Rep. Gregory Harris

Filed: 6/1/2019

 

 


 

 


 
10100SB0689ham003LRB101 04450 HLH 61563 a

1
AMENDMENT TO SENATE BILL 689

2    AMENDMENT NO. ______. Amend Senate Bill 689, AS AMENDED, by
3replacing everything after the enacting clause with the
4following:
 
5
"ARTICLE 10. AMENDATORY PROVISIONS

 
6    Section 10-3. The State Finance Act is amended by changing
7Section 6z-81 as follows:
 
8    (30 ILCS 105/6z-81)
9    Sec. 6z-81. Healthcare Provider Relief Fund.
10    (a) There is created in the State treasury a special fund
11to be known as the Healthcare Provider Relief Fund.
12    (b) The Fund is created for the purpose of receiving and
13disbursing moneys in accordance with this Section.
14Disbursements from the Fund shall be made only as follows:
15        (1) Subject to appropriation, for payment by the

 

 

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1    Department of Healthcare and Family Services or by the
2    Department of Human Services of medical bills and related
3    expenses, including administrative expenses, for which the
4    State is responsible under Titles XIX and XXI of the Social
5    Security Act, the Illinois Public Aid Code, the Children's
6    Health Insurance Program Act, the Covering ALL KIDS Health
7    Insurance Act, and the Long Term Acute Care Hospital
8    Quality Improvement Transfer Program Act.
9        (2) For repayment of funds borrowed from other State
10    funds or from outside sources, including interest thereon.
11        (3) For State fiscal years 2017, 2018, and 2019, for
12    making payments to the human poison control center pursuant
13    to Section 12-4.105 of the Illinois Public Aid Code.
14    (c) The Fund shall consist of the following:
15        (1) Moneys received by the State from short-term
16    borrowing pursuant to the Short Term Borrowing Act on or
17    after the effective date of Public Act 96-820.
18        (2) All federal matching funds received by the Illinois
19    Department of Healthcare and Family Services as a result of
20    expenditures made by the Department that are attributable
21    to moneys deposited in the Fund.
22        (3) All federal matching funds received by the Illinois
23    Department of Healthcare and Family Services as a result of
24    federal approval of Title XIX State plan amendment
25    transmittal number 07-09.
26        (3.5) Proceeds from the assessment authorized under

 

 

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1    Article V-H of the Public Aid Code.
2        (4) All other moneys received for the Fund from any
3    other source, including interest earned thereon.
4        (5) All federal matching funds received by the Illinois
5    Department of Healthcare and Family Services as a result of
6    expenditures made by the Department for Medical Assistance
7    from the General Revenue Fund, the Tobacco Settlement
8    Recovery Fund, the Long-Term Care Provider Fund, and the
9    Drug Rebate Fund related to individuals eligible for
10    medical assistance pursuant to the Patient Protection and
11    Affordable Care Act (P.L. 111-148) and Section 5-2 of the
12    Illinois Public Aid Code.
13    (d) In addition to any other transfers that may be provided
14for by law, on the effective date of Public Act 97-44, or as
15soon thereafter as practical, the State Comptroller shall
16direct and the State Treasurer shall transfer the sum of
17$365,000,000 from the General Revenue Fund into the Healthcare
18Provider Relief Fund.
19    (e) In addition to any other transfers that may be provided
20for by law, on July 1, 2011, or as soon thereafter as
21practical, the State Comptroller shall direct and the State
22Treasurer shall transfer the sum of $160,000,000 from the
23General Revenue Fund to the Healthcare Provider Relief Fund.
24    (f) Notwithstanding any other State law to the contrary,
25and in addition to any other transfers that may be provided for
26by law, the State Comptroller shall order transferred and the

 

 

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1State Treasurer shall transfer $500,000,000 to the Healthcare
2Provider Relief Fund from the General Revenue Fund in equal
3monthly installments of $100,000,000, with the first transfer
4to be made on July 1, 2012, or as soon thereafter as practical,
5and with each of the remaining transfers to be made on August
61, 2012, September 1, 2012, October 1, 2012, and November 1,
72012, or as soon thereafter as practical. This transfer may
8assist the Department of Healthcare and Family Services in
9improving Medical Assistance bill processing timeframes or in
10meeting the possible requirements of Senate Bill 3397, or other
11similar legislation, of the 97th General Assembly should it
12become law.
13    (g) Notwithstanding any other State law to the contrary,
14and in addition to any other transfers that may be provided for
15by law, on July 1, 2013, or as soon thereafter as may be
16practical, the State Comptroller shall direct and the State
17Treasurer shall transfer the sum of $601,000,000 from the
18General Revenue Fund to the Healthcare Provider Relief Fund.
19(Source: P.A. 99-516, eff. 6-30-16; 100-587, eff. 6-4-18.)
 
20    Section 10-5. The Illinois Income Tax Act is amended by
21changing Section 203 as follows:
 
22    (35 ILCS 5/203)  (from Ch. 120, par. 2-203)
23    Sec. 203. Base income defined.
24    (a) Individuals.

 

 

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1        (1) In general. In the case of an individual, base
2    income means an amount equal to the taxpayer's adjusted
3    gross income for the taxable year as modified by paragraph
4    (2).
5        (2) Modifications. The adjusted gross income referred
6    to in paragraph (1) shall be modified by adding thereto the
7    sum of the following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest or dividends during the
10        taxable year to the extent excluded from gross income
11        in the computation of adjusted gross income, except
12        stock dividends of qualified public utilities
13        described in Section 305(e) of the Internal Revenue
14        Code;
15            (B) An amount equal to the amount of tax imposed by
16        this Act to the extent deducted from gross income in
17        the computation of adjusted gross income for the
18        taxable year;
19            (C) An amount equal to the amount received during
20        the taxable year as a recovery or refund of real
21        property taxes paid with respect to the taxpayer's
22        principal residence under the Revenue Act of 1939 and
23        for which a deduction was previously taken under
24        subparagraph (L) of this paragraph (2) prior to July 1,
25        1991, the retrospective application date of Article 4
26        of Public Act 87-17. In the case of multi-unit or

 

 

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1        multi-use structures and farm dwellings, the taxes on
2        the taxpayer's principal residence shall be that
3        portion of the total taxes for the entire property
4        which is attributable to such principal residence;
5            (D) An amount equal to the amount of the capital
6        gain deduction allowable under the Internal Revenue
7        Code, to the extent deducted from gross income in the
8        computation of adjusted gross income;
9            (D-5) An amount, to the extent not included in
10        adjusted gross income, equal to the amount of money
11        withdrawn by the taxpayer in the taxable year from a
12        medical care savings account and the interest earned on
13        the account in the taxable year of a withdrawal
14        pursuant to subsection (b) of Section 20 of the Medical
15        Care Savings Account Act or subsection (b) of Section
16        20 of the Medical Care Savings Account Act of 2000;
17            (D-10) For taxable years ending after December 31,
18        1997, an amount equal to any eligible remediation costs
19        that the individual deducted in computing adjusted
20        gross income and for which the individual claims a
21        credit under subsection (l) of Section 201;
22            (D-15) For taxable years 2001 and thereafter, an
23        amount equal to the bonus depreciation deduction taken
24        on the taxpayer's federal income tax return for the
25        taxable year under subsection (k) of Section 168 of the
26        Internal Revenue Code;

 

 

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1            (D-16) If the taxpayer sells, transfers, abandons,
2        or otherwise disposes of property for which the
3        taxpayer was required in any taxable year to make an
4        addition modification under subparagraph (D-15), then
5        an amount equal to the aggregate amount of the
6        deductions taken in all taxable years under
7        subparagraph (Z) with respect to that property.
8            If the taxpayer continues to own property through
9        the last day of the last tax year for which the
10        taxpayer may claim a depreciation deduction for
11        federal income tax purposes and for which the taxpayer
12        was allowed in any taxable year to make a subtraction
13        modification under subparagraph (Z), then an amount
14        equal to that subtraction modification.
15            The taxpayer is required to make the addition
16        modification under this subparagraph only once with
17        respect to any one piece of property;
18            (D-17) An amount equal to the amount otherwise
19        allowed as a deduction in computing base income for
20        interest paid, accrued, or incurred, directly or
21        indirectly, (i) for taxable years ending on or after
22        December 31, 2004, to a foreign person who would be a
23        member of the same unitary business group but for the
24        fact that foreign person's business activity outside
25        the United States is 80% or more of the foreign
26        person's total business activity and (ii) for taxable

 

 

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1        years ending on or after December 31, 2008, to a person
2        who would be a member of the same unitary business
3        group but for the fact that the person is prohibited
4        under Section 1501(a)(27) from being included in the
5        unitary business group because he or she is ordinarily
6        required to apportion business income under different
7        subsections of Section 304. The addition modification
8        required by this subparagraph shall be reduced to the
9        extent that dividends were included in base income of
10        the unitary group for the same taxable year and
11        received by the taxpayer or by a member of the
12        taxpayer's unitary business group (including amounts
13        included in gross income under Sections 951 through 964
14        of the Internal Revenue Code and amounts included in
15        gross income under Section 78 of the Internal Revenue
16        Code) with respect to the stock of the same person to
17        whom the interest was paid, accrued, or incurred.
18            This paragraph shall not apply to the following:
19                (i) an item of interest paid, accrued, or
20            incurred, directly or indirectly, to a person who
21            is subject in a foreign country or state, other
22            than a state which requires mandatory unitary
23            reporting, to a tax on or measured by net income
24            with respect to such interest; or
25                (ii) an item of interest paid, accrued, or
26            incurred, directly or indirectly, to a person if

 

 

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1            the taxpayer can establish, based on a
2            preponderance of the evidence, both of the
3            following:
4                    (a) the person, during the same taxable
5                year, paid, accrued, or incurred, the interest
6                to a person that is not a related member, and
7                    (b) the transaction giving rise to the
8                interest expense between the taxpayer and the
9                person did not have as a principal purpose the
10                avoidance of Illinois income tax, and is paid
11                pursuant to a contract or agreement that
12                reflects an arm's-length interest rate and
13                terms; or
14                (iii) the taxpayer can establish, based on
15            clear and convincing evidence, that the interest
16            paid, accrued, or incurred relates to a contract or
17            agreement entered into at arm's-length rates and
18            terms and the principal purpose for the payment is
19            not federal or Illinois tax avoidance; or
20                (iv) an item of interest paid, accrued, or
21            incurred, directly or indirectly, to a person if
22            the taxpayer establishes by clear and convincing
23            evidence that the adjustments are unreasonable; or
24            if the taxpayer and the Director agree in writing
25            to the application or use of an alternative method
26            of apportionment under Section 304(f).

 

 

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1                Nothing in this subsection shall preclude the
2            Director from making any other adjustment
3            otherwise allowed under Section 404 of this Act for
4            any tax year beginning after the effective date of
5            this amendment provided such adjustment is made
6            pursuant to regulation adopted by the Department
7            and such regulations provide methods and standards
8            by which the Department will utilize its authority
9            under Section 404 of this Act;
10            (D-18) An amount equal to the amount of intangible
11        expenses and costs otherwise allowed as a deduction in
12        computing base income, and that were paid, accrued, or
13        incurred, directly or indirectly, (i) for taxable
14        years ending on or after December 31, 2004, to a
15        foreign person who would be a member of the same
16        unitary business group but for the fact that the
17        foreign person's business activity outside the United
18        States is 80% or more of that person's total business
19        activity and (ii) for taxable years ending on or after
20        December 31, 2008, to a person who would be a member of
21        the same unitary business group but for the fact that
22        the person is prohibited under Section 1501(a)(27)
23        from being included in the unitary business group
24        because he or she is ordinarily required to apportion
25        business income under different subsections of Section
26        304. The addition modification required by this

 

 

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1        subparagraph shall be reduced to the extent that
2        dividends were included in base income of the unitary
3        group for the same taxable year and received by the
4        taxpayer or by a member of the taxpayer's unitary
5        business group (including amounts included in gross
6        income under Sections 951 through 964 of the Internal
7        Revenue Code and amounts included in gross income under
8        Section 78 of the Internal Revenue Code) with respect
9        to the stock of the same person to whom the intangible
10        expenses and costs were directly or indirectly paid,
11        incurred, or accrued. The preceding sentence does not
12        apply to the extent that the same dividends caused a
13        reduction to the addition modification required under
14        Section 203(a)(2)(D-17) of this Act. As used in this
15        subparagraph, the term "intangible expenses and costs"
16        includes (1) expenses, losses, and costs for, or
17        related to, the direct or indirect acquisition, use,
18        maintenance or management, ownership, sale, exchange,
19        or any other disposition of intangible property; (2)
20        losses incurred, directly or indirectly, from
21        factoring transactions or discounting transactions;
22        (3) royalty, patent, technical, and copyright fees;
23        (4) licensing fees; and (5) other similar expenses and
24        costs. For purposes of this subparagraph, "intangible
25        property" includes patents, patent applications, trade
26        names, trademarks, service marks, copyrights, mask

 

 

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1        works, trade secrets, and similar types of intangible
2        assets.
3            This paragraph shall not apply to the following:
4                (i) any item of intangible expenses or costs
5            paid, accrued, or incurred, directly or
6            indirectly, from a transaction with a person who is
7            subject in a foreign country or state, other than a
8            state which requires mandatory unitary reporting,
9            to a tax on or measured by net income with respect
10            to such item; or
11                (ii) any item of intangible expense or cost
12            paid, accrued, or incurred, directly or
13            indirectly, if the taxpayer can establish, based
14            on a preponderance of the evidence, both of the
15            following:
16                    (a) the person during the same taxable
17                year paid, accrued, or incurred, the
18                intangible expense or cost to a person that is
19                not a related member, and
20                    (b) the transaction giving rise to the
21                intangible expense or cost between the
22                taxpayer and the person did not have as a
23                principal purpose the avoidance of Illinois
24                income tax, and is paid pursuant to a contract
25                or agreement that reflects arm's-length terms;
26                or

 

 

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1                (iii) any item of intangible expense or cost
2            paid, accrued, or incurred, directly or
3            indirectly, from a transaction with a person if the
4            taxpayer establishes by clear and convincing
5            evidence, that the adjustments are unreasonable;
6            or if the taxpayer and the Director agree in
7            writing to the application or use of an alternative
8            method of apportionment under Section 304(f);
9                Nothing in this subsection shall preclude the
10            Director from making any other adjustment
11            otherwise allowed under Section 404 of this Act for
12            any tax year beginning after the effective date of
13            this amendment provided such adjustment is made
14            pursuant to regulation adopted by the Department
15            and such regulations provide methods and standards
16            by which the Department will utilize its authority
17            under Section 404 of this Act;
18            (D-19) For taxable years ending on or after
19        December 31, 2008, an amount equal to the amount of
20        insurance premium expenses and costs otherwise allowed
21        as a deduction in computing base income, and that were
22        paid, accrued, or incurred, directly or indirectly, to
23        a person who would be a member of the same unitary
24        business group but for the fact that the person is
25        prohibited under Section 1501(a)(27) from being
26        included in the unitary business group because he or

 

 

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1        she is ordinarily required to apportion business
2        income under different subsections of Section 304. The
3        addition modification required by this subparagraph
4        shall be reduced to the extent that dividends were
5        included in base income of the unitary group for the
6        same taxable year and received by the taxpayer or by a
7        member of the taxpayer's unitary business group
8        (including amounts included in gross income under
9        Sections 951 through 964 of the Internal Revenue Code
10        and amounts included in gross income under Section 78
11        of the Internal Revenue Code) with respect to the stock
12        of the same person to whom the premiums and costs were
13        directly or indirectly paid, incurred, or accrued. The
14        preceding sentence does not apply to the extent that
15        the same dividends caused a reduction to the addition
16        modification required under Section 203(a)(2)(D-17) or
17        Section 203(a)(2)(D-18) of this Act.
18            (D-20) For taxable years beginning on or after
19        January 1, 2002 and ending on or before December 31,
20        2006, in the case of a distribution from a qualified
21        tuition program under Section 529 of the Internal
22        Revenue Code, other than (i) a distribution from a
23        College Savings Pool created under Section 16.5 of the
24        State Treasurer Act or (ii) a distribution from the
25        Illinois Prepaid Tuition Trust Fund, an amount equal to
26        the amount excluded from gross income under Section

 

 

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1        529(c)(3)(B). For taxable years beginning on or after
2        January 1, 2007, in the case of a distribution from a
3        qualified tuition program under Section 529 of the
4        Internal Revenue Code, other than (i) a distribution
5        from a College Savings Pool created under Section 16.5
6        of the State Treasurer Act, (ii) a distribution from
7        the Illinois Prepaid Tuition Trust Fund, or (iii) a
8        distribution from a qualified tuition program under
9        Section 529 of the Internal Revenue Code that (I)
10        adopts and determines that its offering materials
11        comply with the College Savings Plans Network's
12        disclosure principles and (II) has made reasonable
13        efforts to inform in-state residents of the existence
14        of in-state qualified tuition programs by informing
15        Illinois residents directly and, where applicable, to
16        inform financial intermediaries distributing the
17        program to inform in-state residents of the existence
18        of in-state qualified tuition programs at least
19        annually, an amount equal to the amount excluded from
20        gross income under Section 529(c)(3)(B).
21            For the purposes of this subparagraph (D-20), a
22        qualified tuition program has made reasonable efforts
23        if it makes disclosures (which may use the term
24        "in-state program" or "in-state plan" and need not
25        specifically refer to Illinois or its qualified
26        programs by name) (i) directly to prospective

 

 

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1        participants in its offering materials or makes a
2        public disclosure, such as a website posting; and (ii)
3        where applicable, to intermediaries selling the
4        out-of-state program in the same manner that the
5        out-of-state program distributes its offering
6        materials;
7            (D-20.5) For taxable years beginning on or after
8        January 1, 2018, in the case of a distribution from a
9        qualified ABLE program under Section 529A of the
10        Internal Revenue Code, other than a distribution from a
11        qualified ABLE program created under Section 16.6 of
12        the State Treasurer Act, an amount equal to the amount
13        excluded from gross income under Section 529A(c)(1)(B)
14        of the Internal Revenue Code;
15            (D-21) For taxable years beginning on or after
16        January 1, 2007, in the case of transfer of moneys from
17        a qualified tuition program under Section 529 of the
18        Internal Revenue Code that is administered by the State
19        to an out-of-state program, an amount equal to the
20        amount of moneys previously deducted from base income
21        under subsection (a)(2)(Y) of this Section;
22            (D-21.5) For taxable years beginning on or after
23        January 1, 2018, in the case of the transfer of moneys
24        from a qualified tuition program under Section 529 or a
25        qualified ABLE program under Section 529A of the
26        Internal Revenue Code that is administered by this

