | software, music, video, reading materials or ring | 6 | | tones. | 7 | | "Vertical service" means an "ancillary service" | 8 | | that is offered in connection with one or more | 9 | | "telecommunications services", which offers advanced | 10 | | calling features that allow customers to identify | 11 | | callers and to manage multiple calls and call | 12 | | connections, including "conference bridging services". | 13 | | "Voice mail service" means an "ancillary service" | 14 | | that enables the customer to store, send or receive | 15 | | recorded messages. "Voice mail service" does not | 16 | | include any "vertical services" that the customer may | 17 | | be required to have in order to utilize the "voice mail | 18 | | service". | 19 | | (ii) Receipts from the sale of telecommunications | 20 | | service sold on an individual call-by-call basis are | 21 | | in this State if either of the following applies: | 22 | | (a) The call both originates and terminates in | 23 | | this State. | 24 | | (b) The call either originates or terminates | 25 | | in this State and the service address is located | 26 | | in this State. |
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| 1 | | (iii) Receipts from the sale of postpaid | 2 | | telecommunications service at retail are in this State | 3 | | if the origination point of the telecommunication | 4 | | signal, as first identified by the service provider's | 5 | | telecommunication system or as identified by | 6 | | information received by the seller from its service | 7 | | provider if the system used to transport | 8 | | telecommunication signals is not the seller's, is | 9 | | located in this State. | 10 | | (iv) Receipts from the sale of prepaid | 11 | | telecommunications service or prepaid mobile | 12 | | telecommunications service at retail are in this State | 13 | | if the purchaser obtains the prepaid card or similar | 14 | | means of conveyance at a location in this State. | 15 | | Receipts from recharging a prepaid telecommunications | 16 | | service or mobile telecommunications service is in | 17 | | this State if the purchaser's billing information | 18 | | indicates a location in this State. | 19 | | (v) Receipts from the sale of private | 20 | | communication services are in this State as follows: | 21 | | (a) 100% of receipts from charges imposed at | 22 | | each channel termination point in this State. | 23 | | (b) 100% of receipts from charges for the | 24 | | total channel mileage between each channel | 25 | | termination point in this State. | 26 | | (c) 50% of the total receipts from charges for |
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| 1 | | service segments when those segments are between 2 | 2 | | customer channel termination points, 1 of which is | 3 | | located in this State and the other is located | 4 | | outside of this State, which segments are | 5 | | separately charged. | 6 | | (d) The receipts from charges for service | 7 | | segments with a channel termination point located | 8 | | in this State and in two or more other states, and | 9 | | which segments are not separately billed, are in | 10 | | this State based on a percentage determined by | 11 | | dividing the number of customer channel | 12 | | termination points in this State by the total | 13 | | number of customer channel termination points. | 14 | | (vi) Receipts from charges for ancillary services | 15 | | for telecommunications service sold to customers at | 16 | | retail are in this State if the customer's primary | 17 | | place of use of telecommunications services associated | 18 | | with those ancillary services is in this State. If the | 19 | | seller of those ancillary services cannot determine | 20 | | where the associated telecommunications are located, | 21 | | then the ancillary services shall be based on the | 22 | | location of the purchaser. | 23 | | (vii) Receipts to access a carrier's network or | 24 | | from the sale of telecommunication services or | 25 | | ancillary services for resale are in this State as | 26 | | follows: |
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| 1 | | (a) 100% of the receipts from access fees | 2 | | attributable to intrastate telecommunications | 3 | | service that both originates and terminates in | 4 | | this State. | 5 | | (b) 50% of the receipts from access fees | 6 | | attributable to interstate telecommunications | 7 | | service if the interstate call either originates | 8 | | or terminates in this State. | 9 | | (c) 100% of the receipts from interstate end | 10 | | user access line charges, if the customer's | 11 | | service address is in this State. As used in this | 12 | | subdivision, "interstate end user access line | 13 | | charges" includes, but is not limited to, the | 14 | | surcharge approved by the federal communications | 15 | | commission and levied pursuant to 47 CFR 69. | 16 | | (d) Gross receipts from sales of | 17 | | telecommunication services or from ancillary | 18 | | services for telecommunications services sold to | 19 | | other telecommunication service providers for | 20 | | resale shall be sourced to this State using the | 21 | | apportionment concepts used for non-resale | 22 | | receipts of telecommunications services if the | 23 | | information is readily available to make that | 24 | | determination. If the information is not readily | 25 | | available, then the taxpayer may use any other | 26 | | reasonable and consistent method. |
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| 1 | | (B-7) For taxable years ending on or after December | 2 | | 31, 2008, receipts from the sale of broadcasting services | 3 | | are in this State if the broadcasting services are | 4 | | received in this State. For purposes of this paragraph | 5 | | (B-7), the following terms have the following meanings: | 6 | | "Advertising revenue" means consideration received | 7 | | by the taxpayer in exchange for broadcasting services | 8 | | or allowing the broadcasting of commercials or | 9 | | announcements in connection with the broadcasting of | 10 | | film or radio programming, from sponsorships of the | 11 | | programming, or from product placements in the | 12 | | programming. | 13 | | "Audience factor" means the ratio that the | 14 | | audience or subscribers located in this State of a | 15 | | station, a network, or a cable system bears to the | 16 | | total audience or total subscribers for that station, | 17 | | network, or cable system. The audience factor for film | 18 | | or radio programming shall be determined by reference | 19 | | to the books and records of the taxpayer or by | 20 | | reference to published rating statistics provided the | 21 | | method used by the taxpayer is consistently used from | 22 | | year to year for this purpose and fairly represents | 23 | | the taxpayer's activity in this State. | 24 | | "Broadcast" or "broadcasting" or "broadcasting | 25 | | services" means the transmission or provision of film | 26 | | or radio programming, whether through the public |
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| 1 | | airwaves, by cable, by direct or indirect satellite | 2 | | transmission, or by any other means of communication, | 3 | | either through a station, a network, or a cable | 4 | | system. | 5 | | "Film" or "film programming" means the broadcast | 6 | | on television of any and all performances, events, or | 7 | | productions, including , but not limited to , news, | 8 | | sporting events, plays, stories, or other literary, | 9 | | commercial, educational, or artistic works, either | 10 | | live or through the use of video tape, disc, or any | 11 | | other type of format or medium. Each episode of a | 12 | | series of films produced for television shall | 13 | | constitute separate "film" notwithstanding that the | 14 | | series relates to the same principal subject and is | 15 | | produced during one or more tax periods. | 16 | | "Radio" or "radio programming" means the broadcast | 17 | | on radio of any and all performances, events, or | 18 | | productions, including , but not limited to , news, | 19 | | sporting events, plays, stories, or other literary, | 20 | | commercial, educational, or artistic works, either | 21 | | live or through the use of an audio tape, disc, or any | 22 | | other format or medium. Each episode in a series of | 23 | | radio programming produced for radio broadcast shall | 24 | | constitute a separate "radio programming" | 25 | | notwithstanding that the series relates to the same | 26 | | principal subject and is produced during one or more |
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| 1 | | tax periods. | 2 | | (i) In the case of advertising revenue from | 3 | | broadcasting, the customer is the advertiser and | 4 | | the service is received in this State if the | 5 | | commercial domicile of the advertiser is in this | 6 | | State. | 7 | | (ii) In the case where film or radio | 8 | | programming is broadcast by a station, a network, | 9 | | or a cable system for a fee or other remuneration | 10 | | received from the recipient of the broadcast, the | 11 | | portion of the service that is received in this | 12 | | State is measured by the portion of the recipients | 13 | | of the broadcast located in this State. | 14 | | Accordingly, the fee or other remuneration for | 15 | | such service that is included in the Illinois | 16 | | numerator of the sales factor is the total of | 17 | | those fees or other remuneration received from | 18 | | recipients in Illinois. For purposes of this | 19 | | paragraph, a taxpayer may determine the location | 20 | | of the recipients of its broadcast using the | 21 | | address of the recipient shown in its contracts | 22 | | with the recipient or using the billing address of | 23 | | the recipient in the taxpayer's records. | 24 | | (iii) In the case where film or radio | 25 | | programming is broadcast by a station, a network, | 26 | | or a cable system for a fee or other remuneration |
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| 1 | | from the person providing the programming, the | 2 | | portion of the broadcast service that is received | 3 | | by such station, network, or cable system in this | 4 | | State is measured by the portion of recipients of | 5 | | the broadcast located in this State. Accordingly, | 6 | | the amount of revenue related to such an | 7 | | arrangement that is included in the Illinois | 8 | | numerator of the sales factor is the total fee or | 9 | | other total remuneration from the person providing | 10 | | the programming related to that broadcast | 11 | | multiplied by the Illinois audience factor for | 12 | | that broadcast. | 13 | | (iv) In the case where film or radio | 14 | | programming is provided by a taxpayer that is a | 15 | | network or station to a customer for broadcast in | 16 | | exchange for a fee or other remuneration from that | 17 | | customer the broadcasting service is received at | 18 | | the location of the office of the customer from | 19 | | which the services were ordered in the regular | 20 | | course of the customer's trade or business. | 21 | | Accordingly, in such a case the revenue derived by | 22 | | the taxpayer that is included in the taxpayer's | 23 | | Illinois numerator of the sales factor is the | 24 | | revenue from such customers who receive the | 25 | | broadcasting service in Illinois. | 26 | | (v) In the case where film or radio |