 

 

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1        State to an ABLE account established under an
2        out-of-state ABLE account program, an amount equal to
3        the contribution component of the transferred amount
4        that was previously deducted from base income under
5        subsection (a)(2)(Y) or subsection (a)(2)(HH) of this
6        Section;
7            (D-22) For taxable years beginning on or after
8        January 1, 2009, and prior to January 1, 2018, in the
9        case of a nonqualified withdrawal or refund of moneys
10        from a qualified tuition program under Section 529 of
11        the Internal Revenue Code administered by the State
12        that is not used for qualified expenses at an eligible
13        education institution, an amount equal to the
14        contribution component of the nonqualified withdrawal
15        or refund that was previously deducted from base income
16        under subsection (a)(2)(y) of this Section, provided
17        that the withdrawal or refund did not result from the
18        beneficiary's death or disability. For taxable years
19        beginning on or after January 1, 2018: (1) in the case
20        of a nonqualified withdrawal or refund, as defined
21        under Section 16.5 of the State Treasurer Act, of
22        moneys from a qualified tuition program under Section
23        529 of the Internal Revenue Code administered by the
24        State, an amount equal to the contribution component of
25        the nonqualified withdrawal or refund that was
26        previously deducted from base income under subsection

 

 

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1        (a)(2)(Y) of this Section, and (2) in the case of a
2        nonqualified withdrawal or refund from a qualified
3        ABLE program under Section 529A of the Internal Revenue
4        Code administered by the State that is not used for
5        qualified disability expenses, an amount equal to the
6        contribution component of the nonqualified withdrawal
7        or refund that was previously deducted from base income
8        under subsection (a)(2)(HH) of this Section;
9            (D-23) An amount equal to the credit allowable to
10        the taxpayer under Section 218(a) of this Act,
11        determined without regard to Section 218(c) of this
12        Act;
13            (D-24) For taxable years ending on or after
14        December 31, 2017, an amount equal to the deduction
15        allowed under Section 199 of the Internal Revenue Code
16        for the taxable year;
17    and by deducting from the total so obtained the sum of the
18    following amounts:
19            (E) For taxable years ending before December 31,
20        2001, any amount included in such total in respect of
21        any compensation (including but not limited to any
22        compensation paid or accrued to a serviceman while a
23        prisoner of war or missing in action) paid to a
24        resident by reason of being on active duty in the Armed
25        Forces of the United States and in respect of any
26        compensation paid or accrued to a resident who as a

 

 

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1        governmental employee was a prisoner of war or missing
2        in action, and in respect of any compensation paid to a
3        resident in 1971 or thereafter for annual training
4        performed pursuant to Sections 502 and 503, Title 32,
5        United States Code as a member of the Illinois National
6        Guard or, beginning with taxable years ending on or
7        after December 31, 2007, the National Guard of any
8        other state. For taxable years ending on or after
9        December 31, 2001, any amount included in such total in
10        respect of any compensation (including but not limited
11        to any compensation paid or accrued to a serviceman
12        while a prisoner of war or missing in action) paid to a
13        resident by reason of being a member of any component
14        of the Armed Forces of the United States and in respect
15        of any compensation paid or accrued to a resident who
16        as a governmental employee was a prisoner of war or
17        missing in action, and in respect of any compensation
18        paid to a resident in 2001 or thereafter by reason of
19        being a member of the Illinois National Guard or,
20        beginning with taxable years ending on or after
21        December 31, 2007, the National Guard of any other
22        state. The provisions of this subparagraph (E) are
23        exempt from the provisions of Section 250;
24            (F) An amount equal to all amounts included in such
25        total pursuant to the provisions of Sections 402(a),
26        402(c), 403(a), 403(b), 406(a), 407(a), and 408 of the

 

 

10100SB0689ham003- 20 -LRB101 04450 HLH 61563 a

1        Internal Revenue Code, or included in such total as
2        distributions under the provisions of any retirement
3        or disability plan for employees of any governmental
4        agency or unit, or retirement payments to retired
5        partners, which payments are excluded in computing net
6        earnings from self employment by Section 1402 of the
7        Internal Revenue Code and regulations adopted pursuant
8        thereto;
9            (G) The valuation limitation amount;
10            (H) An amount equal to the amount of any tax
11        imposed by this Act which was refunded to the taxpayer
12        and included in such total for the taxable year;
13            (I) An amount equal to all amounts included in such
14        total pursuant to the provisions of Section 111 of the
15        Internal Revenue Code as a recovery of items previously
16        deducted from adjusted gross income in the computation
17        of taxable income;
18            (J) An amount equal to those dividends included in
19        such total which were paid by a corporation which
20        conducts business operations in a River Edge
21        Redevelopment Zone or zones created under the River
22        Edge Redevelopment Zone Act, and conducts
23        substantially all of its operations in a River Edge
24        Redevelopment Zone or zones. This subparagraph (J) is
25        exempt from the provisions of Section 250;
26            (K) An amount equal to those dividends included in

 

 

10100SB0689ham003- 21 -LRB101 04450 HLH 61563 a

1        such total that were paid by a corporation that
2        conducts business operations in a federally designated
3        Foreign Trade Zone or Sub-Zone and that is designated a
4        High Impact Business located in Illinois; provided
5        that dividends eligible for the deduction provided in
6        subparagraph (J) of paragraph (2) of this subsection
7        shall not be eligible for the deduction provided under
8        this subparagraph (K);
9            (L) For taxable years ending after December 31,
10        1983, an amount equal to all social security benefits
11        and railroad retirement benefits included in such
12        total pursuant to Sections 72(r) and 86 of the Internal
13        Revenue Code;
14            (M) With the exception of any amounts subtracted
15        under subparagraph (N), an amount equal to the sum of
16        all amounts disallowed as deductions by (i) Sections
17        171(a)(2), and 265(a)(2) 265(2) of the Internal
18        Revenue Code, and all amounts of expenses allocable to
19        interest and disallowed as deductions by Section
20        265(a)(1) 265(1) of the Internal Revenue Code; and (ii)
21        for taxable years ending on or after August 13, 1999,
22        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
23        the Internal Revenue Code, plus, for taxable years
24        ending on or after December 31, 2011, Section 45G(e)(3)
25        of the Internal Revenue Code and, for taxable years
26        ending on or after December 31, 2008, any amount

 

 

10100SB0689ham003- 22 -LRB101 04450 HLH 61563 a

1        included in gross income under Section 87 of the
2        Internal Revenue Code; the provisions of this
3        subparagraph are exempt from the provisions of Section
4        250;
5            (N) An amount equal to all amounts included in such
6        total which are exempt from taxation by this State
7        either by reason of its statutes or Constitution or by
8        reason of the Constitution, treaties or statutes of the
9        United States; provided that, in the case of any
10        statute of this State that exempts income derived from
11        bonds or other obligations from the tax imposed under
12        this Act, the amount exempted shall be the interest net
13        of bond premium amortization;
14            (O) An amount equal to any contribution made to a
15        job training project established pursuant to the Tax
16        Increment Allocation Redevelopment Act;
17            (P) An amount equal to the amount of the deduction
18        used to compute the federal income tax credit for
19        restoration of substantial amounts held under claim of
20        right for the taxable year pursuant to Section 1341 of
21        the Internal Revenue Code or of any itemized deduction
22        taken from adjusted gross income in the computation of
23        taxable income for restoration of substantial amounts
24        held under claim of right for the taxable year;
25            (Q) An amount equal to any amounts included in such
26        total, received by the taxpayer as an acceleration in

 

 

10100SB0689ham003- 23 -LRB101 04450 HLH 61563 a

1        the payment of life, endowment or annuity benefits in
2        advance of the time they would otherwise be payable as
3        an indemnity for a terminal illness;
4            (R) An amount equal to the amount of any federal or
5        State bonus paid to veterans of the Persian Gulf War;
6            (S) An amount, to the extent included in adjusted
7        gross income, equal to the amount of a contribution
8        made in the taxable year on behalf of the taxpayer to a
9        medical care savings account established under the
10        Medical Care Savings Account Act or the Medical Care
11        Savings Account Act of 2000 to the extent the
12        contribution is accepted by the account administrator
13        as provided in that Act;
14            (T) An amount, to the extent included in adjusted
15        gross income, equal to the amount of interest earned in
16        the taxable year on a medical care savings account
17        established under the Medical Care Savings Account Act
18        or the Medical Care Savings Account Act of 2000 on
19        behalf of the taxpayer, other than interest added
20        pursuant to item (D-5) of this paragraph (2);
21            (U) For one taxable year beginning on or after
22        January 1, 1994, an amount equal to the total amount of
23        tax imposed and paid under subsections (a) and (b) of
24        Section 201 of this Act on grant amounts received by
25        the taxpayer under the Nursing Home Grant Assistance
26        Act during the taxpayer's taxable years 1992 and 1993;

 

 

10100SB0689ham003- 24 -LRB101 04450 HLH 61563 a

1            (V) Beginning with tax years ending on or after
2        December 31, 1995 and ending with tax years ending on
3        or before December 31, 2004, an amount equal to the
4        amount paid by a taxpayer who is a self-employed
5        taxpayer, a partner of a partnership, or a shareholder
6        in a Subchapter S corporation for health insurance or
7        long-term care insurance for that taxpayer or that
8        taxpayer's spouse or dependents, to the extent that the
9        amount paid for that health insurance or long-term care
10        insurance may be deducted under Section 213 of the
11        Internal Revenue Code, has not been deducted on the
12        federal income tax return of the taxpayer, and does not
13        exceed the taxable income attributable to that
14        taxpayer's income, self-employment income, or
15        Subchapter S corporation income; except that no
16        deduction shall be allowed under this item (V) if the
17        taxpayer is eligible to participate in any health
18        insurance or long-term care insurance plan of an
19        employer of the taxpayer or the taxpayer's spouse. The
20        amount of the health insurance and long-term care
21        insurance subtracted under this item (V) shall be
22        determined by multiplying total health insurance and
23        long-term care insurance premiums paid by the taxpayer
24        times a number that represents the fractional
25        percentage of eligible medical expenses under Section
26        213 of the Internal Revenue Code of 1986 not actually

 

 

10100SB0689ham003- 25 -LRB101 04450 HLH 61563 a

1        deducted on the taxpayer's federal income tax return;
2            (W) For taxable years beginning on or after January
3        1, 1998, all amounts included in the taxpayer's federal
4        gross income in the taxable year from amounts converted
5        from a regular IRA to a Roth IRA. This paragraph is
6        exempt from the provisions of Section 250;
7            (X) For taxable year 1999 and thereafter, an amount
8        equal to the amount of any (i) distributions, to the
9        extent includible in gross income for federal income
10        tax purposes, made to the taxpayer because of his or
11        her status as a victim of persecution for racial or
12        religious reasons by Nazi Germany or any other Axis
13        regime or as an heir of the victim and (ii) items of
14        income, to the extent includible in gross income for
15        federal income tax purposes, attributable to, derived
16        from or in any way related to assets stolen from,
17        hidden from, or otherwise lost to a victim of
18        persecution for racial or religious reasons by Nazi
19        Germany or any other Axis regime immediately prior to,
20        during, and immediately after World War II, including,
21        but not limited to, interest on the proceeds receivable
22        as insurance under policies issued to a victim of
23        persecution for racial or religious reasons by Nazi
24        Germany or any other Axis regime by European insurance
25        companies immediately prior to and during World War II;
26        provided, however, this subtraction from federal

 

 

10100SB0689ham003- 26 -LRB101 04450 HLH 61563 a

1        adjusted gross income does not apply to assets acquired
2        with such assets or with the proceeds from the sale of
3        such assets; provided, further, this paragraph shall
4        only apply to a taxpayer who was the first recipient of
5        such assets after their recovery and who is a victim of
6        persecution for racial or religious reasons by Nazi
7        Germany or any other Axis regime or as an heir of the
8        victim. The amount of and the eligibility for any
9        public assistance, benefit, or similar entitlement is
10        not affected by the inclusion of items (i) and (ii) of
11        this paragraph in gross income for federal income tax
12        purposes. This paragraph is exempt from the provisions
13        of Section 250;
14            (Y) For taxable years beginning on or after January
15        1, 2002 and ending on or before December 31, 2004,
16        moneys contributed in the taxable year to a College
17        Savings Pool account under Section 16.5 of the State
18        Treasurer Act, except that amounts excluded from gross
19        income under Section 529(c)(3)(C)(i) of the Internal
20        Revenue Code shall not be considered moneys
21        contributed under this subparagraph (Y). For taxable
22        years beginning on or after January 1, 2005, a maximum
23        of $10,000 contributed in the taxable year to (i) a
24        College Savings Pool account under Section 16.5 of the
25        State Treasurer Act or (ii) the Illinois Prepaid
26        Tuition Trust Fund, except that amounts excluded from

 

 

10100SB0689ham003- 27 -LRB101 04450 HLH 61563 a

1        gross income under Section 529(c)(3)(C)(i) of the
2        Internal Revenue Code shall not be considered moneys
3        contributed under this subparagraph (Y). For purposes
4        of this subparagraph, contributions made by an
5        employer on behalf of an employee, or matching
6        contributions made by an employee, shall be treated as
7        made by the employee. This subparagraph (Y) is exempt
8        from the provisions of Section 250;
9            (Z) For taxable years 2001 and thereafter, for the
10        taxable year in which the bonus depreciation deduction
11        is taken on the taxpayer's federal income tax return
12        under subsection (k) of Section 168 of the Internal
13        Revenue Code and for each applicable taxable year
14        thereafter, an amount equal to "x", where:
15                (1) "y" equals the amount of the depreciation
16            deduction taken for the taxable year on the
17            taxpayer's federal income tax return on property
18            for which the bonus depreciation deduction was
19            taken in any year under subsection (k) of Section
20            168 of the Internal Revenue Code, but not including
21            the bonus depreciation deduction;
22                (2) for taxable years ending on or before
23            December 31, 2005, "x" equals "y" multiplied by 30
24            and then divided by 70 (or "y" multiplied by
25            0.429); and
26                (3) for taxable years ending after December

 

 

10100SB0689ham003- 28 -LRB101 04450 HLH 61563 a

1            31, 2005:
2                    (i) for property on which a bonus
3                depreciation deduction of 30% of the adjusted
4                basis was taken, "x" equals "y" multiplied by
5                30 and then divided by 70 (or "y" multiplied by
6                0.429); and
7                    (ii) for property on which a bonus
8                depreciation deduction of 50% of the adjusted
9                basis was taken, "x" equals "y" multiplied by
10                1.0.
11            The aggregate amount deducted under this
12        subparagraph in all taxable years for any one piece of
13        property may not exceed the amount of the bonus
14        depreciation deduction taken on that property on the
15        taxpayer's federal income tax return under subsection
16        (k) of Section 168 of the Internal Revenue Code. This
17        subparagraph (Z) is exempt from the provisions of
18        Section 250;
19            (AA) If the taxpayer sells, transfers, abandons,
20        or otherwise disposes of property for which the
21        taxpayer was required in any taxable year to make an
22        addition modification under subparagraph (D-15), then
23        an amount equal to that addition modification.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

10100SB0689ham003- 29 -LRB101 04450 HLH 61563 a

1        federal income tax purposes and for which the taxpayer
2        was required in any taxable year to make an addition
3        modification under subparagraph (D-15), then an amount
4        equal to that addition modification.
5            The taxpayer is allowed to take the deduction under
6        this subparagraph only once with respect to any one
7        piece of property.
8            This subparagraph (AA) is exempt from the
9        provisions of Section 250;
10            (BB) Any amount included in adjusted gross income,
11        other than salary, received by a driver in a
12        ridesharing arrangement using a motor vehicle;
13            (CC) The amount of (i) any interest income (net of
14        the deductions allocable thereto) taken into account
15        for the taxable year with respect to a transaction with
16        a taxpayer that is required to make an addition
17        modification with respect to such transaction under
18        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
19        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
20        the amount of that addition modification, and (ii) any
21        income from intangible property (net of the deductions
22        allocable thereto) taken into account for the taxable
23        year with respect to a transaction with a taxpayer that
24        is required to make an addition modification with
25        respect to such transaction under Section
26        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or

 

 

10100SB0689ham003- 30 -LRB101 04450 HLH 61563 a

1        203(d)(2)(D-8), but not to exceed the amount of that
2        addition modification. This subparagraph (CC) is
3        exempt from the provisions of Section 250;
4            (DD) An amount equal to the interest income taken
5        into account for the taxable year (net of the
6        deductions allocable thereto) with respect to
7        transactions with (i) a foreign person who would be a
8        member of the taxpayer's unitary business group but for
9        the fact that the foreign person's business activity
10        outside the United States is 80% or more of that
11        person's total business activity and (ii) for taxable
12        years ending on or after December 31, 2008, to a person
13        who would be a member of the same unitary business
14        group but for the fact that the person is prohibited
15        under Section 1501(a)(27) from being included in the
16        unitary business group because he or she is ordinarily
17        required to apportion business income under different
18        subsections of Section 304, but not to exceed the
19        addition modification required to be made for the same
20        taxable year under Section 203(a)(2)(D-17) for
21        interest paid, accrued, or incurred, directly or
22        indirectly, to the same person. This subparagraph (DD)
23        is exempt from the provisions of Section 250;
24            (EE) An amount equal to the income from intangible
25        property taken into account for the taxable year (net
26        of the deductions allocable thereto) with respect to

 

 

10100SB0689ham003- 31 -LRB101 04450 HLH 61563 a

1        transactions with (i) a foreign person who would be a
2        member of the taxpayer's unitary business group but for
3        the fact that the foreign person's business activity
4        outside the United States is 80% or more of that
5        person's total business activity and (ii) for taxable
6        years ending on or after December 31, 2008, to a person
7        who would be a member of the same unitary business
8        group but for the fact that the person is prohibited
9        under Section 1501(a)(27) from being included in the
10        unitary business group because he or she is ordinarily
11        required to apportion business income under different
12        subsections of Section 304, but not to exceed the
13        addition modification required to be made for the same
14        taxable year under Section 203(a)(2)(D-18) for
15        intangible expenses and costs paid, accrued, or
16        incurred, directly or indirectly, to the same foreign
17        person. This subparagraph (EE) is exempt from the
18        provisions of Section 250;
19            (FF) An amount equal to any amount awarded to the
20        taxpayer during the taxable year by the Court of Claims
21        under subsection (c) of Section 8 of the Court of
22        Claims Act for time unjustly served in a State prison.
23        This subparagraph (FF) is exempt from the provisions of
24        Section 250;
25            (GG) For taxable years ending on or after December
26        31, 2011, in the case of a taxpayer who was required to

 

 

10100SB0689ham003- 32 -LRB101 04450 HLH 61563 a

1        add back any insurance premiums under Section
2        203(a)(2)(D-19), such taxpayer may elect to subtract
3        that part of a reimbursement received from the
4        insurance company equal to the amount of the expense or
5        loss (including expenses incurred by the insurance
6        company) that would have been taken into account as a
7        deduction for federal income tax purposes if the
8        expense or loss had been uninsured. If a taxpayer makes
9        the election provided for by this subparagraph (GG),
10        the insurer to which the premiums were paid must add
11        back to income the amount subtracted by the taxpayer
12        pursuant to this subparagraph (GG). This subparagraph
13        (GG) is exempt from the provisions of Section 250; and
14            (HH) For taxable years beginning on or after
15        January 1, 2018 and prior to January 1, 2023, a maximum
16        of $10,000 contributed in the taxable year to a
17        qualified ABLE account under Section 16.6 of the State
18        Treasurer Act, except that amounts excluded from gross
19        income under Section 529(c)(3)(C)(i) or Section
20        529A(c)(1)(C) of the Internal Revenue Code shall not be
21        considered moneys contributed under this subparagraph
22        (HH). For purposes of this subparagraph (HH),
23        contributions made by an employer on behalf of an
24        employee, or matching contributions made by an
25        employee, shall be treated as made by the employee.
 

 

 

10100SB0689ham003- 33 -LRB101 04450 HLH 61563 a

1    (b) Corporations.
2        (1) In general. In the case of a corporation, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. The taxable income referred to in
6    paragraph (1) shall be modified by adding thereto the sum
7    of the following amounts:
8            (A) An amount equal to all amounts paid or accrued
9        to the taxpayer as interest and all distributions
10        received from regulated investment companies during
11        the taxable year to the extent excluded from gross
12        income in the computation of taxable income;
13            (B) An amount equal to the amount of tax imposed by
14        this Act to the extent deducted from gross income in
15        the computation of taxable income for the taxable year;
16            (C) In the case of a regulated investment company,
17        an amount equal to the excess of (i) the net long-term
18        capital gain for the taxable year, over (ii) the amount
19        of the capital gain dividends designated as such in
20        accordance with Section 852(b)(3)(C) of the Internal
21        Revenue Code and any amount designated under Section
22        852(b)(3)(D) of the Internal Revenue Code,
23        attributable to the taxable year (this amendatory Act
24        of 1995 (Public Act 89-89) is declarative of existing
25        law and is not a new enactment);
26            (D) The amount of any net operating loss deduction

 

 

10100SB0689ham003- 34 -LRB101 04450 HLH 61563 a

1        taken in arriving at taxable income, other than a net
2        operating loss carried forward from a taxable year
3        ending prior to December 31, 1986;
4            (E) For taxable years in which a net operating loss
5        carryback or carryforward from a taxable year ending
6        prior to December 31, 1986 is an element of taxable
7        income under paragraph (1) of subsection (e) or
8        subparagraph (E) of paragraph (2) of subsection (e),
9        the amount by which addition modifications other than
10        those provided by this subparagraph (E) exceeded
11        subtraction modifications in such earlier taxable
12        year, with the following limitations applied in the
13        order that they are listed:
14                (i) the addition modification relating to the
15            net operating loss carried back or forward to the
16            taxable year from any taxable year ending prior to
17            December 31, 1986 shall be reduced by the amount of
18            addition modification under this subparagraph (E)
19            which related to that net operating loss and which
20            was taken into account in calculating the base
21            income of an earlier taxable year, and
22                (ii) the addition modification relating to the
23            net operating loss carried back or forward to the
24            taxable year from any taxable year ending prior to
25            December 31, 1986 shall not exceed the amount of
26            such carryback or carryforward;

 

 

10100SB0689ham003- 35 -LRB101 04450 HLH 61563 a

1            For taxable years in which there is a net operating
2        loss carryback or carryforward from more than one other
3        taxable year ending prior to December 31, 1986, the
4        addition modification provided in this subparagraph
5        (E) shall be the sum of the amounts computed
6        independently under the preceding provisions of this
7        subparagraph (E) for each such taxable year;
8            (E-5) For taxable years ending after December 31,
9        1997, an amount equal to any eligible remediation costs
10        that the corporation deducted in computing adjusted
11        gross income and for which the corporation claims a
12        credit under subsection (l) of Section 201;
13            (E-10) For taxable years 2001 and thereafter, an
14        amount equal to the bonus depreciation deduction taken
15        on the taxpayer's federal income tax return for the
16        taxable year under subsection (k) of Section 168 of the
17        Internal Revenue Code;
18            (E-11) If the taxpayer sells, transfers, abandons,
19        or otherwise disposes of property for which the
20        taxpayer was required in any taxable year to make an
21        addition modification under subparagraph (E-10), then
22        an amount equal to the aggregate amount of the
23        deductions taken in all taxable years under
24        subparagraph (T) with respect to that property.
25            If the taxpayer continues to own property through
26        the last day of the last tax year for which the

 

 

10100SB0689ham003- 36 -LRB101 04450 HLH 61563 a

1        taxpayer may claim a depreciation deduction for
2        federal income tax purposes and for which the taxpayer
3        was allowed in any taxable year to make a subtraction
4        modification under subparagraph (T), then an amount
5        equal to that subtraction modification.
6            The taxpayer is required to make the addition
7        modification under this subparagraph only once with
8        respect to any one piece of property;
9            (E-12) An amount equal to the amount otherwise
10        allowed as a deduction in computing base income for
11        interest paid, accrued, or incurred, directly or
12        indirectly, (i) for taxable years ending on or after
13        December 31, 2004, to a foreign person who would be a
14        member of the same unitary business group but for the
15        fact the foreign person's business activity outside
16        the United States is 80% or more of the foreign
17        person's total business activity and (ii) for taxable
18        years ending on or after December 31, 2008, to a person
19        who would be a member of the same unitary business
20        group but for the fact that the person is prohibited
21        under Section 1501(a)(27) from being included in the
22        unitary business group because he or she is ordinarily
23        required to apportion business income under different
24        subsections of Section 304. The addition modification
25        required by this subparagraph shall be reduced to the
26        extent that dividends were included in base income of

 

 

10100SB0689ham003- 37 -LRB101 04450 HLH 61563 a

1        the unitary group for the same taxable year and
2        received by the taxpayer or by a member of the
3        taxpayer's unitary business group (including amounts
4        included in gross income pursuant to Sections 951
5        through 964 of the Internal Revenue Code and amounts
6        included in gross income under Section 78 of the
7        Internal Revenue Code) with respect to the stock of the
8        same person to whom the interest was paid, accrued, or
9        incurred.
10            This paragraph shall not apply to the following:
11                (i) an item of interest paid, accrued, or
12            incurred, directly or indirectly, to a person who
13            is subject in a foreign country or state, other
14            than a state which requires mandatory unitary
15            reporting, to a tax on or measured by net income
16            with respect to such interest; or
17                (ii) an item of interest paid, accrued, or
18            incurred, directly or indirectly, to a person if
19            the taxpayer can establish, based on a
20            preponderance of the evidence, both of the
21            following:
22                    (a) the person, during the same taxable
23                year, paid, accrued, or incurred, the interest
24                to a person that is not a related member, and
25                    (b) the transaction giving rise to the
26                interest expense between the taxpayer and the

 

 

10100SB0689ham003- 38 -LRB101 04450 HLH 61563 a

1                person did not have as a principal purpose the
2                avoidance of Illinois income tax, and is paid
3                pursuant to a contract or agreement that
4                reflects an arm's-length interest rate and
5                terms; or
6                (iii) the taxpayer can establish, based on
7            clear and convincing evidence, that the interest
8            paid, accrued, or incurred relates to a contract or
9            agreement entered into at arm's-length rates and
10            terms and the principal purpose for the payment is
11            not federal or Illinois tax avoidance; or
12                (iv) an item of interest paid, accrued, or
13            incurred, directly or indirectly, to a person if
14            the taxpayer establishes by clear and convincing
15            evidence that the adjustments are unreasonable; or
16            if the taxpayer and the Director agree in writing
17            to the application or use of an alternative method
18            of apportionment under Section 304(f).
19                Nothing in this subsection shall preclude the
20            Director from making any other adjustment
21            otherwise allowed under Section 404 of this Act for
22            any tax year beginning after the effective date of
23            this amendment provided such adjustment is made
24            pursuant to regulation adopted by the Department
25            and such regulations provide methods and standards
26            by which the Department will utilize its authority

 

 

10100SB0689ham003- 39 -LRB101 04450 HLH 61563 a

1            under Section 404 of this Act;
2            (E-13) An amount equal to the amount of intangible
3        expenses and costs otherwise allowed as a deduction in
4        computing base income, and that were paid, accrued, or
5        incurred, directly or indirectly, (i) for taxable
6        years ending on or after December 31, 2004, to a
7        foreign person who would be a member of the same
8        unitary business group but for the fact that the
9        foreign person's business activity outside the United
10        States is 80% or more of that person's total business
11        activity and (ii) for taxable years ending on or after
12        December 31, 2008, to a person who would be a member of
13        the same unitary business group but for the fact that
14        the person is prohibited under Section 1501(a)(27)
15        from being included in the unitary business group
16        because he or she is ordinarily required to apportion
17        business income under different subsections of Section
18        304. The addition modification required by this
19        subparagraph shall be reduced to the extent that
20        dividends were included in base income of the unitary
21        group for the same taxable year and received by the
22        taxpayer or by a member of the taxpayer's unitary
23        business group (including amounts included in gross
24        income pursuant to Sections 951 through 964 of the
25        Internal Revenue Code and amounts included in gross
26        income under Section 78 of the Internal Revenue Code)

 

 

10100SB0689ham003- 40 -LRB101 04450 HLH 61563 a

1        with respect to the stock of the same person to whom
2        the intangible expenses and costs were directly or
3        indirectly paid, incurred, or accrued. The preceding
4        sentence shall not apply to the extent that the same
5        dividends caused a reduction to the addition
6        modification required under Section 203(b)(2)(E-12) of
7        this Act. As used in this subparagraph, the term
8        "intangible expenses and costs" includes (1) expenses,
9        losses, and costs for, or related to, the direct or
10        indirect acquisition, use, maintenance or management,
11        ownership, sale, exchange, or any other disposition of
12        intangible property; (2) losses incurred, directly or
13        indirectly, from factoring transactions or discounting
14        transactions; (3) royalty, patent, technical, and
15        copyright fees; (4) licensing fees; and (5) other
16        similar expenses and costs. For purposes of this
17        subparagraph, "intangible property" includes patents,
18        patent applications, trade names, trademarks, service
19        marks, copyrights, mask works, trade secrets, and
20        similar types of intangible assets.
21            This paragraph shall not apply to the following:
22                (i) any item of intangible expenses or costs
23            paid, accrued, or incurred, directly or
24            indirectly, from a transaction with a person who is
25            subject in a foreign country or state, other than a
26            state which requires mandatory unitary reporting,

 

 

10100SB0689ham003- 41 -LRB101 04450 HLH 61563 a

1            to a tax on or measured by net income with respect
2            to such item; or
3                (ii) any item of intangible expense or cost
4            paid, accrued, or incurred, directly or
5            indirectly, if the taxpayer can establish, based
6            on a preponderance of the evidence, both of the
7            following:
8                    (a) the person during the same taxable
9                year paid, accrued, or incurred, the
10                intangible expense or cost to a person that is
11                not a related member, and
12                    (b) the transaction giving rise to the
13                intangible expense or cost between the
14                taxpayer and the person did not have as a
15                principal purpose the avoidance of Illinois
16                income tax, and is paid pursuant to a contract
17                or agreement that reflects arm's-length terms;
18                or
19                (iii) any item of intangible expense or cost
20            paid, accrued, or incurred, directly or
21            indirectly, from a transaction with a person if the
22            taxpayer establishes by clear and convincing
23            evidence, that the adjustments are unreasonable;
24            or if the taxpayer and the Director agree in
25            writing to the application or use of an alternative
26            method of apportionment under Section 304(f);

 

 

10100SB0689ham003- 42 -LRB101 04450 HLH 61563 a

1                Nothing in this subsection shall preclude the
2            Director from making any other adjustment
3            otherwise allowed under Section 404 of this Act for
4            any tax year beginning after the effective date of
5            this amendment provided such adjustment is made
6            pursuant to regulation adopted by the Department
7            and such regulations provide methods and standards
8            by which the Department will utilize its authority
9            under Section 404 of this Act;
10            (E-14) For taxable years ending on or after
11        December 31, 2008, an amount equal to the amount of
12        insurance premium expenses and costs otherwise allowed
13        as a deduction in computing base income, and that were
14        paid, accrued, or incurred, directly or indirectly, to
15        a person who would be a member of the same unitary
16        business group but for the fact that the person is
17        prohibited under Section 1501(a)(27) from being
18        included in the unitary business group because he or
19        she is ordinarily required to apportion business
20        income under different subsections of Section 304. The
21        addition modification required by this subparagraph
22        shall be reduced to the extent that dividends were
23        included in base income of the unitary group for the
24        same taxable year and received by the taxpayer or by a
25        member of the taxpayer's unitary business group
26        (including amounts included in gross income under

 

 

10100SB0689ham003- 43 -LRB101 04450 HLH 61563 a

1        Sections 951 through 964 of the Internal Revenue Code
2        and amounts included in gross income under Section 78
3        of the Internal Revenue Code) with respect to the stock
4        of the same person to whom the premiums and costs were
5        directly or indirectly paid, incurred, or accrued. The
6        preceding sentence does not apply to the extent that
7        the same dividends caused a reduction to the addition
8        modification required under Section 203(b)(2)(E-12) or
9        Section 203(b)(2)(E-13) of this Act;
10            (E-15) For taxable years beginning after December
11        31, 2008, any deduction for dividends paid by a captive
12        real estate investment trust that is allowed to a real
13        estate investment trust under Section 857(b)(2)(B) of
14        the Internal Revenue Code for dividends paid;
15            (E-16) An amount equal to the credit allowable to
16        the taxpayer under Section 218(a) of this Act,
17        determined without regard to Section 218(c) of this
18        Act;
19            (E-17) For taxable years ending on or after
20        December 31, 2017, an amount equal to the deduction
21        allowed under Section 199 of the Internal Revenue Code
22        for the taxable year;
23            (E-18) for taxable years beginning after December
24        31, 2018, an amount equal to the deduction allowed
25        under Section 250(a)(1)(A) of the Internal Revenue
26        Code for the taxable year.