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| 1 | | programming is provided by a taxpayer that is not | 2 | | a network or station to another person for | 3 | | broadcasting in exchange for a fee or other | 4 | | remuneration from that person, the broadcasting | 5 | | service is received at the location of the office | 6 | | of the customer from which the services were | 7 | | ordered in the regular course of the customer's | 8 | | trade or business. Accordingly, in such a case the | 9 | | revenue derived by the taxpayer that is included | 10 | | in the taxpayer's Illinois numerator of the sales | 11 | | factor is the revenue from such customers who | 12 | | receive the broadcasting service in Illinois. | 13 | | (B-8) Gross receipts from winnings under the Illinois | 14 | | Lottery Law from the assignment of a prize under Section | 15 | | 13.1 of the Illinois Lottery Law are received in this | 16 | | State. This paragraph (B-8) applies only to taxable years | 17 | | ending on or after December 31, 2013. | 18 | | (B-9) For taxable years ending on or after December | 19 | | 31, 2019, gross receipts from winnings from pari-mutuel | 20 | | wagering conducted at a wagering facility licensed under | 21 | | the Illinois Horse Racing Act of 1975 or from winnings | 22 | | from gambling games conducted on a riverboat or in a | 23 | | casino or organization gaming facility licensed under the | 24 | | Illinois Gambling Act are in this State. | 25 | | (C) For taxable years ending before December 31, 2008, | 26 | | sales, other than sales governed by paragraphs (B), (B-1), |
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| 1 | | (B-2), and (B-8) are in
this State if:
| 2 | | (i) The income-producing activity is performed in | 3 | | this State; or
| 4 | | (ii) The income-producing activity is performed | 5 | | both within and
without this State and a greater | 6 | | proportion of the income-producing
activity is | 7 | | performed within this State than without this State, | 8 | | based
on performance costs.
| 9 | | (C-5) For taxable years ending on or after December | 10 | | 31, 2008, sales, other than sales governed by paragraphs | 11 | | (B), (B-1), (B-2), (B-5), and (B-7), are in this State if | 12 | | any of the following criteria are met: | 13 | | (i) Sales from the sale or lease of real property | 14 | | are in this State if the property is located in this | 15 | | State. | 16 | | (ii) Sales from the lease or rental of tangible | 17 | | personal property are in this State if the property is | 18 | | located in this State during the rental period. Sales | 19 | | from the lease or rental of tangible personal property | 20 | | that is characteristically moving property, including, | 21 | | but not limited to, motor vehicles, rolling stock, | 22 | | aircraft, vessels, or mobile equipment are in this | 23 | | State to the extent that the property is used in this | 24 | | State. | 25 | | (iii) In the case of interest, net gains (but not | 26 | | less than zero) and other items of income from |
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| 1 | | intangible personal property, the sale is in this | 2 | | State if: | 3 | | (a) in the case of a taxpayer who is a dealer | 4 | | in the item of intangible personal property within | 5 | | the meaning of Section 475 of the Internal Revenue | 6 | | Code, the income or gain is received from a | 7 | | customer in this State. For purposes of this | 8 | | subparagraph, a customer is in this State if the | 9 | | customer is an individual, trust or estate who is | 10 | | a resident of this State and, for all other | 11 | | customers, if the customer's commercial domicile | 12 | | is in this State. Unless the dealer has actual | 13 | | knowledge of the residence or commercial domicile | 14 | | of a customer during a taxable year, the customer | 15 | | shall be deemed to be a customer in this State if | 16 | | the billing address of the customer, as shown in | 17 | | the records of the dealer, is in this State; or | 18 | | (b) in all other cases, if the | 19 | | income-producing activity of the taxpayer is | 20 | | performed in this State or, if the | 21 | | income-producing activity of the taxpayer is | 22 | | performed both within and without this State, if a | 23 | | greater proportion of the income-producing | 24 | | activity of the taxpayer is performed within this | 25 | | State than in any other state, based on | 26 | | performance costs. |
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| 1 | | (iv) Sales of services are in this State if the | 2 | | services are received in this State. For the purposes | 3 | | of this section, gross receipts from the performance | 4 | | of services provided to a corporation, partnership, or | 5 | | trust may only be attributed to a state where that | 6 | | corporation, partnership, or trust has a fixed place | 7 | | of business. If the state where the services are | 8 | | received is not readily determinable or is a state | 9 | | where the corporation, partnership, or trust receiving | 10 | | the service does not have a fixed place of business, | 11 | | the services shall be deemed to be received at the | 12 | | location of the office of the customer from which the | 13 | | services were ordered in the regular course of the | 14 | | customer's trade or business. If the ordering office | 15 | | cannot be determined, the services shall be deemed to | 16 | | be received at the office of the customer to which the | 17 | | services are billed. If the taxpayer is not taxable in | 18 | | the state in which the services are received, the sale | 19 | | must be excluded from both the numerator and the | 20 | | denominator of the sales factor. The Department shall | 21 | | adopt rules prescribing where specific types of | 22 | | service are received, including, but not limited to, | 23 | | publishing, and utility service.
| 24 | | (D) For taxable years ending on or after December 31, | 25 | | 1995, the following
items of income shall not be included | 26 | | in the numerator or denominator of the
sales factor: |
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| 1 | | dividends; amounts included under Section 78 of the | 2 | | Internal
Revenue Code; and Subpart F income as defined in | 3 | | Section 952 of the Internal
Revenue Code.