 

 

10100SB0689ham003- 44 -LRB101 04450 HLH 61563 a

1    and by deducting from the total so obtained the sum of the
2    following amounts:
3            (F) An amount equal to the amount of any tax
4        imposed by this Act which was refunded to the taxpayer
5        and included in such total for the taxable year;
6            (G) An amount equal to any amount included in such
7        total under Section 78 of the Internal Revenue Code;
8            (H) In the case of a regulated investment company,
9        an amount equal to the amount of exempt interest
10        dividends as defined in subsection (b)(5) of Section
11        852 of the Internal Revenue Code, paid to shareholders
12        for the taxable year;
13            (I) With the exception of any amounts subtracted
14        under subparagraph (J), an amount equal to the sum of
15        all amounts disallowed as deductions by (i) Sections
16        171(a)(2), and 265(a)(2) and amounts disallowed as
17        interest expense by Section 291(a)(3) of the Internal
18        Revenue Code, and all amounts of expenses allocable to
19        interest and disallowed as deductions by Section
20        265(a)(1) of the Internal Revenue Code; and (ii) for
21        taxable years ending on or after August 13, 1999,
22        Sections 171(a)(2), 265, 280C, 291(a)(3), and
23        832(b)(5)(B)(i) of the Internal Revenue Code, plus,
24        for tax years ending on or after December 31, 2011,
25        amounts disallowed as deductions by Section 45G(e)(3)
26        of the Internal Revenue Code and, for taxable years

 

 

10100SB0689ham003- 45 -LRB101 04450 HLH 61563 a

1        ending on or after December 31, 2008, any amount
2        included in gross income under Section 87 of the
3        Internal Revenue Code and the policyholders' share of
4        tax-exempt interest of a life insurance company under
5        Section 807(a)(2)(B) of the Internal Revenue Code (in
6        the case of a life insurance company with gross income
7        from a decrease in reserves for the tax year) or
8        Section 807(b)(1)(B) of the Internal Revenue Code (in
9        the case of a life insurance company allowed a
10        deduction for an increase in reserves for the tax
11        year); the provisions of this subparagraph are exempt
12        from the provisions of Section 250;
13            (J) An amount equal to all amounts included in such
14        total which are exempt from taxation by this State
15        either by reason of its statutes or Constitution or by
16        reason of the Constitution, treaties or statutes of the
17        United States; provided that, in the case of any
18        statute of this State that exempts income derived from
19        bonds or other obligations from the tax imposed under
20        this Act, the amount exempted shall be the interest net
21        of bond premium amortization;
22            (K) An amount equal to those dividends included in
23        such total which were paid by a corporation which
24        conducts business operations in a River Edge
25        Redevelopment Zone or zones created under the River
26        Edge Redevelopment Zone Act and conducts substantially

 

 

10100SB0689ham003- 46 -LRB101 04450 HLH 61563 a

1        all of its operations in a River Edge Redevelopment
2        Zone or zones. This subparagraph (K) is exempt from the
3        provisions of Section 250;
4            (L) An amount equal to those dividends included in
5        such total that were paid by a corporation that
6        conducts business operations in a federally designated
7        Foreign Trade Zone or Sub-Zone and that is designated a
8        High Impact Business located in Illinois; provided
9        that dividends eligible for the deduction provided in
10        subparagraph (K) of paragraph 2 of this subsection
11        shall not be eligible for the deduction provided under
12        this subparagraph (L);
13            (M) For any taxpayer that is a financial
14        organization within the meaning of Section 304(c) of
15        this Act, an amount included in such total as interest
16        income from a loan or loans made by such taxpayer to a
17        borrower, to the extent that such a loan is secured by
18        property which is eligible for the River Edge
19        Redevelopment Zone Investment Credit. To determine the
20        portion of a loan or loans that is secured by property
21        eligible for a Section 201(f) investment credit to the
22        borrower, the entire principal amount of the loan or
23        loans between the taxpayer and the borrower should be
24        divided into the basis of the Section 201(f) investment
25        credit property which secures the loan or loans, using
26        for this purpose the original basis of such property on

 

 

10100SB0689ham003- 47 -LRB101 04450 HLH 61563 a

1        the date that it was placed in service in the River
2        Edge Redevelopment Zone. The subtraction modification
3        available to the taxpayer in any year under this
4        subsection shall be that portion of the total interest
5        paid by the borrower with respect to such loan
6        attributable to the eligible property as calculated
7        under the previous sentence. This subparagraph (M) is
8        exempt from the provisions of Section 250;
9            (M-1) For any taxpayer that is a financial
10        organization within the meaning of Section 304(c) of
11        this Act, an amount included in such total as interest
12        income from a loan or loans made by such taxpayer to a
13        borrower, to the extent that such a loan is secured by
14        property which is eligible for the High Impact Business
15        Investment Credit. To determine the portion of a loan
16        or loans that is secured by property eligible for a
17        Section 201(h) investment credit to the borrower, the
18        entire principal amount of the loan or loans between
19        the taxpayer and the borrower should be divided into
20        the basis of the Section 201(h) investment credit
21        property which secures the loan or loans, using for
22        this purpose the original basis of such property on the
23        date that it was placed in service in a federally
24        designated Foreign Trade Zone or Sub-Zone located in
25        Illinois. No taxpayer that is eligible for the
26        deduction provided in subparagraph (M) of paragraph

 

 

10100SB0689ham003- 48 -LRB101 04450 HLH 61563 a

1        (2) of this subsection shall be eligible for the
2        deduction provided under this subparagraph (M-1). The
3        subtraction modification available to taxpayers in any
4        year under this subsection shall be that portion of the
5        total interest paid by the borrower with respect to
6        such loan attributable to the eligible property as
7        calculated under the previous sentence;
8            (N) Two times any contribution made during the
9        taxable year to a designated zone organization to the
10        extent that the contribution (i) qualifies as a
11        charitable contribution under subsection (c) of
12        Section 170 of the Internal Revenue Code and (ii) must,
13        by its terms, be used for a project approved by the
14        Department of Commerce and Economic Opportunity under
15        Section 11 of the Illinois Enterprise Zone Act or under
16        Section 10-10 of the River Edge Redevelopment Zone Act.
17        This subparagraph (N) is exempt from the provisions of
18        Section 250;
19            (O) An amount equal to: (i) 85% for taxable years
20        ending on or before December 31, 1992, or, a percentage
21        equal to the percentage allowable under Section
22        243(a)(1) of the Internal Revenue Code of 1986 for
23        taxable years ending after December 31, 1992, of the
24        amount by which dividends included in taxable income
25        and received from a corporation that is not created or
26        organized under the laws of the United States or any

 

 

10100SB0689ham003- 49 -LRB101 04450 HLH 61563 a

1        state or political subdivision thereof, including, for
2        taxable years ending on or after December 31, 1988,
3        dividends received or deemed received or paid or deemed
4        paid under Sections 951 through 965 of the Internal
5        Revenue Code, exceed the amount of the modification
6        provided under subparagraph (G) of paragraph (2) of
7        this subsection (b) which is related to such dividends,
8        and including, for taxable years ending on or after
9        December 31, 2008, dividends received from a captive
10        real estate investment trust; plus (ii) 100% of the
11        amount by which dividends, included in taxable income
12        and received, including, for taxable years ending on or
13        after December 31, 1988, dividends received or deemed
14        received or paid or deemed paid under Sections 951
15        through 964 of the Internal Revenue Code and including,
16        for taxable years ending on or after December 31, 2008,
17        dividends received from a captive real estate
18        investment trust, from any such corporation specified
19        in clause (i) that would but for the provisions of
20        Section 1504(b)(3) of the Internal Revenue Code be
21        treated as a member of the affiliated group which
22        includes the dividend recipient, exceed the amount of
23        the modification provided under subparagraph (G) of
24        paragraph (2) of this subsection (b) which is related
25        to such dividends. This subparagraph (O) is exempt from
26        the provisions of Section 250 of this Act;

 

 

10100SB0689ham003- 50 -LRB101 04450 HLH 61563 a

1            (P) An amount equal to any contribution made to a
2        job training project established pursuant to the Tax
3        Increment Allocation Redevelopment Act;
4            (Q) An amount equal to the amount of the deduction
5        used to compute the federal income tax credit for
6        restoration of substantial amounts held under claim of
7        right for the taxable year pursuant to Section 1341 of
8        the Internal Revenue Code;
9            (R) On and after July 20, 1999, in the case of an
10        attorney-in-fact with respect to whom an interinsurer
11        or a reciprocal insurer has made the election under
12        Section 835 of the Internal Revenue Code, 26 U.S.C.
13        835, an amount equal to the excess, if any, of the
14        amounts paid or incurred by that interinsurer or
15        reciprocal insurer in the taxable year to the
16        attorney-in-fact over the deduction allowed to that
17        interinsurer or reciprocal insurer with respect to the
18        attorney-in-fact under Section 835(b) of the Internal
19        Revenue Code for the taxable year; the provisions of
20        this subparagraph are exempt from the provisions of
21        Section 250;
22            (S) For taxable years ending on or after December
23        31, 1997, in the case of a Subchapter S corporation, an
24        amount equal to all amounts of income allocable to a
25        shareholder subject to the Personal Property Tax
26        Replacement Income Tax imposed by subsections (c) and

 

 

10100SB0689ham003- 51 -LRB101 04450 HLH 61563 a

1        (d) of Section 201 of this Act, including amounts
2        allocable to organizations exempt from federal income
3        tax by reason of Section 501(a) of the Internal Revenue
4        Code. This subparagraph (S) is exempt from the
5        provisions of Section 250;
6            (T) For taxable years 2001 and thereafter, for the
7        taxable year in which the bonus depreciation deduction
8        is taken on the taxpayer's federal income tax return
9        under subsection (k) of Section 168 of the Internal
10        Revenue Code and for each applicable taxable year
11        thereafter, an amount equal to "x", where:
12                (1) "y" equals the amount of the depreciation
13            deduction taken for the taxable year on the
14            taxpayer's federal income tax return on property
15            for which the bonus depreciation deduction was
16            taken in any year under subsection (k) of Section
17            168 of the Internal Revenue Code, but not including
18            the bonus depreciation deduction;
19                (2) for taxable years ending on or before
20            December 31, 2005, "x" equals "y" multiplied by 30
21            and then divided by 70 (or "y" multiplied by
22            0.429); and
23                (3) for taxable years ending after December
24            31, 2005:
25                    (i) for property on which a bonus
26                depreciation deduction of 30% of the adjusted

 

 

10100SB0689ham003- 52 -LRB101 04450 HLH 61563 a

1                basis was taken, "x" equals "y" multiplied by
2                30 and then divided by 70 (or "y" multiplied by
3                0.429); and
4                    (ii) for property on which a bonus
5                depreciation deduction of 50% of the adjusted
6                basis was taken, "x" equals "y" multiplied by
7                1.0.
8            The aggregate amount deducted under this
9        subparagraph in all taxable years for any one piece of
10        property may not exceed the amount of the bonus
11        depreciation deduction taken on that property on the
12        taxpayer's federal income tax return under subsection
13        (k) of Section 168 of the Internal Revenue Code. This
14        subparagraph (T) is exempt from the provisions of
15        Section 250;
16            (U) If the taxpayer sells, transfers, abandons, or
17        otherwise disposes of property for which the taxpayer
18        was required in any taxable year to make an addition
19        modification under subparagraph (E-10), then an amount
20        equal to that addition modification.
21            If the taxpayer continues to own property through
22        the last day of the last tax year for which the
23        taxpayer may claim a depreciation deduction for
24        federal income tax purposes and for which the taxpayer
25        was required in any taxable year to make an addition
26        modification under subparagraph (E-10), then an amount

 

 

10100SB0689ham003- 53 -LRB101 04450 HLH 61563 a

1        equal to that addition modification.
2            The taxpayer is allowed to take the deduction under
3        this subparagraph only once with respect to any one
4        piece of property.
5            This subparagraph (U) is exempt from the
6        provisions of Section 250;
7            (V) The amount of: (i) any interest income (net of
8        the deductions allocable thereto) taken into account
9        for the taxable year with respect to a transaction with
10        a taxpayer that is required to make an addition
11        modification with respect to such transaction under
12        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
13        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
14        the amount of such addition modification, (ii) any
15        income from intangible property (net of the deductions
16        allocable thereto) taken into account for the taxable
17        year with respect to a transaction with a taxpayer that
18        is required to make an addition modification with
19        respect to such transaction under Section
20        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
21        203(d)(2)(D-8), but not to exceed the amount of such
22        addition modification, and (iii) any insurance premium
23        income (net of deductions allocable thereto) taken
24        into account for the taxable year with respect to a
25        transaction with a taxpayer that is required to make an
26        addition modification with respect to such transaction

 

 

10100SB0689ham003- 54 -LRB101 04450 HLH 61563 a

1        under Section 203(a)(2)(D-19), Section
2        203(b)(2)(E-14), Section 203(c)(2)(G-14), or Section
3        203(d)(2)(D-9), but not to exceed the amount of that
4        addition modification. This subparagraph (V) is exempt
5        from the provisions of Section 250;
6            (W) An amount equal to the interest income taken
7        into account for the taxable year (net of the
8        deductions allocable thereto) with respect to
9        transactions with (i) a foreign person who would be a
10        member of the taxpayer's unitary business group but for
11        the fact that the foreign person's business activity
12        outside the United States is 80% or more of that
13        person's total business activity and (ii) for taxable
14        years ending on or after December 31, 2008, to a person
15        who would be a member of the same unitary business
16        group but for the fact that the person is prohibited
17        under Section 1501(a)(27) from being included in the
18        unitary business group because he or she is ordinarily
19        required to apportion business income under different
20        subsections of Section 304, but not to exceed the
21        addition modification required to be made for the same
22        taxable year under Section 203(b)(2)(E-12) for
23        interest paid, accrued, or incurred, directly or
24        indirectly, to the same person. This subparagraph (W)
25        is exempt from the provisions of Section 250;
26            (X) An amount equal to the income from intangible

 

 

10100SB0689ham003- 55 -LRB101 04450 HLH 61563 a

1        property taken into account for the taxable year (net
2        of the deductions allocable thereto) with respect to
3        transactions with (i) a foreign person who would be a
4        member of the taxpayer's unitary business group but for
5        the fact that the foreign person's business activity
6        outside the United States is 80% or more of that
7        person's total business activity and (ii) for taxable
8        years ending on or after December 31, 2008, to a person
9        who would be a member of the same unitary business
10        group but for the fact that the person is prohibited
11        under Section 1501(a)(27) from being included in the
12        unitary business group because he or she is ordinarily
13        required to apportion business income under different
14        subsections of Section 304, but not to exceed the
15        addition modification required to be made for the same
16        taxable year under Section 203(b)(2)(E-13) for
17        intangible expenses and costs paid, accrued, or
18        incurred, directly or indirectly, to the same foreign
19        person. This subparagraph (X) is exempt from the
20        provisions of Section 250;
21            (Y) For taxable years ending on or after December
22        31, 2011, in the case of a taxpayer who was required to
23        add back any insurance premiums under Section
24        203(b)(2)(E-14), such taxpayer may elect to subtract
25        that part of a reimbursement received from the
26        insurance company equal to the amount of the expense or

 

 

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1        loss (including expenses incurred by the insurance
2        company) that would have been taken into account as a
3        deduction for federal income tax purposes if the
4        expense or loss had been uninsured. If a taxpayer makes
5        the election provided for by this subparagraph (Y), the
6        insurer to which the premiums were paid must add back
7        to income the amount subtracted by the taxpayer
8        pursuant to this subparagraph (Y). This subparagraph
9        (Y) is exempt from the provisions of Section 250; and
10            (Z) The difference between the nondeductible
11        controlled foreign corporation dividends under Section
12        965(e)(3) of the Internal Revenue Code over the taxable
13        income of the taxpayer, computed without regard to
14        Section 965(e)(2)(A) of the Internal Revenue Code, and
15        without regard to any net operating loss deduction.
16        This subparagraph (Z) is exempt from the provisions of
17        Section 250.
18        (3) Special rule. For purposes of paragraph (2)(A),
19    "gross income" in the case of a life insurance company, for
20    tax years ending on and after December 31, 1994, and prior
21    to December 31, 2011, shall mean the gross investment
22    income for the taxable year and, for tax years ending on or
23    after December 31, 2011, shall mean all amounts included in
24    life insurance gross income under Section 803(a)(3) of the
25    Internal Revenue Code.
 

 

 

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1    (c) Trusts and estates.
2        (1) In general. In the case of a trust or estate, base
3    income means an amount equal to the taxpayer's taxable
4    income for the taxable year as modified by paragraph (2).
5        (2) Modifications. Subject to the provisions of
6    paragraph (3), the taxable income referred to in paragraph
7    (1) shall be modified by adding thereto the sum of the
8    following amounts:
9            (A) An amount equal to all amounts paid or accrued
10        to the taxpayer as interest or dividends during the
11        taxable year to the extent excluded from gross income
12        in the computation of taxable income;
13            (B) In the case of (i) an estate, $600; (ii) a
14        trust which, under its governing instrument, is
15        required to distribute all of its income currently,
16        $300; and (iii) any other trust, $100, but in each such
17        case, only to the extent such amount was deducted in
18        the computation of taxable income;
19            (C) An amount equal to the amount of tax imposed by
20        this Act to the extent deducted from gross income in
21        the computation of taxable income for the taxable year;
22            (D) The amount of any net operating loss deduction
23        taken in arriving at taxable income, other than a net
24        operating loss carried forward from a taxable year
25        ending prior to December 31, 1986;
26            (E) For taxable years in which a net operating loss

 

 

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1        carryback or carryforward from a taxable year ending
2        prior to December 31, 1986 is an element of taxable
3        income under paragraph (1) of subsection (e) or
4        subparagraph (E) of paragraph (2) of subsection (e),
5        the amount by which addition modifications other than
6        those provided by this subparagraph (E) exceeded
7        subtraction modifications in such taxable year, with
8        the following limitations applied in the order that
9        they are listed:
10                (i) the addition modification relating to the
11            net operating loss carried back or forward to the
12            taxable year from any taxable year ending prior to
13            December 31, 1986 shall be reduced by the amount of
14            addition modification under this subparagraph (E)
15            which related to that net operating loss and which
16            was taken into account in calculating the base
17            income of an earlier taxable year, and
18                (ii) the addition modification relating to the
19            net operating loss carried back or forward to the
20            taxable year from any taxable year ending prior to
21            December 31, 1986 shall not exceed the amount of
22            such carryback or carryforward;
23            For taxable years in which there is a net operating
24        loss carryback or carryforward from more than one other
25        taxable year ending prior to December 31, 1986, the
26        addition modification provided in this subparagraph

 

 

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1        (E) shall be the sum of the amounts computed
2        independently under the preceding provisions of this
3        subparagraph (E) for each such taxable year;
4            (F) For taxable years ending on or after January 1,
5        1989, an amount equal to the tax deducted pursuant to
6        Section 164 of the Internal Revenue Code if the trust
7        or estate is claiming the same tax for purposes of the
8        Illinois foreign tax credit under Section 601 of this
9        Act;
10            (G) An amount equal to the amount of the capital
11        gain deduction allowable under the Internal Revenue
12        Code, to the extent deducted from gross income in the
13        computation of taxable income;
14            (G-5) For taxable years ending after December 31,
15        1997, an amount equal to any eligible remediation costs
16        that the trust or estate deducted in computing adjusted
17        gross income and for which the trust or estate claims a
18        credit under subsection (l) of Section 201;
19            (G-10) For taxable years 2001 and thereafter, an
20        amount equal to the bonus depreciation deduction taken
21        on the taxpayer's federal income tax return for the
22        taxable year under subsection (k) of Section 168 of the
23        Internal Revenue Code; and
24            (G-11) If the taxpayer sells, transfers, abandons,
25        or otherwise disposes of property for which the
26        taxpayer was required in any taxable year to make an

 

 

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1        addition modification under subparagraph (G-10), then
2        an amount equal to the aggregate amount of the
3        deductions taken in all taxable years under
4        subparagraph (R) with respect to that property.
5            If the taxpayer continues to own property through
6        the last day of the last tax year for which the
7        taxpayer may claim a depreciation deduction for
8        federal income tax purposes and for which the taxpayer
9        was allowed in any taxable year to make a subtraction
10        modification under subparagraph (R), then an amount
11        equal to that subtraction modification.
12            The taxpayer is required to make the addition
13        modification under this subparagraph only once with
14        respect to any one piece of property;
15            (G-12) An amount equal to the amount otherwise
16        allowed as a deduction in computing base income for
17        interest paid, accrued, or incurred, directly or
18        indirectly, (i) for taxable years ending on or after
19        December 31, 2004, to a foreign person who would be a
20        member of the same unitary business group but for the
21        fact that the foreign person's business activity
22        outside the United States is 80% or more of the foreign
23        person's total business activity and (ii) for taxable
24        years ending on or after December 31, 2008, to a person
25        who would be a member of the same unitary business
26        group but for the fact that the person is prohibited

 

 

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1        under Section 1501(a)(27) from being included in the
2        unitary business group because he or she is ordinarily
3        required to apportion business income under different
4        subsections of Section 304. The addition modification
5        required by this subparagraph shall be reduced to the
6        extent that dividends were included in base income of
7        the unitary group for the same taxable year and
8        received by the taxpayer or by a member of the
9        taxpayer's unitary business group (including amounts
10        included in gross income pursuant to Sections 951
11        through 964 of the Internal Revenue Code and amounts
12        included in gross income under Section 78 of the
13        Internal Revenue Code) with respect to the stock of the
14        same person to whom the interest was paid, accrued, or
15        incurred.
16            This paragraph shall not apply to the following:
17                (i) an item of interest paid, accrued, or
18            incurred, directly or indirectly, to a person who
19            is subject in a foreign country or state, other
20            than a state which requires mandatory unitary
21            reporting, to a tax on or measured by net income
22            with respect to such interest; or
23                (ii) an item of interest paid, accrued, or
24            incurred, directly or indirectly, to a person if
25            the taxpayer can establish, based on a
26            preponderance of the evidence, both of the

 

 

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1            following:
2                    (a) the person, during the same taxable
3                year, paid, accrued, or incurred, the interest
4                to a person that is not a related member, and
5                    (b) the transaction giving rise to the
6                interest expense between the taxpayer and the
7                person did not have as a principal purpose the
8                avoidance of Illinois income tax, and is paid
9                pursuant to a contract or agreement that
10                reflects an arm's-length interest rate and
11                terms; or
12                (iii) the taxpayer can establish, based on
13            clear and convincing evidence, that the interest
14            paid, accrued, or incurred relates to a contract or
15            agreement entered into at arm's-length rates and
16            terms and the principal purpose for the payment is
17            not federal or Illinois tax avoidance; or
18                (iv) an item of interest paid, accrued, or
19            incurred, directly or indirectly, to a person if
20            the taxpayer establishes by clear and convincing
21            evidence that the adjustments are unreasonable; or
22            if the taxpayer and the Director agree in writing
23            to the application or use of an alternative method
24            of apportionment under Section 304(f).
25                Nothing in this subsection shall preclude the
26            Director from making any other adjustment

 

 

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1            otherwise allowed under Section 404 of this Act for
2            any tax year beginning after the effective date of
3            this amendment provided such adjustment is made
4            pursuant to regulation adopted by the Department
5            and such regulations provide methods and standards
6            by which the Department will utilize its authority
7            under Section 404 of this Act;
8            (G-13) An amount equal to the amount of intangible
9        expenses and costs otherwise allowed as a deduction in
10        computing base income, and that were paid, accrued, or
11        incurred, directly or indirectly, (i) for taxable
12        years ending on or after December 31, 2004, to a
13        foreign person who would be a member of the same
14        unitary business group but for the fact that the
15        foreign person's business activity outside the United
16        States is 80% or more of that person's total business
17        activity and (ii) for taxable years ending on or after
18        December 31, 2008, to a person who would be a member of
19        the same unitary business group but for the fact that
20        the person is prohibited under Section 1501(a)(27)
21        from being included in the unitary business group
22        because he or she is ordinarily required to apportion
23        business income under different subsections of Section
24        304. The addition modification required by this
25        subparagraph shall be reduced to the extent that
26        dividends were included in base income of the unitary

 

 

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1        group for the same taxable year and received by the
2        taxpayer or by a member of the taxpayer's unitary
3        business group (including amounts included in gross
4        income pursuant to Sections 951 through 964 of the
5        Internal Revenue Code and amounts included in gross
6        income under Section 78 of the Internal Revenue Code)
7        with respect to the stock of the same person to whom
8        the intangible expenses and costs were directly or
9        indirectly paid, incurred, or accrued. The preceding
10        sentence shall not apply to the extent that the same
11        dividends caused a reduction to the addition
12        modification required under Section 203(c)(2)(G-12) of
13        this Act. As used in this subparagraph, the term
14        "intangible expenses and costs" includes: (1)
15        expenses, losses, and costs for or related to the
16        direct or indirect acquisition, use, maintenance or
17        management, ownership, sale, exchange, or any other
18        disposition of intangible property; (2) losses
19        incurred, directly or indirectly, from factoring
20        transactions or discounting transactions; (3) royalty,
21        patent, technical, and copyright fees; (4) licensing
22        fees; and (5) other similar expenses and costs. For
23        purposes of this subparagraph, "intangible property"
24        includes patents, patent applications, trade names,
25        trademarks, service marks, copyrights, mask works,
26        trade secrets, and similar types of intangible assets.

 

 

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1            This paragraph shall not apply to the following:
2                (i) any item of intangible expenses or costs
3            paid, accrued, or incurred, directly or
4            indirectly, from a transaction with a person who is
5            subject in a foreign country or state, other than a
6            state which requires mandatory unitary reporting,
7            to a tax on or measured by net income with respect
8            to such item; or
9                (ii) any item of intangible expense or cost
10            paid, accrued, or incurred, directly or
11            indirectly, if the taxpayer can establish, based
12            on a preponderance of the evidence, both of the
13            following:
14                    (a) the person during the same taxable
15                year paid, accrued, or incurred, the
16                intangible expense or cost to a person that is
17                not a related member, and
18                    (b) the transaction giving rise to the
19                intangible expense or cost between the
20                taxpayer and the person did not have as a
21                principal purpose the avoidance of Illinois
22                income tax, and is paid pursuant to a contract
23                or agreement that reflects arm's-length terms;
24                or
25                (iii) any item of intangible expense or cost
26            paid, accrued, or incurred, directly or

 

 

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1            indirectly, from a transaction with a person if the
2            taxpayer establishes by clear and convincing
3            evidence, that the adjustments are unreasonable;
4            or if the taxpayer and the Director agree in
5            writing to the application or use of an alternative
6            method of apportionment under Section 304(f);
7                Nothing in this subsection shall preclude the
8            Director from making any other adjustment
9            otherwise allowed under Section 404 of this Act for
10            any tax year beginning after the effective date of
11            this amendment provided such adjustment is made
12            pursuant to regulation adopted by the Department
13            and such regulations provide methods and standards
14            by which the Department will utilize its authority
15            under Section 404 of this Act;
16            (G-14) For taxable years ending on or after
17        December 31, 2008, an amount equal to the amount of
18        insurance premium expenses and costs otherwise allowed
19        as a deduction in computing base income, and that were
20        paid, accrued, or incurred, directly or indirectly, to
21        a person who would be a member of the same unitary
22        business group but for the fact that the person is
23        prohibited under Section 1501(a)(27) from being
24        included in the unitary business group because he or
25        she is ordinarily required to apportion business
26        income under different subsections of Section 304. The

 

 

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1        addition modification required by this subparagraph
2        shall be reduced to the extent that dividends were
3        included in base income of the unitary group for the
4        same taxable year and received by the taxpayer or by a
5        member of the taxpayer's unitary business group
6        (including amounts included in gross income under
7        Sections 951 through 964 of the Internal Revenue Code
8        and amounts included in gross income under Section 78
9        of the Internal Revenue Code) with respect to the stock
10        of the same person to whom the premiums and costs were
11        directly or indirectly paid, incurred, or accrued. The
12        preceding sentence does not apply to the extent that
13        the same dividends caused a reduction to the addition
14        modification required under Section 203(c)(2)(G-12) or
15        Section 203(c)(2)(G-13) of this Act;
16            (G-15) An amount equal to the credit allowable to
17        the taxpayer under Section 218(a) of this Act,
18        determined without regard to Section 218(c) of this
19        Act;
20            (G-16) For taxable years ending on or after
21        December 31, 2017, an amount equal to the deduction
22        allowed under Section 199 of the Internal Revenue Code
23        for the taxable year;
24    and by deducting from the total so obtained the sum of the
25    following amounts:
26            (H) An amount equal to all amounts included in such

 

 

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1        total pursuant to the provisions of Sections 402(a),
2        402(c), 403(a), 403(b), 406(a), 407(a) and 408 of the
3        Internal Revenue Code or included in such total as
4        distributions under the provisions of any retirement
5        or disability plan for employees of any governmental
6        agency or unit, or retirement payments to retired
7        partners, which payments are excluded in computing net
8        earnings from self employment by Section 1402 of the
9        Internal Revenue Code and regulations adopted pursuant
10        thereto;
11            (I) The valuation limitation amount;
12            (J) An amount equal to the amount of any tax
13        imposed by this Act which was refunded to the taxpayer
14        and included in such total for the taxable year;
15            (K) An amount equal to all amounts included in
16        taxable income as modified by subparagraphs (A), (B),
17        (C), (D), (E), (F) and (G) which are exempt from
18        taxation by this State either by reason of its statutes
19        or Constitution or by reason of the Constitution,
20        treaties or statutes of the United States; provided
21        that, in the case of any statute of this State that
22        exempts income derived from bonds or other obligations
23        from the tax imposed under this Act, the amount
24        exempted shall be the interest net of bond premium
25        amortization;
26            (L) With the exception of any amounts subtracted

 

 

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1        under subparagraph (K), an amount equal to the sum of
2        all amounts disallowed as deductions by (i) Sections
3        171(a)(2) and 265(a)(2) of the Internal Revenue Code,
4        and all amounts of expenses allocable to interest and
5        disallowed as deductions by Section 265(a)(1) 265(1)
6        of the Internal Revenue Code; and (ii) for taxable
7        years ending on or after August 13, 1999, Sections
8        171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of the
9        Internal Revenue Code, plus, (iii) for taxable years
10        ending on or after December 31, 2011, Section 45G(e)(3)
11        of the Internal Revenue Code and, for taxable years
12        ending on or after December 31, 2008, any amount
13        included in gross income under Section 87 of the
14        Internal Revenue Code; the provisions of this
15        subparagraph are exempt from the provisions of Section
16        250;
17            (M) An amount equal to those dividends included in
18        such total which were paid by a corporation which
19        conducts business operations in a River Edge
20        Redevelopment Zone or zones created under the River
21        Edge Redevelopment Zone Act and conducts substantially
22        all of its operations in a River Edge Redevelopment
23        Zone or zones. This subparagraph (M) is exempt from the
24        provisions of Section 250;
25            (N) An amount equal to any contribution made to a
26        job training project established pursuant to the Tax

 

 

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1        Increment Allocation Redevelopment Act;
2            (O) An amount equal to those dividends included in
3        such total that were paid by a corporation that
4        conducts business operations in a federally designated
5        Foreign Trade Zone or Sub-Zone and that is designated a
6        High Impact Business located in Illinois; provided
7        that dividends eligible for the deduction provided in
8        subparagraph (M) of paragraph (2) of this subsection
9        shall not be eligible for the deduction provided under
10        this subparagraph (O);
11            (P) An amount equal to the amount of the deduction
12        used to compute the federal income tax credit for
13        restoration of substantial amounts held under claim of
14        right for the taxable year pursuant to Section 1341 of
15        the Internal Revenue Code;
16            (Q) For taxable year 1999 and thereafter, an amount
17        equal to the amount of any (i) distributions, to the
18        extent includible in gross income for federal income
19        tax purposes, made to the taxpayer because of his or
20        her status as a victim of persecution for racial or
21        religious reasons by Nazi Germany or any other Axis
22        regime or as an heir of the victim and (ii) items of
23        income, to the extent includible in gross income for
24        federal income tax purposes, attributable to, derived
25        from or in any way related to assets stolen from,
26        hidden from, or otherwise lost to a victim of

 

 

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1        persecution for racial or religious reasons by Nazi
2        Germany or any other Axis regime immediately prior to,
3        during, and immediately after World War II, including,
4        but not limited to, interest on the proceeds receivable
5        as insurance under policies issued to a victim of
6        persecution for racial or religious reasons by Nazi
7        Germany or any other Axis regime by European insurance
8        companies immediately prior to and during World War II;
9        provided, however, this subtraction from federal
10        adjusted gross income does not apply to assets acquired
11        with such assets or with the proceeds from the sale of
12        such assets; provided, further, this paragraph shall
13        only apply to a taxpayer who was the first recipient of
14        such assets after their recovery and who is a victim of
15        persecution for racial or religious reasons by Nazi
16        Germany or any other Axis regime or as an heir of the
17        victim. The amount of and the eligibility for any
18        public assistance, benefit, or similar entitlement is
19        not affected by the inclusion of items (i) and (ii) of
20        this paragraph in gross income for federal income tax
21        purposes. This paragraph is exempt from the provisions
22        of Section 250;
23            (R) For taxable years 2001 and thereafter, for the
24        taxable year in which the bonus depreciation deduction
25        is taken on the taxpayer's federal income tax return
26        under subsection (k) of Section 168 of the Internal

 

 

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1        Revenue Code and for each applicable taxable year
2        thereafter, an amount equal to "x", where:
3                (1) "y" equals the amount of the depreciation
4            deduction taken for the taxable year on the
5            taxpayer's federal income tax return on property
6            for which the bonus depreciation deduction was
7            taken in any year under subsection (k) of Section
8            168 of the Internal Revenue Code, but not including
9            the bonus depreciation deduction;
10                (2) for taxable years ending on or before
11            December 31, 2005, "x" equals "y" multiplied by 30
12            and then divided by 70 (or "y" multiplied by
13            0.429); and
14                (3) for taxable years ending after December
15            31, 2005:
16                    (i) for property on which a bonus
17                depreciation deduction of 30% of the adjusted
18                basis was taken, "x" equals "y" multiplied by
19                30 and then divided by 70 (or "y" multiplied by
20                0.429); and
21                    (ii) for property on which a bonus
22                depreciation deduction of 50% of the adjusted
23                basis was taken, "x" equals "y" multiplied by
24                1.0.
25            The aggregate amount deducted under this
26        subparagraph in all taxable years for any one piece of

 

 

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1        property may not exceed the amount of the bonus
2        depreciation deduction taken on that property on the
3        taxpayer's federal income tax return under subsection
4        (k) of Section 168 of the Internal Revenue Code. This
5        subparagraph (R) is exempt from the provisions of
6        Section 250;
7            (S) If the taxpayer sells, transfers, abandons, or
8        otherwise disposes of property for which the taxpayer
9        was required in any taxable year to make an addition
10        modification under subparagraph (G-10), then an amount
11        equal to that addition modification.
12            If the taxpayer continues to own property through
13        the last day of the last tax year for which the
14        taxpayer may claim a depreciation deduction for
15        federal income tax purposes and for which the taxpayer
16        was required in any taxable year to make an addition
17        modification under subparagraph (G-10), then an amount
18        equal to that addition modification.
19            The taxpayer is allowed to take the deduction under
20        this subparagraph only once with respect to any one
21        piece of property.
22            This subparagraph (S) is exempt from the
23        provisions of Section 250;
24            (T) The amount of (i) any interest income (net of
25        the deductions allocable thereto) taken into account
26        for the taxable year with respect to a transaction with

 

 

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1        a taxpayer that is required to make an addition
2        modification with respect to such transaction under
3        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
4        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
5        the amount of such addition modification and (ii) any
6        income from intangible property (net of the deductions
7        allocable thereto) taken into account for the taxable
8        year with respect to a transaction with a taxpayer that
9        is required to make an addition modification with
10        respect to such transaction under Section
11        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
12        203(d)(2)(D-8), but not to exceed the amount of such
13        addition modification. This subparagraph (T) is exempt
14        from the provisions of Section 250;
15            (U) An amount equal to the interest income taken
16        into account for the taxable year (net of the
17        deductions allocable thereto) with respect to
18        transactions with (i) a foreign person who would be a
19        member of the taxpayer's unitary business group but for
20        the fact the foreign person's business activity
21        outside the United States is 80% or more of that
22        person's total business activity and (ii) for taxable
23        years ending on or after December 31, 2008, to a person
24        who would be a member of the same unitary business
25        group but for the fact that the person is prohibited
26        under Section 1501(a)(27) from being included in the

 

 

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1        unitary business group because he or she is ordinarily
2        required to apportion business income under different
3        subsections of Section 304, but not to exceed the
4        addition modification required to be made for the same
5        taxable year under Section 203(c)(2)(G-12) for
6        interest paid, accrued, or incurred, directly or
7        indirectly, to the same person. This subparagraph (U)
8        is exempt from the provisions of Section 250;
9            (V) An amount equal to the income from intangible
10        property taken into account for the taxable year (net
11        of the deductions allocable thereto) with respect to
12        transactions with (i) a foreign person who would be a
13        member of the taxpayer's unitary business group but for
14        the fact that the foreign person's business activity
15        outside the United States is 80% or more of that
16        person's total business activity and (ii) for taxable
17        years ending on or after December 31, 2008, to a person
18        who would be a member of the same unitary business
19        group but for the fact that the person is prohibited
20        under Section 1501(a)(27) from being included in the
21        unitary business group because he or she is ordinarily
22        required to apportion business income under different
23        subsections of Section 304, but not to exceed the
24        addition modification required to be made for the same
25        taxable year under Section 203(c)(2)(G-13) for
26        intangible expenses and costs paid, accrued, or

 

 

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1        incurred, directly or indirectly, to the same foreign
2        person. This subparagraph (V) is exempt from the
3        provisions of Section 250;
4            (W) in the case of an estate, an amount equal to
5        all amounts included in such total pursuant to the
6        provisions of Section 111 of the Internal Revenue Code
7        as a recovery of items previously deducted by the
8        decedent from adjusted gross income in the computation
9        of taxable income. This subparagraph (W) is exempt from
10        Section 250;
11            (X) an amount equal to the refund included in such
12        total of any tax deducted for federal income tax
13        purposes, to the extent that deduction was added back
14        under subparagraph (F). This subparagraph (X) is
15        exempt from the provisions of Section 250; and
16            (Y) For taxable years ending on or after December
17        31, 2011, in the case of a taxpayer who was required to
18        add back any insurance premiums under Section
19        203(c)(2)(G-14), such taxpayer may elect to subtract
20        that part of a reimbursement received from the
21        insurance company equal to the amount of the expense or
22        loss (including expenses incurred by the insurance
23        company) that would have been taken into account as a
24        deduction for federal income tax purposes if the
25        expense or loss had been uninsured. If a taxpayer makes
26        the election provided for by this subparagraph (Y), the

 

 

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1        insurer to which the premiums were paid must add back
2        to income the amount subtracted by the taxpayer
3        pursuant to this subparagraph (Y). This subparagraph
4        (Y) is exempt from the provisions of Section 250; and .
5            (Z) For taxable years beginning after December 31,
6        2018 and before January 1, 2026, the amount of excess
7        business loss of the taxpayer disallowed as a deduction
8        by Section 461(l)(1)(B) of the Internal Revenue Code.
9        (3) Limitation. The amount of any modification
10    otherwise required under this subsection shall, under
11    regulations prescribed by the Department, be adjusted by
12    any amounts included therein which were properly paid,
13    credited, or required to be distributed, or permanently set
14    aside for charitable purposes pursuant to Internal Revenue
15    Code Section 642(c) during the taxable year.
 