No inference | 4 | | shall be drawn from the enactment of this paragraph (D) in
| 5 | | construing this Section for taxable years ending before | 6 | | December 31, 1995.
| 7 | | (E) Paragraphs (B-1) and (B-2) shall apply to tax | 8 | | years ending on or
after December 31, 1999, provided that | 9 | | a taxpayer may elect to apply the
provisions of these | 10 | | paragraphs to prior tax years. Such election shall be made
| 11 | | in the form and manner prescribed by the Department, shall | 12 | | be irrevocable, and
shall apply to all tax years; provided | 13 | | that, if a taxpayer's Illinois income
tax liability for | 14 | | any tax year, as assessed under Section 903 prior to | 15 | | January
1, 1999, was computed in a manner contrary to the | 16 | | provisions of paragraphs
(B-1) or (B-2), no refund shall | 17 | | be payable to the taxpayer for that tax year to
the extent | 18 | | such refund is the result of applying the provisions of | 19 | | paragraph
(B-1) or (B-2) retroactively. In the case of a | 20 | | unitary business group, such
election shall apply to all | 21 | | members of such group for every tax year such group
is in | 22 | | existence, but shall not apply to any taxpayer for any | 23 | | period during
which that taxpayer is not a member of such | 24 | | group.
| 25 | | (b) Insurance companies.
| 26 | | (1) In general. Except as otherwise
provided by |
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| 1 | | paragraph (2), business income of an insurance company for | 2 | | a
taxable year shall be apportioned to this State by | 3 | | multiplying such
income by a fraction, the numerator of | 4 | | which is the direct premiums
written for insurance upon | 5 | | property or risk in this State, and the
denominator of | 6 | | which is the direct premiums written for insurance upon
| 7 | | property or risk everywhere. For purposes of this | 8 | | subsection, the term
"direct premiums written" means the | 9 | | total amount of direct premiums
written, assessments and | 10 | | annuity considerations as reported for the
taxable year on | 11 | | the annual statement filed by the company with the
| 12 | | Illinois Director of Insurance in the form approved by the | 13 | | National
Convention of Insurance Commissioners
or such | 14 | | other form as may be
prescribed in lieu thereof.
| 15 | | (2) Reinsurance. If the principal source of premiums | 16 | | written by an
insurance company consists of premiums for | 17 | | reinsurance accepted by it,
the business income of such | 18 | | company shall be apportioned to this State
by multiplying | 19 | | such income by a fraction, the numerator of which is the
| 20 | | sum of (i) direct premiums written for insurance upon | 21 | | property or risk
in this State, plus (ii) premiums written | 22 | | for reinsurance accepted in
respect of property or risk in | 23 | | this State, and the denominator of which
is the sum of | 24 | | (iii) direct premiums written for insurance upon property
| 25 | | or risk everywhere, plus (iv) premiums written for | 26 | | reinsurance accepted
in respect of property or risk |
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| 1 | | everywhere. For purposes of this
paragraph, premiums | 2 | | written for reinsurance accepted in respect of
property or | 3 | | risk in this State, whether or not otherwise determinable,
| 4 | | may, at the election of the company, be determined on the | 5 | | basis of the
proportion which premiums written for | 6 | | reinsurance accepted from
companies commercially domiciled | 7 | | in Illinois bears to premiums written
for reinsurance | 8 | | accepted from all sources, or, alternatively, in the
| 9 | | proportion which the sum of the direct premiums written | 10 | | for insurance
upon property or risk in this State by each | 11 | | ceding company from which
reinsurance is accepted bears to | 12 | | the sum of the total direct premiums
written by each such | 13 | | ceding company for the taxable year. The election made by | 14 | | a company under this paragraph for its first taxable year | 15 | | ending on or after December 31, 2011, shall be binding for | 16 | | that company for that taxable year and for all subsequent | 17 | | taxable years, and may be altered only with the written | 18 | | permission of the Department, which shall not be | 19 | | unreasonably withheld.
| 20 | | (c) Financial organizations.