16    (d) Partnerships.
17        (1) In general. In the case of a partnership, base
18    income means an amount equal to the taxpayer's taxable
19    income for the taxable year as modified by paragraph (2).
20        (2) Modifications. The taxable income referred to in
21    paragraph (1) shall be modified by adding thereto the sum
22    of the following amounts:
23            (A) An amount equal to all amounts paid or accrued
24        to the taxpayer as interest or dividends during the
25        taxable year to the extent excluded from gross income

 

 

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1        in the computation of taxable income;
2            (B) An amount equal to the amount of tax imposed by
3        this Act to the extent deducted from gross income for
4        the taxable year;
5            (C) The amount of deductions allowed to the
6        partnership pursuant to Section 707 (c) of the Internal
7        Revenue Code in calculating its taxable income;
8            (D) An amount equal to the amount of the capital
9        gain deduction allowable under the Internal Revenue
10        Code, to the extent deducted from gross income in the
11        computation of taxable income;
12            (D-5) For taxable years 2001 and thereafter, an
13        amount equal to the bonus depreciation deduction taken
14        on the taxpayer's federal income tax return for the
15        taxable year under subsection (k) of Section 168 of the
16        Internal Revenue Code;
17            (D-6) If the taxpayer sells, transfers, abandons,
18        or otherwise disposes of property for which the
19        taxpayer was required in any taxable year to make an
20        addition modification under subparagraph (D-5), then
21        an amount equal to the aggregate amount of the
22        deductions taken in all taxable years under
23        subparagraph (O) with respect to that property.
24            If the taxpayer continues to own property through
25        the last day of the last tax year for which the
26        taxpayer may claim a depreciation deduction for

 

 

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1        federal income tax purposes and for which the taxpayer
2        was allowed in any taxable year to make a subtraction
3        modification under subparagraph (O), then an amount
4        equal to that subtraction modification.
5            The taxpayer is required to make the addition
6        modification under this subparagraph only once with
7        respect to any one piece of property;
8            (D-7) An amount equal to the amount otherwise
9        allowed as a deduction in computing base income for
10        interest paid, accrued, or incurred, directly or
11        indirectly, (i) for taxable years ending on or after
12        December 31, 2004, to a foreign person who would be a
13        member of the same unitary business group but for the
14        fact the foreign person's business activity outside
15        the United States is 80% or more of the foreign
16        person's total business activity and (ii) for taxable
17        years ending on or after December 31, 2008, to a person
18        who would be a member of the same unitary business
19        group but for the fact that the person is prohibited
20        under Section 1501(a)(27) from being included in the
21        unitary business group because he or she is ordinarily
22        required to apportion business income under different
23        subsections of Section 304. The addition modification
24        required by this subparagraph shall be reduced to the
25        extent that dividends were included in base income of
26        the unitary group for the same taxable year and

 

 

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1        received by the taxpayer or by a member of the
2        taxpayer's unitary business group (including amounts
3        included in gross income pursuant to Sections 951
4        through 964 of the Internal Revenue Code and amounts
5        included in gross income under Section 78 of the
6        Internal Revenue Code) with respect to the stock of the
7        same person to whom the interest was paid, accrued, or
8        incurred.
9            This paragraph shall not apply to the following:
10                (i) an item of interest paid, accrued, or
11            incurred, directly or indirectly, to a person who
12            is subject in a foreign country or state, other
13            than a state which requires mandatory unitary
14            reporting, to a tax on or measured by net income
15            with respect to such interest; or
16                (ii) an item of interest paid, accrued, or
17            incurred, directly or indirectly, to a person if
18            the taxpayer can establish, based on a
19            preponderance of the evidence, both of the
20            following:
21                    (a) the person, during the same taxable
22                year, paid, accrued, or incurred, the interest
23                to a person that is not a related member, and
24                    (b) the transaction giving rise to the
25                interest expense between the taxpayer and the
26                person did not have as a principal purpose the

 

 

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1                avoidance of Illinois income tax, and is paid
2                pursuant to a contract or agreement that
3                reflects an arm's-length interest rate and
4                terms; or
5                (iii) the taxpayer can establish, based on
6            clear and convincing evidence, that the interest
7            paid, accrued, or incurred relates to a contract or
8            agreement entered into at arm's-length rates and
9            terms and the principal purpose for the payment is
10            not federal or Illinois tax avoidance; or
11                (iv) an item of interest paid, accrued, or
12            incurred, directly or indirectly, to a person if
13            the taxpayer establishes by clear and convincing
14            evidence that the adjustments are unreasonable; or
15            if the taxpayer and the Director agree in writing
16            to the application or use of an alternative method
17            of apportionment under Section 304(f).
18                Nothing in this subsection shall preclude the
19            Director from making any other adjustment
20            otherwise allowed under Section 404 of this Act for
21            any tax year beginning after the effective date of
22            this amendment provided such adjustment is made
23            pursuant to regulation adopted by the Department
24            and such regulations provide methods and standards
25            by which the Department will utilize its authority
26            under Section 404 of this Act; and

 

 

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1            (D-8) An amount equal to the amount of intangible
2        expenses and costs otherwise allowed as a deduction in
3        computing base income, and that were paid, accrued, or
4        incurred, directly or indirectly, (i) for taxable
5        years ending on or after December 31, 2004, to a
6        foreign person who would be a member of the same
7        unitary business group but for the fact that the
8        foreign person's business activity outside the United
9        States is 80% or more of that person's total business
10        activity and (ii) for taxable years ending on or after
11        December 31, 2008, to a person who would be a member of
12        the same unitary business group but for the fact that
13        the person is prohibited under Section 1501(a)(27)
14        from being included in the unitary business group
15        because he or she is ordinarily required to apportion
16        business income under different subsections of Section
17        304. The addition modification required by this
18        subparagraph shall be reduced to the extent that
19        dividends were included in base income of the unitary
20        group for the same taxable year and received by the
21        taxpayer or by a member of the taxpayer's unitary
22        business group (including amounts included in gross
23        income pursuant to Sections 951 through 964 of the
24        Internal Revenue Code and amounts included in gross
25        income under Section 78 of the Internal Revenue Code)
26        with respect to the stock of the same person to whom

 

 

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1        the intangible expenses and costs were directly or
2        indirectly paid, incurred or accrued. The preceding
3        sentence shall not apply to the extent that the same
4        dividends caused a reduction to the addition
5        modification required under Section 203(d)(2)(D-7) of
6        this Act. As used in this subparagraph, the term
7        "intangible expenses and costs" includes (1) expenses,
8        losses, and costs for, or related to, the direct or
9        indirect acquisition, use, maintenance or management,
10        ownership, sale, exchange, or any other disposition of
11        intangible property; (2) losses incurred, directly or
12        indirectly, from factoring transactions or discounting
13        transactions; (3) royalty, patent, technical, and
14        copyright fees; (4) licensing fees; and (5) other
15        similar expenses and costs. For purposes of this
16        subparagraph, "intangible property" includes patents,
17        patent applications, trade names, trademarks, service
18        marks, copyrights, mask works, trade secrets, and
19        similar types of intangible assets;
20            This paragraph shall not apply to the following:
21                (i) any item of intangible expenses or costs
22            paid, accrued, or incurred, directly or
23            indirectly, from a transaction with a person who is
24            subject in a foreign country or state, other than a
25            state which requires mandatory unitary reporting,
26            to a tax on or measured by net income with respect

 

 

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1            to such item; or
2                (ii) any item of intangible expense or cost
3            paid, accrued, or incurred, directly or
4            indirectly, if the taxpayer can establish, based
5            on a preponderance of the evidence, both of the
6            following:
7                    (a) the person during the same taxable
8                year paid, accrued, or incurred, the
9                intangible expense or cost to a person that is
10                not a related member, and
11                    (b) the transaction giving rise to the
12                intangible expense or cost between the
13                taxpayer and the person did not have as a
14                principal purpose the avoidance of Illinois
15                income tax, and is paid pursuant to a contract
16                or agreement that reflects arm's-length terms;
17                or
18                (iii) any item of intangible expense or cost
19            paid, accrued, or incurred, directly or
20            indirectly, from a transaction with a person if the
21            taxpayer establishes by clear and convincing
22            evidence, that the adjustments are unreasonable;
23            or if the taxpayer and the Director agree in
24            writing to the application or use of an alternative
25            method of apportionment under Section 304(f);
26                Nothing in this subsection shall preclude the

 

 

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1            Director from making any other adjustment
2            otherwise allowed under Section 404 of this Act for
3            any tax year beginning after the effective date of
4            this amendment provided such adjustment is made
5            pursuant to regulation adopted by the Department
6            and such regulations provide methods and standards
7            by which the Department will utilize its authority
8            under Section 404 of this Act;
9            (D-9) For taxable years ending on or after December
10        31, 2008, an amount equal to the amount of insurance
11        premium expenses and costs otherwise allowed as a
12        deduction in computing base income, and that were paid,
13        accrued, or incurred, directly or indirectly, to a
14        person who would be a member of the same unitary
15        business group but for the fact that the person is
16        prohibited under Section 1501(a)(27) from being
17        included in the unitary business group because he or
18        she is ordinarily required to apportion business
19        income under different subsections of Section 304. The
20        addition modification required by this subparagraph
21        shall be reduced to the extent that dividends were
22        included in base income of the unitary group for the
23        same taxable year and received by the taxpayer or by a
24        member of the taxpayer's unitary business group
25        (including amounts included in gross income under
26        Sections 951 through 964 of the Internal Revenue Code

 

 

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1        and amounts included in gross income under Section 78
2        of the Internal Revenue Code) with respect to the stock
3        of the same person to whom the premiums and costs were
4        directly or indirectly paid, incurred, or accrued. The
5        preceding sentence does not apply to the extent that
6        the same dividends caused a reduction to the addition
7        modification required under Section 203(d)(2)(D-7) or
8        Section 203(d)(2)(D-8) of this Act;
9            (D-10) An amount equal to the credit allowable to
10        the taxpayer under Section 218(a) of this Act,
11        determined without regard to Section 218(c) of this
12        Act;
13            (D-11) For taxable years ending on or after
14        December 31, 2017, an amount equal to the deduction
15        allowed under Section 199 of the Internal Revenue Code
16        for the taxable year;
17    and by deducting from the total so obtained the following
18    amounts:
19            (E) The valuation limitation amount;
20            (F) An amount equal to the amount of any tax
21        imposed by this Act which was refunded to the taxpayer
22        and included in such total for the taxable year;
23            (G) An amount equal to all amounts included in
24        taxable income as modified by subparagraphs (A), (B),
25        (C) and (D) which are exempt from taxation by this
26        State either by reason of its statutes or Constitution

 

 

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1        or by reason of the Constitution, treaties or statutes
2        of the United States; provided that, in the case of any
3        statute of this State that exempts income derived from
4        bonds or other obligations from the tax imposed under
5        this Act, the amount exempted shall be the interest net
6        of bond premium amortization;
7            (H) Any income of the partnership which
8        constitutes personal service income as defined in
9        Section 1348(b)(1) of the Internal Revenue Code (as in
10        effect December 31, 1981) or a reasonable allowance for
11        compensation paid or accrued for services rendered by
12        partners to the partnership, whichever is greater;
13        this subparagraph (H) is exempt from the provisions of
14        Section 250;
15            (I) An amount equal to all amounts of income
16        distributable to an entity subject to the Personal
17        Property Tax Replacement Income Tax imposed by
18        subsections (c) and (d) of Section 201 of this Act
19        including amounts distributable to organizations
20        exempt from federal income tax by reason of Section
21        501(a) of the Internal Revenue Code; this subparagraph
22        (I) is exempt from the provisions of Section 250;
23            (J) With the exception of any amounts subtracted
24        under subparagraph (G), an amount equal to the sum of
25        all amounts disallowed as deductions by (i) Sections
26        171(a)(2), and 265(a)(2) 265(2) of the Internal

 

 

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1        Revenue Code, and all amounts of expenses allocable to
2        interest and disallowed as deductions by Section
3        265(a)(1) 265(1) of the Internal Revenue Code; and (ii)
4        for taxable years ending on or after August 13, 1999,
5        Sections 171(a)(2), 265, 280C, and 832(b)(5)(B)(i) of
6        the Internal Revenue Code, plus, (iii) for taxable
7        years ending on or after December 31, 2011, Section
8        45G(e)(3) of the Internal Revenue Code and, for taxable
9        years ending on or after December 31, 2008, any amount
10        included in gross income under Section 87 of the
11        Internal Revenue Code; the provisions of this
12        subparagraph are exempt from the provisions of Section
13        250;
14            (K) An amount equal to those dividends included in
15        such total which were paid by a corporation which
16        conducts business operations in a River Edge
17        Redevelopment Zone or zones created under the River
18        Edge Redevelopment Zone Act and conducts substantially
19        all of its operations from a River Edge Redevelopment
20        Zone or zones. This subparagraph (K) is exempt from the
21        provisions of Section 250;
22            (L) An amount equal to any contribution made to a
23        job training project established pursuant to the Real
24        Property Tax Increment Allocation Redevelopment Act;
25            (M) An amount equal to those dividends included in
26        such total that were paid by a corporation that

 

 

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1        conducts business operations in a federally designated
2        Foreign Trade Zone or Sub-Zone and that is designated a
3        High Impact Business located in Illinois; provided
4        that dividends eligible for the deduction provided in
5        subparagraph (K) of paragraph (2) of this subsection
6        shall not be eligible for the deduction provided under
7        this subparagraph (M);
8            (N) An amount equal to the amount of the deduction
9        used to compute the federal income tax credit for
10        restoration of substantial amounts held under claim of
11        right for the taxable year pursuant to Section 1341 of
12        the Internal Revenue Code;
13            (O) For taxable years 2001 and thereafter, for the
14        taxable year in which the bonus depreciation deduction
15        is taken on the taxpayer's federal income tax return
16        under subsection (k) of Section 168 of the Internal
17        Revenue Code and for each applicable taxable year
18        thereafter, an amount equal to "x", where:
19                (1) "y" equals the amount of the depreciation
20            deduction taken for the taxable year on the
21            taxpayer's federal income tax return on property
22            for which the bonus depreciation deduction was
23            taken in any year under subsection (k) of Section
24            168 of the Internal Revenue Code, but not including
25            the bonus depreciation deduction;
26                (2) for taxable years ending on or before

 

 

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1            December 31, 2005, "x" equals "y" multiplied by 30
2            and then divided by 70 (or "y" multiplied by
3            0.429); and
4                (3) for taxable years ending after December
5            31, 2005:
6                    (i) for property on which a bonus
7                depreciation deduction of 30% of the adjusted
8                basis was taken, "x" equals "y" multiplied by
9                30 and then divided by 70 (or "y" multiplied by
10                0.429); and
11                    (ii) for property on which a bonus
12                depreciation deduction of 50% of the adjusted
13                basis was taken, "x" equals "y" multiplied by
14                1.0.
15            The aggregate amount deducted under this
16        subparagraph in all taxable years for any one piece of
17        property may not exceed the amount of the bonus
18        depreciation deduction taken on that property on the
19        taxpayer's federal income tax return under subsection
20        (k) of Section 168 of the Internal Revenue Code. This
21        subparagraph (O) is exempt from the provisions of
22        Section 250;
23            (P) If the taxpayer sells, transfers, abandons, or
24        otherwise disposes of property for which the taxpayer
25        was required in any taxable year to make an addition
26        modification under subparagraph (D-5), then an amount

 

 

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1        equal to that addition modification.
2            If the taxpayer continues to own property through
3        the last day of the last tax year for which the
4        taxpayer may claim a depreciation deduction for
5        federal income tax purposes and for which the taxpayer
6        was required in any taxable year to make an addition
7        modification under subparagraph (D-5), then an amount
8        equal to that addition modification.
9            The taxpayer is allowed to take the deduction under
10        this subparagraph only once with respect to any one
11        piece of property.
12            This subparagraph (P) is exempt from the
13        provisions of Section 250;
14            (Q) The amount of (i) any interest income (net of
15        the deductions allocable thereto) taken into account
16        for the taxable year with respect to a transaction with
17        a taxpayer that is required to make an addition
18        modification with respect to such transaction under
19        Section 203(a)(2)(D-17), 203(b)(2)(E-12),
20        203(c)(2)(G-12), or 203(d)(2)(D-7), but not to exceed
21        the amount of such addition modification and (ii) any
22        income from intangible property (net of the deductions
23        allocable thereto) taken into account for the taxable
24        year with respect to a transaction with a taxpayer that
25        is required to make an addition modification with
26        respect to such transaction under Section

 

 

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1        203(a)(2)(D-18), 203(b)(2)(E-13), 203(c)(2)(G-13), or
2        203(d)(2)(D-8), but not to exceed the amount of such
3        addition modification. This subparagraph (Q) is exempt
4        from Section 250;
5            (R) An amount equal to the interest income taken
6        into account for the taxable year (net of the
7        deductions allocable thereto) with respect to
8        transactions with (i) a foreign person who would be a
9        member of the taxpayer's unitary business group but for
10        the fact that the foreign person's business activity
11        outside the United States is 80% or more of that
12        person's total business activity and (ii) for taxable
13        years ending on or after December 31, 2008, to a person
14        who would be a member of the same unitary business
15        group but for the fact that the person is prohibited
16        under Section 1501(a)(27) from being included in the
17        unitary business group because he or she is ordinarily
18        required to apportion business income under different
19        subsections of Section 304, but not to exceed the
20        addition modification required to be made for the same
21        taxable year under Section 203(d)(2)(D-7) for interest
22        paid, accrued, or incurred, directly or indirectly, to
23        the same person. This subparagraph (R) is exempt from
24        Section 250;
25            (S) An amount equal to the income from intangible
26        property taken into account for the taxable year (net

 

 

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1        of the deductions allocable thereto) with respect to
2        transactions with (i) a foreign person who would be a
3        member of the taxpayer's unitary business group but for
4        the fact that the foreign person's business activity
5        outside the United States is 80% or more of that
6        person's total business activity and (ii) for taxable
7        years ending on or after December 31, 2008, to a person
8        who would be a member of the same unitary business
9        group but for the fact that the person is prohibited
10        under Section 1501(a)(27) from being included in the
11        unitary business group because he or she is ordinarily
12        required to apportion business income under different
13        subsections of Section 304, but not to exceed the
14        addition modification required to be made for the same
15        taxable year under Section 203(d)(2)(D-8) for
16        intangible expenses and costs paid, accrued, or
17        incurred, directly or indirectly, to the same person.
18        This subparagraph (S) is exempt from Section 250; and
19            (T) For taxable years ending on or after December
20        31, 2011, in the case of a taxpayer who was required to
21        add back any insurance premiums under Section
22        203(d)(2)(D-9), such taxpayer may elect to subtract
23        that part of a reimbursement received from the
24        insurance company equal to the amount of the expense or
25        loss (including expenses incurred by the insurance
26        company) that would have been taken into account as a

 

 

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1        deduction for federal income tax purposes if the
2        expense or loss had been uninsured. If a taxpayer makes
3        the election provided for by this subparagraph (T), the
4        insurer to which the premiums were paid must add back
5        to income the amount subtracted by the taxpayer
6        pursuant to this subparagraph (T). This subparagraph
7        (T) is exempt from the provisions of Section 250.
 