| 21 | | (1) In general. For taxable years ending before | 22 | | December 31, 2008, business income of a financial
| 23 | | organization shall be apportioned to this State by | 24 | | multiplying such
income by a fraction, the numerator of | 25 | | which is its business income from
sources within this | 26 | | State, and the denominator of which is its business
income |
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| 1 | | from all sources. For the purposes of this subsection, the
| 2 | | business income of a financial organization from sources | 3 | | within this
State is the sum of the amounts referred to in | 4 | | subparagraphs (A) through
(E) following, but excluding the | 5 | | adjusted income of an international banking
facility as | 6 | | determined in paragraph (2):
| 7 | | (A) Fees, commissions or other compensation for | 8 | | financial services
rendered within this State;
| 9 | | (B) Gross profits from trading in stocks, bonds or | 10 | | other securities
managed within this State;
| 11 | | (C) Dividends, and interest from Illinois | 12 | | customers, which are received
within this State;
| 13 | | (D) Interest charged to customers at places of | 14 | | business maintained
within this State for carrying | 15 | | debit balances of margin accounts,
without deduction | 16 | | of any costs incurred in carrying such accounts; and
| 17 | | (E) Any other gross income resulting from the | 18 | | operation as a
financial organization within this | 19 | | State. | 20 | | In computing the amounts
referred to in paragraphs (A) | 21 | | through (E) of this subsection, any amount
received by a | 22 | | member of an affiliated group (determined under Section
| 23 | | 1504(a) of the Internal Revenue Code but without reference | 24 | | to whether
any such corporation is an "includible | 25 | | corporation" under Section
1504(b) of the Internal Revenue | 26 | | Code) from another member of such group
shall be included |
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| 1 | | only to the extent such amount exceeds expenses of the
| 2 | | recipient directly related thereto.
| 3 | | (2) International Banking Facility. For taxable years | 4 | | ending before December 31, 2008:
| 5 | | (A) Adjusted Income. The adjusted income of an | 6 | | international banking
facility is its income reduced | 7 | | by the amount of the floor amount.
| 8 | | (B) Floor Amount. The floor amount shall be the | 9 | | amount, if any,
determined
by multiplying the income | 10 | | of the international banking facility by a fraction,
| 11 | | not greater than one, which is determined as follows:
| 12 | | (i) The numerator shall be:
| 13 | | The average aggregate, determined on a | 14 | | quarterly basis, of the
financial
organization's | 15 | | loans to banks in foreign countries, to foreign | 16 | | domiciled
borrowers (except where secured | 17 | | primarily by real estate) and to foreign
| 18 | | governments and other foreign official | 19 | | institutions, as reported for its
branches, | 20 | | agencies and offices within the state on its | 21 | | "Consolidated Report
of Condition", Schedule A, | 22 | | Lines 2.c., 5.b., and 7.a., which was filed with
| 23 | | the Federal Deposit Insurance Corporation and | 24 | | other regulatory authorities,
for the year 1980, | 25 | | minus
| 26 | | The average aggregate, determined on a |
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| 1 | | quarterly basis, of such loans
(other
than loans | 2 | | of an international banking facility), as reported | 3 | | by the financial
institution for its branches, | 4 | | agencies and offices within the state, on
the | 5 | | corresponding Schedule and lines of the | 6 | | Consolidated Report of Condition
for the current | 7 | | taxable year, provided, however, that in no case | 8 | | shall the
amount determined in this clause (the | 9 | | subtrahend) exceed the amount determined
in the | 10 | | preceding clause (the minuend); and
| 11 | | (ii) the denominator shall be the average | 12 | | aggregate, determined on a
quarterly basis, of the | 13 | | international banking facility's loans to banks in
| 14 | | foreign countries, to foreign domiciled borrowers | 15 | | (except where secured
primarily by real estate) | 16 | | and to foreign governments and other foreign
| 17 | | official institutions, which were recorded in its | 18 | | financial accounts for
the current taxable year.
| 19 | | (C) Change to Consolidated Report of Condition and | 20 | | in Qualification.
In the event the Consolidated Report | 21 | | of Condition which is filed with the
Federal Deposit | 22 | | Insurance Corporation and other regulatory authorities | 23 | | is
altered so that the information required for | 24 | | determining the floor amount
is not found on Schedule | 25 | | A, lines 2.c., 5.b. and 7.a., the financial
| 26 | | institution shall notify the Department and the |
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| 1 | | Department may, by
regulations or otherwise, prescribe | 2 | | or authorize the use of an alternative
source for such | 3 | | information. The financial institution shall also | 4 | | notify
the Department should its international banking | 5 | | facility fail to qualify as
such, in whole or in part, | 6 | | or should there be any amendment or change to
the | 7 | | Consolidated Report of Condition, as originally filed, | 8 | | to the extent
such amendment or change alters the | 9 | | information used in determining the floor
amount.
| 10 | | (3) For taxable years ending on or after December 31, | 11 | | 2008, the business income of a financial organization | 12 | | shall be apportioned to this State by multiplying such | 13 | | income by a fraction, the numerator of which is its gross | 14 | | receipts from sources in this State or otherwise | 15 | | attributable to this State's marketplace and the | 16 | | denominator of which is its gross receipts everywhere | 17 | | during the taxable year. "Gross receipts" for purposes of | 18 | | this subparagraph (3) means gross income, including net | 19 | | taxable gain on disposition of assets, including | 20 | | securities and money market instruments, when derived from | 21 | | transactions and activities in the regular course of the | 22 | | financial organization's trade or business. The following | 23 | | examples are illustrative:
| 24 | | (i) Receipts from the lease or rental of real or | 25 | | tangible personal property are in this State if the | 26 | | property is located in this State during the rental |
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| 1 | | period. Receipts from the lease or rental of tangible | 2 | | personal property that is characteristically moving | 3 | | property, including, but not limited to, motor | 4 | | vehicles, rolling stock, aircraft, vessels, or mobile | 5 | | equipment are from sources in this State to the extent | 6 | | that the property is used in this State. | 7 | | (ii) Interest income, commissions, fees, gains on | 8 | | disposition, and other receipts from assets in the | 9 | | nature of loans that are secured primarily by real | 10 | | estate or tangible personal property are from sources | 11 | | in this State if the security is located in this State. | 12 | | (iii) Interest income, commissions, fees, gains on | 13 | | disposition, and other receipts from consumer loans | 14 | | that are not secured by real or tangible personal | 15 | | property are from sources in this State if the debtor | 16 | | is a resident of this State. | 17 | | (iv) Interest income, commissions, fees, gains on | 18 | | disposition, and other receipts from commercial loans | 19 | | and installment obligations that are not secured by | 20 | | real or tangible personal property are from sources in | 21 | | this State if the proceeds of the loan are to be | 22 | | applied in this State. If it cannot be determined | 23 | | where the funds are to be applied, the income and | 24 | | receipts are from sources in this State if the office | 25 | | of the borrower from which the loan was negotiated in | 26 | | the regular course of business is located in this |
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| 1 | | State. If the location of this office cannot be | 2 | | determined, the income and receipts shall be excluded | 3 | | from the numerator and denominator of the sales | 4 | | 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 | 12 | | and 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 | 17 | | paragraph), attributable to this State and | 18 | | included in the numerator is determined by | 19 | | multiplying the amount described in | 20 | | subparagraph (B) of paragraph (1) of this | 21 | | subsection by a fraction, the numerator of | 22 | | which is the gross income from such trading | 23 | | assets and activities which are properly | 24 | | assigned to a fixed place of business of the | 25 | | taxpayer within this State and the denominator | 26 | | of which is the gross income from all such |
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| 1 | | assets and activities. | 2 | | (D) Properly assigned, for purposes of | 3 | | this paragraph (2) of this subsection, means | 4 | | the investment or trading asset or activity is | 5 | | assigned to the fixed place of business with | 6 | | which it has a preponderance of substantive | 7 | | contacts. An investment or trading asset or | 8 | | activity assigned by the taxpayer to a fixed | 9 | | place of business without the State shall be | 10 | | presumed to have been properly assigned if: | 11 | | (i) the taxpayer has assigned, in the | 12 | | regular course of its business, such asset | 13 | | or activity on its records to a fixed | 14 | | place of business consistent with federal | 15 | | or state regulatory requirements; | 16 | | (ii) such assignment on its records is | 17 | | based upon substantive contacts of the | 18 | | asset or activity to such fixed place of | 19 | | business; and | 20 | | (iii) the taxpayer uses such records | 21 | | reflecting assignment of such assets or | 22 | | activities for the filing of all state and | 23 | | local tax returns for which an assignment | 24 | | of such assets or activities to a fixed | 25 | | place of business is required. | 26 | | (E) The presumption of proper assignment |
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| 1 | | of an investment or trading asset or activity | 2 | | provided in subparagraph (D) of paragraph (2) | 3 | | of this subsection may be rebutted upon a | 4 | | showing by the Department, supported by a | 5 | | preponderance of the evidence, that the | 6 | | preponderance of substantive contacts | 7 | | regarding such asset or activity did not occur | 8 | | at the fixed place of business to which it was | 9 | | assigned on the taxpayer's records. If the | 10 | | fixed place of business that has a | 11 | | preponderance of substantive contacts cannot | 12 | | be determined for an investment or trading | 13 | | asset or activity to which the presumption in | 14 | | subparagraph (D) of paragraph (2) of this | 15 | | subsection does not apply or with respect to | 16 | | which that presumption has been rebutted, that | 17 | | asset or activity is properly assigned to the | 18 | | state in which the taxpayer's commercial | 19 | | domicile is located. For purposes of this | 20 | | subparagraph (E), it shall be presumed, | 21 | | subject to rebuttal, that taxpayer's | 22 | | commercial domicile is in the state of the | 23 | | United States or the District of Columbia to | 24 | | which the greatest number of employees are | 25 | | regularly connected with the management of the | 26 | | investment or trading income or out of which |
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| 1 | | they are working, irrespective of where the | 2 | | services of such employees are performed, as | 3 | | of the last day of the taxable year.