8    (e) Gross income; adjusted gross income; taxable income.
9        (1) In general. Subject to the provisions of paragraph
10    (2) and subsection (b)(3), for purposes of this Section and
11    Section 803(e), a taxpayer's gross income, adjusted gross
12    income, or taxable income for the taxable year shall mean
13    the amount of gross income, adjusted gross income or
14    taxable income properly reportable for federal income tax
15    purposes for the taxable year under the provisions of the
16    Internal Revenue Code. Taxable income may be less than
17    zero. However, for taxable years ending on or after
18    December 31, 1986, net operating loss carryforwards from
19    taxable years ending prior to December 31, 1986, may not
20    exceed the sum of federal taxable income for the taxable
21    year before net operating loss deduction, plus the excess
22    of addition modifications over subtraction modifications
23    for the taxable year. For taxable years ending prior to
24    December 31, 1986, taxable income may never be an amount in
25    excess of the net operating loss for the taxable year as

 

 

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1    defined in subsections (c) and (d) of Section 172 of the
2    Internal Revenue Code, provided that when taxable income of
3    a corporation (other than a Subchapter S corporation),
4    trust, or estate is less than zero and addition
5    modifications, other than those provided by subparagraph
6    (E) of paragraph (2) of subsection (b) for corporations or
7    subparagraph (E) of paragraph (2) of subsection (c) for
8    trusts and estates, exceed subtraction modifications, an
9    addition modification must be made under those
10    subparagraphs for any other taxable year to which the
11    taxable income less than zero (net operating loss) is
12    applied under Section 172 of the Internal Revenue Code or
13    under subparagraph (E) of paragraph (2) of this subsection
14    (e) applied in conjunction with Section 172 of the Internal
15    Revenue Code.
16        (2) Special rule. For purposes of paragraph (1) of this
17    subsection, the taxable income properly reportable for
18    federal income tax purposes shall mean:
19            (A) Certain life insurance companies. In the case
20        of a life insurance company subject to the tax imposed
21        by Section 801 of the Internal Revenue Code, life
22        insurance company taxable income, plus the amount of
23        distribution from pre-1984 policyholder surplus
24        accounts as calculated under Section 815a of the
25        Internal Revenue Code;
26            (B) Certain other insurance companies. In the case

 

 

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1        of mutual insurance companies subject to the tax
2        imposed by Section 831 of the Internal Revenue Code,
3        insurance company taxable income;
4            (C) Regulated investment companies. In the case of
5        a regulated investment company subject to the tax
6        imposed by Section 852 of the Internal Revenue Code,
7        investment company taxable income;
8            (D) Real estate investment trusts. In the case of a
9        real estate investment trust subject to the tax imposed
10        by Section 857 of the Internal Revenue Code, real
11        estate investment trust taxable income;
12            (E) Consolidated corporations. In the case of a
13        corporation which is a member of an affiliated group of
14        corporations filing a consolidated income tax return
15        for the taxable year for federal income tax purposes,
16        taxable income determined as if such corporation had
17        filed a separate return for federal income tax purposes
18        for the taxable year and each preceding taxable year
19        for which it was a member of an affiliated group. For
20        purposes of this subparagraph, the taxpayer's separate
21        taxable income shall be determined as if the election
22        provided by Section 243(b)(2) of the Internal Revenue
23        Code had been in effect for all such years;
24            (F) Cooperatives. In the case of a cooperative
25        corporation or association, the taxable income of such
26        organization determined in accordance with the

 

 

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1        provisions of Section 1381 through 1388 of the Internal
2        Revenue Code, but without regard to the prohibition
3        against offsetting losses from patronage activities
4        against income from nonpatronage activities; except
5        that a cooperative corporation or association may make
6        an election to follow its federal income tax treatment
7        of patronage losses and nonpatronage losses. In the
8        event such election is made, such losses shall be
9        computed and carried over in a manner consistent with
10        subsection (a) of Section 207 of this Act and
11        apportioned by the apportionment factor reported by
12        the cooperative on its Illinois income tax return filed
13        for the taxable year in which the losses are incurred.
14        The election shall be effective for all taxable years
15        with original returns due on or after the date of the
16        election. In addition, the cooperative may file an
17        amended return or returns, as allowed under this Act,
18        to provide that the election shall be effective for
19        losses incurred or carried forward for taxable years
20        occurring prior to the date of the election. Once made,
21        the election may only be revoked upon approval of the
22        Director. The Department shall adopt rules setting
23        forth requirements for documenting the elections and
24        any resulting Illinois net loss and the standards to be
25        used by the Director in evaluating requests to revoke
26        elections. Public Act 96-932 is declaratory of

 

 

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1        existing law;
2            (G) Subchapter S corporations. In the case of: (i)
3        a Subchapter S corporation for which there is in effect
4        an election for the taxable year under Section 1362 of
5        the Internal Revenue Code, the taxable income of such
6        corporation determined in accordance with Section
7        1363(b) of the Internal Revenue Code, except that
8        taxable income shall take into account those items
9        which are required by Section 1363(b)(1) of the
10        Internal Revenue Code to be separately stated; and (ii)
11        a Subchapter S corporation for which there is in effect
12        a federal election to opt out of the provisions of the
13        Subchapter S Revision Act of 1982 and have applied
14        instead the prior federal Subchapter S rules as in
15        effect on July 1, 1982, the taxable income of such
16        corporation determined in accordance with the federal
17        Subchapter S rules as in effect on July 1, 1982; and
18            (H) Partnerships. In the case of a partnership,
19        taxable income determined in accordance with Section
20        703 of the Internal Revenue Code, except that taxable
21        income shall take into account those items which are
22        required by Section 703(a)(1) to be separately stated
23        but which would be taken into account by an individual
24        in calculating his taxable income.
25        (3) Recapture of business expenses on disposition of
26    asset or business. Notwithstanding any other law to the

 

 

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1    contrary, if in prior years income from an asset or
2    business has been classified as business income and in a
3    later year is demonstrated to be non-business income, then
4    all expenses, without limitation, deducted in such later
5    year and in the 2 immediately preceding taxable years
6    related to that asset or business that generated the
7    non-business income shall be added back and recaptured as
8    business income in the year of the disposition of the asset
9    or business. Such amount shall be apportioned to Illinois
10    using the greater of the apportionment fraction computed
11    for the business under Section 304 of this Act for the
12    taxable year or the average of the apportionment fractions
13    computed for the business under Section 304 of this Act for
14    the taxable year and for the 2 immediately preceding
15    taxable years.
 
16    (f) Valuation limitation amount.
17        (1) In general. The valuation limitation amount
18    referred to in subsections (a)(2)(G), (c)(2)(I) and
19    (d)(2)(E) is an amount equal to:
20            (A) The sum of the pre-August 1, 1969 appreciation
21        amounts (to the extent consisting of gain reportable
22        under the provisions of Section 1245 or 1250 of the
23        Internal Revenue Code) for all property in respect of
24        which such gain was reported for the taxable year; plus
25            (B) The lesser of (i) the sum of the pre-August 1,

 

 

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1        1969 appreciation amounts (to the extent consisting of
2        capital gain) for all property in respect of which such
3        gain was reported for federal income tax purposes for
4        the taxable year, or (ii) the net capital gain for the
5        taxable year, reduced in either case by any amount of
6        such gain included in the amount determined under
7        subsection (a)(2)(F) or (c)(2)(H).
8        (2) Pre-August 1, 1969 appreciation amount.
9            (A) If the fair market value of property referred
10        to in paragraph (1) was readily ascertainable on August
11        1, 1969, the pre-August 1, 1969 appreciation amount for
12        such property is the lesser of (i) the excess of such
13        fair market value over the taxpayer's basis (for
14        determining gain) for such property on that date
15        (determined under the Internal Revenue Code as in
16        effect on that date), or (ii) the total gain realized
17        and reportable for federal income tax purposes in
18        respect of the sale, exchange or other disposition of
19        such property.
20            (B) If the fair market value of property referred
21        to in paragraph (1) was not readily ascertainable on
22        August 1, 1969, the pre-August 1, 1969 appreciation
23        amount for such property is that amount which bears the
24        same ratio to the total gain reported in respect of the
25        property for federal income tax purposes for the
26        taxable year, as the number of full calendar months in

 

 

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1        that part of the taxpayer's holding period for the
2        property ending July 31, 1969 bears to the number of
3        full calendar months in the taxpayer's entire holding
4        period for the property.
5            (C) The Department shall prescribe such
6        regulations as may be necessary to carry out the
7        purposes of this paragraph.
 
8    (g) Double deductions. Unless specifically provided
9otherwise, nothing in this Section shall permit the same item
10to be deducted more than once.
 
11    (h) Legislative intention. Except as expressly provided by
12this Section there shall be no modifications or limitations on
13the amounts of income, gain, loss or deduction taken into
14account in determining gross income, adjusted gross income or
15taxable income for federal income tax purposes for the taxable
16year, or in the amount of such items entering into the
17computation of base income and net income under this Act for
18such taxable year, whether in respect of property values as of
19August 1, 1969 or otherwise.
20(Source: P.A. 100-22, eff. 7-6-17; 100-905, eff. 8-17-18;
21revised 10-29-18.)
 
22    Section 10-10. The Use Tax Act is amended by changing
23Section 2 and by adding Section 2d as follows:
 

 

 

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1    (35 ILCS 105/2)  (from Ch. 120, par. 439.2)
2    Sec. 2. Definitions.
3    "Use" means the exercise by any person of any right or
4power over tangible personal property incident to the ownership
5of that property, except that it does not include the sale of
6such property in any form as tangible personal property in the
7regular course of business to the extent that such property is
8not first subjected to a use for which it was purchased, and
9does not include the use of such property by its owner for
10demonstration purposes: Provided that the property purchased
11is deemed to be purchased for the purpose of resale, despite
12first being used, to the extent to which it is resold as an
13ingredient of an intentionally produced product or by-product
14of manufacturing. "Use" does not mean the demonstration use or
15interim use of tangible personal property by a retailer before
16he sells that tangible personal property. For watercraft or
17aircraft, if the period of demonstration use or interim use by
18the retailer exceeds 18 months, the retailer shall pay on the
19retailers' original cost price the tax imposed by this Act, and
20no credit for that tax is permitted if the watercraft or
21aircraft is subsequently sold by the retailer. "Use" does not
22mean the physical incorporation of tangible personal property,
23to the extent not first subjected to a use for which it was
24purchased, as an ingredient or constituent, into other tangible
25personal property (a) which is sold in the regular course of

 

 

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1business or (b) which the person incorporating such ingredient
2or constituent therein has undertaken at the time of such
3purchase to cause to be transported in interstate commerce to
4destinations outside the State of Illinois: Provided that the
5property purchased is deemed to be purchased for the purpose of
6resale, despite first being used, to the extent to which it is
7resold as an ingredient of an intentionally produced product or
8by-product of manufacturing.
9    "Watercraft" means a Class 2, Class 3, or Class 4
10watercraft as defined in Section 3-2 of the Boat Registration
11and Safety Act, a personal watercraft, or any boat equipped
12with an inboard motor.
13    "Purchase at retail" means the acquisition of the ownership
14of or title to tangible personal property through a sale at
15retail.
16    "Purchaser" means anyone who, through a sale at retail,
17acquires the ownership of tangible personal property for a
18valuable consideration.
19    "Sale at retail" means any transfer of the ownership of or
20title to tangible personal property to a purchaser, for the
21purpose of use, and not for the purpose of resale in any form
22as tangible personal property to the extent not first subjected
23to a use for which it was purchased, for a valuable
24consideration: Provided that the property purchased is deemed
25to be purchased for the purpose of resale, despite first being
26used, to the extent to which it is resold as an ingredient of

 

 

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1an intentionally produced product or by-product of
2manufacturing. For this purpose, slag produced as an incident
3to manufacturing pig iron or steel and sold is considered to be
4an intentionally produced by-product of manufacturing. "Sale
5at retail" includes any such transfer made for resale unless
6made in compliance with Section 2c of the Retailers' Occupation
7Tax Act, as incorporated by reference into Section 12 of this
8Act. Transactions whereby the possession of the property is
9transferred but the seller retains the title as security for
10payment of the selling price are sales.
11    "Sale at retail" shall also be construed to include any
12Illinois florist's sales transaction in which the purchase
13order is received in Illinois by a florist and the sale is for
14use or consumption, but the Illinois florist has a florist in
15another state deliver the property to the purchaser or the
16purchaser's donee in such other state.
17    Nonreusable tangible personal property that is used by
18persons engaged in the business of operating a restaurant,
19cafeteria, or drive-in is a sale for resale when it is
20transferred to customers in the ordinary course of business as
21part of the sale of food or beverages and is used to deliver,
22package, or consume food or beverages, regardless of where
23consumption of the food or beverages occurs. Examples of those
24items include, but are not limited to nonreusable, paper and
25plastic cups, plates, baskets, boxes, sleeves, buckets or other
26containers, utensils, straws, placemats, napkins, doggie bags,

 

 

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1and wrapping or packaging materials that are transferred to
2customers as part of the sale of food or beverages in the
3ordinary course of business.
4    The purchase, employment and transfer of such tangible
5personal property as newsprint and ink for the primary purpose
6of conveying news (with or without other information) is not a
7purchase, use or sale of tangible personal property.
8    "Selling price" means the consideration for a sale valued
9in money whether received in money or otherwise, including
10cash, credits, property other than as hereinafter provided, and
11services, but not including the value of or credit given for
12traded-in tangible personal property where the item that is
13traded-in is of like kind and character as that which is being
14sold, and shall be determined without any deduction on account
15of the cost of the property sold, the cost of materials used,
16labor or service cost or any other expense whatsoever, but does
17not include interest or finance charges which appear as
18separate items on the bill of sale or sales contract nor
19charges that are added to prices by sellers on account of the
20seller's tax liability under the "Retailers' Occupation Tax
21Act", or on account of the seller's duty to collect, from the
22purchaser, the tax that is imposed by this Act, or, except as
23otherwise provided with respect to any cigarette tax imposed by
24a home rule unit, on account of the seller's tax liability
25under any local occupation tax administered by the Department,
26or, except as otherwise provided with respect to any cigarette

 

 

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1tax imposed by a home rule unit on account of the seller's duty
2to collect, from the purchasers, the tax that is imposed under
3any local use tax administered by the Department. Effective
4December 1, 1985, "selling price" shall include charges that
5are added to prices by sellers on account of the seller's tax
6liability under the Cigarette Tax Act, on account of the
7seller's duty to collect, from the purchaser, the tax imposed
8under the Cigarette Use Tax Act, and on account of the seller's
9duty to collect, from the purchaser, any cigarette tax imposed
10by a home rule unit.
11    Notwithstanding any law to the contrary, for any motor
12vehicle, as defined in Section 1-146 of the Vehicle Code, that
13is sold on or after January 1, 2015 for the purpose of leasing
14the vehicle for a defined period that is longer than one year
15and (1) is a motor vehicle of the second division that: (A) is
16a self-contained motor vehicle designed or permanently
17converted to provide living quarters for recreational,
18camping, or travel use, with direct walk through access to the
19living quarters from the driver's seat; (B) is of the van
20configuration designed for the transportation of not less than
217 nor more than 16 passengers; or (C) has a gross vehicle
22weight rating of 8,000 pounds or less or (2) is a motor vehicle
23of the first division, "selling price" or "amount of sale"
24means the consideration received by the lessor pursuant to the
25lease contract, including amounts due at lease signing and all
26monthly or other regular payments charged over the term of the

 

 