| 4 | | (4) (Blank). | 5 | | (5) (Blank). | 6 | | (c-1) Federally regulated exchanges. For taxable years | 7 | | ending on or after December 31, 2012 and ending on or before | 8 | | December 31, 2021 , business income of a federally regulated | 9 | | exchange shall, at the option of the federally regulated | 10 | | exchange, be apportioned to this State by multiplying such | 11 | | income by a fraction, the numerator of which is its business | 12 | | income from sources within this State, and the denominator of | 13 | | which is its business income from all sources. For purposes of | 14 | | this subsection, the business income within this State of a | 15 | | federally regulated exchange is the sum of the following: | 16 | | (1) Receipts attributable to transactions executed on | 17 | | a physical trading floor if that physical trading floor is | 18 | | located in this State. | 19 | | (2) Receipts attributable to all other matching, | 20 | | execution, or clearing transactions, including without | 21 | | limitation receipts from the provision of matching, | 22 | | execution, or clearing services to another entity, | 23 | | multiplied by (i) for taxable years ending on or after | 24 | | December 31, 2012 but before December 31, 2013, 63.77%; | 25 | | and (ii) for taxable years ending on or after December 31, | 26 | | 2013, 27.54%. |
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| 1 | | (3) All other receipts not governed by subparagraphs | 2 | | (1) or (2) of this subsection (c-1), to the extent the | 3 | | receipts would be characterized as "sales in this State" | 4 | | under item (3) of subsection (a) of this Section. | 5 | | "Federally regulated exchange" means (i) a "registered | 6 | | entity" within the meaning of 7 U.S.C. Section 1a(40)(A), (B), | 7 | | or (C), (ii) an "exchange" or "clearing agency" within the | 8 | | meaning of 15 U.S.C. Section 78c (a)(1) or (23), (iii) any such | 9 | | entities regulated under any successor regulatory structure to | 10 | | the foregoing, and (iv) all taxpayers who are members of the | 11 | | same unitary business group as a federally regulated exchange, | 12 | | determined without regard to the prohibition in Section | 13 | | 1501(a)(27) of this Act against including in a unitary | 14 | | business group taxpayers who are ordinarily required to | 15 | | apportion business income under different subsections of this | 16 | | Section; provided that this subparagraph (iv) shall apply only | 17 | | if 50% or more of the business receipts of the unitary business | 18 | | group determined by application of this subparagraph (iv) for | 19 | | the taxable year are attributable to the matching, execution, | 20 | | or clearing of transactions conducted by an entity described | 21 | | in subparagraph (i), (ii), or (iii) of this paragraph. | 22 | | In no event shall the Illinois apportionment percentage | 23 | | computed in accordance with this subsection (c-1) for any | 24 | | taxpayer for any tax year be less than the Illinois | 25 | | apportionment percentage computed under this subsection (c-1) | 26 | | for that taxpayer for the first full tax year ending on or |
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| 1 | | after December 31, 2013 for which this subsection (c-1) | 2 | | applied to the taxpayer. | 3 | | (d) Transportation services. For taxable years ending | 4 | | before December 31, 2008, business income derived from | 5 | | furnishing
transportation services shall be apportioned to | 6 | | this State in accordance
with paragraphs (1) and (2):
| 7 | | (1) Such business income (other than that derived from
| 8 | | transportation by pipeline) shall be apportioned to this | 9 | | State by
multiplying such income by a fraction, the | 10 | | numerator of which is the
revenue miles of the person in | 11 | | this State, and the denominator of which
is the revenue | 12 | | miles of the person everywhere. For purposes of this
| 13 | | paragraph, a revenue mile is the transportation of 1 | 14 | | passenger or 1 net
ton of freight the distance of 1 mile | 15 | | for a consideration. Where a
person is engaged in the | 16 | | transportation of both passengers and freight,
the | 17 | | fraction above referred to shall be determined by means of | 18 | | an
average of the passenger revenue mile fraction and the | 19 | | freight revenue
mile fraction, weighted to reflect the | 20 | | person's
| 21 | | (A) relative railway operating income from total | 22 | | passenger and total
freight service, as reported to | 23 | | the Interstate Commerce Commission, in
the case of | 24 | | transportation by railroad, and
| 25 | | (B) relative gross receipts from passenger and | 26 | | freight
transportation, in case of transportation |
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| 1 | | other than by railroad.
| 2 | | (2) Such business income derived from transportation | 3 | | by pipeline
shall be apportioned to this State by | 4 | | multiplying such income by a
fraction, the numerator of | 5 | | which is the revenue miles of the person in
this State, and | 6 | | the denominator of which is the revenue miles of the
| 7 | | person everywhere. For the purposes of this paragraph, a | 8 | | revenue mile is
the transportation by pipeline of 1 barrel | 9 | | of oil, 1,000 cubic feet of
gas, or of any specified | 10 | | quantity of any other substance, the distance
of 1 mile | 11 | | for a consideration.
| 12 | | (3) For taxable years ending on or after December 31, | 13 | | 2008, business income derived from providing | 14 | | transportation services other than airline services shall | 15 | | be apportioned to this State by using a fraction, (a) the | 16 | | numerator of which shall be (i) all receipts from any | 17 | | movement or shipment of people, goods, mail, oil, gas, or | 18 | | any other substance (other than by airline) that both | 19 | | originates and terminates in this State, plus (ii) that | 20 | | portion of the person's gross receipts from movements or | 21 | | shipments of people, goods, mail, oil, gas, or any other | 22 | | substance (other than by airline) that originates in one | 23 | | state or jurisdiction and terminates in another state or | 24 | | jurisdiction, that is determined by the ratio that the | 25 | | miles traveled in this State bears to total miles | 26 | | everywhere and (b) the denominator of which shall be all |
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| 1 | | revenue derived from the movement or shipment of people, | 2 | | goods, mail, oil, gas, or any other substance (other than | 3 | | by airline). Where a taxpayer is engaged in the | 4 | | transportation of both passengers and freight, the | 5 | | fraction above referred to shall first be determined | 6 | | separately for passenger miles and freight miles. Then an | 7 | | average of the passenger miles fraction and the freight | 8 | | miles fraction shall be weighted to reflect the | 9 | | taxpayer's: | 10 | | (A) relative railway operating income from total | 11 | | passenger and total freight service, as reported to | 12 | | the Surface Transportation Board, in the case of | 13 | | transportation by railroad; and | 14 | | (B) relative gross receipts from passenger and | 15 | | freight transportation, in case of transportation | 16 | | other than by railroad.
| 17 | | (4) For taxable years ending on or after December 31, | 18 | | 2008, business income derived from furnishing airline
| 19 | | transportation services shall be apportioned to this State | 20 | | by
multiplying such income by a fraction, the numerator of | 21 | | which is the
revenue miles of the person in this State, and | 22 | | the denominator of which
is the revenue miles of the | 23 | | person everywhere. For purposes of this
paragraph, a | 24 | | revenue mile is the transportation of one passenger or one | 25 | | net
ton of freight the distance of one mile for a | 26 | | consideration. If a
person is engaged in the |
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| 1 | | transportation of both passengers and freight,
the | 2 | | fraction above referred to shall be determined by means of | 3 | | an
average of the passenger revenue mile fraction and the | 4 | | freight revenue
mile fraction, weighted to reflect the | 5 | | person's relative gross receipts from passenger and | 6 | | freight
airline transportation.
| 7 | | (e) Combined apportionment. Where 2 or more persons are | 8 | | engaged in
a unitary business as described in subsection | 9 | | (a)(27) of
Section 1501,
a part of which is conducted in this | 10 | | State by one or more members of the
group, the business income | 11 | | attributable to this State by any such member
or members shall | 12 | | be apportioned by means of the combined apportionment method.
| 13 | | (f) Alternative allocation. If the allocation and | 14 | | apportionment
provisions of subsections (a) through (e) and of | 15 | | subsection (h) do not, for taxable years ending before | 16 | | December 31, 2008, fairly represent the
extent of a person's | 17 | | business activity in this State, or, for taxable years ending | 18 | | on or after December 31, 2008, fairly represent the market for | 19 | | the person's goods, services, or other sources of business | 20 | | income, the person may
petition for, or the Director may, | 21 | | without a petition, permit or require, in respect of all or any | 22 | | part
of the person's business activity, if reasonable:
| 23 | | (1) Separate accounting;
| 24 | | (2) The exclusion of any one or more factors;
| 25 | | (3) The inclusion of one or more additional factors | 26 | | which will
fairly represent the person's business |
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| 1 | | activities or market in this State; or
| 2 | | (4) The employment of any other method to effectuate | 3 | | an equitable
allocation and apportionment of the person's | 4 | | business income.
| 5 | | (g) Cross reference. For allocation of business income by | 6 | | residents,
see Section 301(a).
| 7 | | (h) For tax years ending on or after December 31, 1998, the | 8 | | apportionment
factor of persons who apportion their business | 9 | | income to this State under
subsection (a) shall be equal to:
| 10 | | (1) for tax years ending on or after December 31, 1998 | 11 | | and before December
31, 1999, 16 2/3% of the property | 12 | | factor plus 16 2/3% of the payroll factor
plus
66 2/3% of | 13 | | the sales factor;
| 14 | | (2) for tax years ending on or after December 31, 1999 | 15 | | and before December
31,
2000, 8 1/3% of the property | 16 | | factor plus 8 1/3% of the payroll factor plus 83
1/3%
of | 17 | | the sales factor;
| 18 | | (3) for tax years ending on or after December 31, | 19 | | 2000, the sales factor.
| 20 | | If, in any tax year ending on or after December 31, 1998 and | 21 | | before December
31, 2000, the denominator of the payroll, | 22 | | property, or sales factor is zero,
the apportionment
factor | 23 | | computed in paragraph (1) or (2) of this subsection for that | 24 | | year shall
be divided by an amount equal to 100% minus the | 25 | | percentage weight given to each
factor whose denominator is | 26 | | equal to zero.
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| 1 | | (Source: P.A. 100-201, eff. 8-18-17; 101-31, eff. 6-28-19; | 2 | | 101-585, eff. 8-26-19; revised 9-12-19.)
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