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1lease. Also included in the selling price is any amount
2received by the lessor from the lessee for the leased vehicle
3that is not calculated at the time the lease is executed,
4including, but not limited to, excess mileage charges and
5charges for excess wear and tear. For sales that occur in
6Illinois, with respect to any amount received by the lessor
7from the lessee for the leased vehicle that is not calculated
8at the time the lease is executed, the lessor who purchased the
9motor vehicle does not incur the tax imposed by the Use Tax Act
10on those amounts, and the retailer who makes the retail sale of
11the motor vehicle to the lessor is not required to collect the
12tax imposed by this Act or to pay the tax imposed by the
13Retailers' Occupation Tax Act on those amounts. However, the
14lessor who purchased the motor vehicle assumes the liability
15for reporting and paying the tax on those amounts directly to
16the Department in the same form (Illinois Retailers' Occupation
17Tax, and local retailers' occupation taxes, if applicable) in
18which the retailer would have reported and paid such tax if the
19retailer had accounted for the tax to the Department. For
20amounts received by the lessor from the lessee that are not
21calculated at the time the lease is executed, the lessor must
22file the return and pay the tax to the Department by the due
23date otherwise required by this Act for returns other than
24transaction returns. If the retailer is entitled under this Act
25to a discount for collecting and remitting the tax imposed
26under this Act to the Department with respect to the sale of

 

 

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1the motor vehicle to the lessor, then the right to the discount
2provided in this Act shall be transferred to the lessor with
3respect to the tax paid by the lessor for any amount received
4by the lessor from the lessee for the leased vehicle that is
5not calculated at the time the lease is executed; provided that
6the discount is only allowed if the return is timely filed and
7for amounts timely paid. The "selling price" of a motor vehicle
8that is sold on or after January 1, 2015 for the purpose of
9leasing for a defined period of longer than one year shall not
10be reduced by the value of or credit given for traded-in
11tangible personal property owned by the lessor, nor shall it be
12reduced by the value of or credit given for traded-in tangible
13personal property owned by the lessee, regardless of whether
14the trade-in value thereof is assigned by the lessee to the
15lessor. In the case of a motor vehicle that is sold for the
16purpose of leasing for a defined period of longer than one
17year, the sale occurs at the time of the delivery of the
18vehicle, regardless of the due date of any lease payments. A
19lessor who incurs a Retailers' Occupation Tax liability on the
20sale of a motor vehicle coming off lease may not take a credit
21against that liability for the Use Tax the lessor paid upon the
22purchase of the motor vehicle (or for any tax the lessor paid
23with respect to any amount received by the lessor from the
24lessee for the leased vehicle that was not calculated at the
25time the lease was executed) if the selling price of the motor
26vehicle at the time of purchase was calculated using the

 

 

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1definition of "selling price" as defined in this paragraph.
2Notwithstanding any other provision of this Act to the
3contrary, lessors shall file all returns and make all payments
4required under this paragraph to the Department by electronic
5means in the manner and form as required by the Department.
6This paragraph does not apply to leases of motor vehicles for
7which, at the time the lease is entered into, the term of the
8lease is not a defined period, including leases with a defined
9initial period with the option to continue the lease on a
10month-to-month or other basis beyond the initial defined
11period.
12    The phrase "like kind and character" shall be liberally
13construed (including but not limited to any form of motor
14vehicle for any form of motor vehicle, or any kind of farm or
15agricultural implement for any other kind of farm or
16agricultural implement), while not including a kind of item
17which, if sold at retail by that retailer, would be exempt from
18retailers' occupation tax and use tax as an isolated or
19occasional sale.
20    "Department" means the Department of Revenue.
21    "Person" means any natural individual, firm, partnership,
22association, joint stock company, joint adventure, public or
23private corporation, limited liability company, or a receiver,
24executor, trustee, guardian or other representative appointed
25by order of any court.
26    "Retailer" means and includes every person engaged in the

 

 

10100SB0689ham003- 110 -LRB101 04450 HLH 61563 a

1business of making sales at retail as defined in this Section.
2    A person who holds himself or herself out as being engaged
3(or who habitually engages) in selling tangible personal
4property at retail is a retailer hereunder with respect to such
5sales (and not primarily in a service occupation)
6notwithstanding the fact that such person designs and produces
7such tangible personal property on special order for the
8purchaser and in such a way as to render the property of value
9only to such purchaser, if such tangible personal property so
10produced on special order serves substantially the same
11function as stock or standard items of tangible personal
12property that are sold at retail.
13    A person whose activities are organized and conducted
14primarily as a not-for-profit service enterprise, and who
15engages in selling tangible personal property at retail
16(whether to the public or merely to members and their guests)
17is a retailer with respect to such transactions, excepting only
18a person organized and operated exclusively for charitable,
19religious or educational purposes either (1), to the extent of
20sales by such person to its members, students, patients or
21inmates of tangible personal property to be used primarily for
22the purposes of such person, or (2), to the extent of sales by
23such person of tangible personal property which is not sold or
24offered for sale by persons organized for profit. The selling
25of school books and school supplies by schools at retail to
26students is not "primarily for the purposes of" the school

 

 

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1which does such selling. This paragraph does not apply to nor
2subject to taxation occasional dinners, social or similar
3activities of a person organized and operated exclusively for
4charitable, religious or educational purposes, whether or not
5such activities are open to the public.
6    A person who is the recipient of a grant or contract under
7Title VII of the Older Americans Act of 1965 (P.L. 92-258) and
8serves meals to participants in the federal Nutrition Program
9for the Elderly in return for contributions established in
10amount by the individual participant pursuant to a schedule of
11suggested fees as provided for in the federal Act is not a
12retailer under this Act with respect to such transactions.
13    Persons who engage in the business of transferring tangible
14personal property upon the redemption of trading stamps are
15retailers hereunder when engaged in such business.
16    The isolated or occasional sale of tangible personal
17property at retail by a person who does not hold himself out as
18being engaged (or who does not habitually engage) in selling
19such tangible personal property at retail or a sale through a
20bulk vending machine does not make such person a retailer
21hereunder. However, any person who is engaged in a business
22which is not subject to the tax imposed by the "Retailers'
23Occupation Tax Act" because of involving the sale of or a
24contract to sell real estate or a construction contract to
25improve real estate, but who, in the course of conducting such
26business, transfers tangible personal property to users or

 

 

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1consumers in the finished form in which it was purchased, and
2which does not become real estate, under any provision of a
3construction contract or real estate sale or real estate sales
4agreement entered into with some other person arising out of or
5because of such nontaxable business, is a retailer to the
6extent of the value of the tangible personal property so
7transferred. If, in such transaction, a separate charge is made
8for the tangible personal property so transferred, the value of
9such property, for the purposes of this Act, is the amount so
10separately charged, but not less than the cost of such property
11to the transferor; if no separate charge is made, the value of
12such property, for the purposes of this Act, is the cost to the
13transferor of such tangible personal property.
14    "Retailer maintaining a place of business in this State",
15or any like term, means and includes any of the following
16retailers:
17        (1) A retailer having or maintaining within this State,
18    directly or by a subsidiary, an office, distribution house,
19    sales house, warehouse or other place of business, or any
20    agent or other representative operating within this State
21    under the authority of the retailer or its subsidiary,
22    irrespective of whether such place of business or agent or
23    other representative is located here permanently or
24    temporarily, or whether such retailer or subsidiary is
25    licensed to do business in this State. However, the
26    ownership of property that is located at the premises of a

 

 

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1    printer with which the retailer has contracted for printing
2    and that consists of the final printed product, property
3    that becomes a part of the final printed product, or copy
4    from which the printed product is produced shall not result
5    in the retailer being deemed to have or maintain an office,
6    distribution house, sales house, warehouse, or other place
7    of business within this State.
8        (1.1) A retailer having a contract with a person
9    located in this State under which the person, for a
10    commission or other consideration based upon the sale of
11    tangible personal property by the retailer, directly or
12    indirectly refers potential customers to the retailer by
13    providing to the potential customers a promotional code or
14    other mechanism that allows the retailer to track purchases
15    referred by such persons. Examples of mechanisms that allow
16    the retailer to track purchases referred by such persons
17    include but are not limited to the use of a link on the
18    person's Internet website, promotional codes distributed
19    through the person's hand-delivered or mailed material,
20    and promotional codes distributed by the person through
21    radio or other broadcast media. The provisions of this
22    paragraph (1.1) shall apply only if the cumulative gross
23    receipts from sales of tangible personal property by the
24    retailer to customers who are referred to the retailer by
25    all persons in this State under such contracts exceed
26    $10,000 during the preceding 4 quarterly periods ending on

 

 

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1    the last day of March, June, September, and December. A
2    retailer meeting the requirements of this paragraph (1.1)
3    shall be presumed to be maintaining a place of business in
4    this State but may rebut this presumption by submitting
5    proof that the referrals or other activities pursued within
6    this State by such persons were not sufficient to meet the
7    nexus standards of the United States Constitution during
8    the preceding 4 quarterly periods.
9        (1.2) Beginning July 1, 2011, a retailer having a
10    contract with a person located in this State under which:
11            (A) the retailer sells the same or substantially
12        similar line of products as the person located in this
13        State and does so using an identical or substantially
14        similar name, trade name, or trademark as the person
15        located in this State; and
16            (B) the retailer provides a commission or other
17        consideration to the person located in this State based
18        upon the sale of tangible personal property by the
19        retailer.
20    The provisions of this paragraph (1.2) shall apply only if
21    the cumulative gross receipts from sales of tangible
22    personal property by the retailer to customers in this
23    State under all such contracts exceed $10,000 during the
24    preceding 4 quarterly periods ending on the last day of
25    March, June, September, and December.
26        (2) A retailer soliciting orders for tangible personal

 

 

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1    property by means of a telecommunication or television
2    shopping system (which utilizes toll free numbers) which is
3    intended by the retailer to be broadcast by cable
4    television or other means of broadcasting, to consumers
5    located in this State.
6        (3) A retailer, pursuant to a contract with a
7    broadcaster or publisher located in this State, soliciting
8    orders for tangible personal property by means of
9    advertising which is disseminated primarily to consumers
10    located in this State and only secondarily to bordering
11    jurisdictions.
12        (4) A retailer soliciting orders for tangible personal
13    property by mail if the solicitations are substantial and
14    recurring and if the retailer benefits from any banking,
15    financing, debt collection, telecommunication, or
16    marketing activities occurring in this State or benefits
17    from the location in this State of authorized installation,
18    servicing, or repair facilities.
19        (5) A retailer that is owned or controlled by the same
20    interests that own or control any retailer engaging in
21    business in the same or similar line of business in this
22    State.
23        (6) A retailer having a franchisee or licensee
24    operating under its trade name if the franchisee or
25    licensee is required to collect the tax under this Section.
26        (7) A retailer, pursuant to a contract with a cable

 

 

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1    television operator located in this State, soliciting
2    orders for tangible personal property by means of
3    advertising which is transmitted or distributed over a
4    cable television system in this State.
5        (8) A retailer engaging in activities in Illinois,
6    which activities in the state in which the retail business
7    engaging in such activities is located would constitute
8    maintaining a place of business in that state.
9        (9) Beginning October 1, 2018, a retailer making sales
10    of tangible personal property to purchasers in Illinois
11    from outside of Illinois if:
12            (A) the cumulative gross receipts from sales of
13        tangible personal property to purchasers in Illinois
14        are $100,000 or more; or
15            (B) the retailer enters into 200 or more separate
16        transactions for the sale of tangible personal
17        property to purchasers in Illinois.
18        The retailer shall determine on a quarterly basis,
19    ending on the last day of March, June, September, and
20    December, whether he or she meets the criteria of either
21    subparagraph (A) or (B) of this paragraph (9) for the
22    preceding 12-month period. If the retailer meets the
23    criteria of either subparagraph (A) or (B) for a 12-month
24    period, he or she is considered a retailer maintaining a
25    place of business in this State and is required to collect
26    and remit the tax imposed under this Act and file returns

 

 

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1    for one year. At the end of that one-year period, the
2    retailer shall determine whether the retailer met the
3    criteria of either subparagraph (A) or (B) during the
4    preceding 12-month period. If the retailer met the criteria
5    in either subparagraph (A) or (B) for the preceding
6    12-month period, he or she is considered a retailer
7    maintaining a place of business in this State and is
8    required to collect and remit the tax imposed under this
9    Act and file returns for the subsequent year. If at the end
10    of a one-year period a retailer that was required to
11    collect and remit the tax imposed under this Act determines
12    that he or she did not meet the criteria in either
13    subparagraph (A) or (B) during the preceding 12-month
14    period, the retailer shall subsequently determine on a
15    quarterly basis, ending on the last day of March, June,
16    September, and December, whether he or she meets the
17    criteria of either subparagraph (A) or (B) for the
18    preceding 12-month period.
19        Beginning January 1, 2020, neither the gross receipts
20    from nor the number of separate transactions for sales of
21    tangible personal property to purchasers in Illinois that a
22    retailer makes through a marketplace facilitator and for
23    which the retailer has received a certification from the
24    marketplace facilitator pursuant to Section 2d of this Act
25    shall be included for purposes of determining whether he or
26    she has met the thresholds of this paragraph (9).

 

 

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1        (10) Beginning January 1, 2020, a marketplace
2    facilitator, as defined in Section 2d of this Act.
3    "Bulk vending machine" means a vending machine, containing
4unsorted confections, nuts, toys, or other items designed
5primarily to be used or played with by children which, when a
6coin or coins of a denomination not larger than $0.50 are
7inserted, are dispensed in equal portions, at random and
8without selection by the customer.
9(Source: P.A. 99-78, eff. 7-20-15; 100-587, eff. 6-4-18.)
 
10    (35 ILCS 105/2d new)
11    Sec. 2d. Marketplace facilitators and marketplace sellers.
12    (a) As used in this Section:
13    "Affiliate" means a person that, with respect to another
14person: (i) has a direct or indirect ownership interest of more
15than 5 percent in the other person; or (ii) is related to the
16other person because a third person, or a group of third
17persons who are affiliated with each other as defined in this
18subsection, holds a direct or indirect ownership interest of
19more than 5% in the related person.
20    "Marketplace" means a physical or electronic place, forum,
21platform, application, or other method by which a marketplace
22seller sells or offers to sell items.
23    "Marketplace facilitator" means a person who, pursuant to
24an agreement with a marketplace seller, facilitates sales of
25tangible personal property by that marketplace seller. A person

 

 

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1facilitates a sale of tangible personal property by, directly
2or indirectly through one or more affiliates, doing both of the
3following: (i) listing or otherwise making available for sale
4the tangible personal property of the marketplace seller
5through a marketplace owned or operated by the marketplace
6facilitator; and (ii) processing sales or payments for
7marketplace sellers.
8    "Marketplace seller" means a person that sells or offers to
9sell tangible personal property through a marketplace.
10    (b) Beginning on January 1, 2020, a marketplace facilitator
11who meets either of the following criteria is considered the
12retailer of each sale of tangible personal property made on the
13marketplace:
14        (1) the cumulative gross receipts from sales of
15    tangible personal property to purchasers in Illinois by the
16    marketplace facilitator and by marketplace sellers are
17    $100,000 or more; or
18        (2) the marketplace facilitator and marketplace
19    sellers cumulatively enter into 200 or more separate
20    transactions for the sale of tangible personal property to
21    purchasers in Illinois.
22    A marketplace facilitator shall determine on a quarterly
23basis, ending on the last day of March, June, September, and
24December, whether he or she meets the criteria of either
25paragraph (1) or (2) of this subsection (b) for the preceding
2612-month period. If the marketplace facilitator meets the

 

 

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1criteria of either paragraph (1) or (2) for a 12-month period,
2he or she is considered a retailer maintaining a place of
3business in this State and is required to collect and remit the
4tax imposed under this Act and file returns for one year. At
5the end of that one-year period, the marketplace facilitator
6shall determine whether the marketplace facilitator met the
7criteria of either paragraph (1) or (2) during the preceding
812-month period. If the marketplace facilitator met the
9criteria in either paragraph (1) or (2) for the preceding
1012-month period, he or she is considered a retailer maintaining
11a place of business in this State and is required to collect
12and remit the tax imposed under this Act and file returns for
13the subsequent year. If at the end of a one-year period a
14marketplace facilitator that was required to collect and remit
15the tax imposed under this Act determines that he or she did
16not meet the criteria in either paragraph (1) or (2) during the
17preceding 12-month period, the marketplace facilitator shall
18subsequently determine on a quarterly basis, ending on the last
19day of March, June, September, and December, whether he or she
20meets the criteria of either paragraph (1) or (2) for the
21preceding 12-month period.
22    (c) A marketplace facilitator that meets either of the
23thresholds in subsection (b) of this Section is considered the
24retailer of each sale made through its marketplace and is
25liable for collecting and remitting the tax under this Act on
26all such sales. The marketplace facilitator has all the rights

 

 

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1and duties, and is required to comply with the same
2requirements and procedures, as all other retailers
3maintaining a place of business in this State who are
4registered or who are required to be registered to collect and
5remit the tax imposed by this Act.
6    (d) A marketplace facilitator shall:
7        (1) certify to each marketplace seller that the
8    marketplace facilitator assumes the rights and duties of a
9    retailer under this Act with respect to sales made by the
10    marketplace seller through the marketplace; and
11        (2) collect taxes imposed by this Act as required by
12    Section 3-45 of this Act for sales made through the
13    marketplace.
14    (e) A marketplace seller shall retain books and records for
15all sales made through a marketplace in accordance with the
16requirements of Section 11.
17    (f) A marketplace seller shall furnish to the marketplace
18facilitator information that is necessary for the marketplace
19facilitator to correctly collect and remit taxes for a retail
20sale. The information may include a certification that an item
21being sold is taxable, not taxable, exempt from taxation, or
22taxable at a specified rate. A marketplace seller shall be held
23harmless for liability for the tax imposed under this Act when
24a marketplace facilitator fails to correctly collect and remit
25tax after having been provided with information by a
26marketplace seller to correctly collect and remit taxes imposed

 

 

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1under this Act.
2    (g) Except as provided in subsection (h), if the
3marketplace facilitator demonstrates to the satisfaction of
4the Department that its failure to correctly collect and remit
5tax on a retail sale resulted from the marketplace
6facilitator's good faith reliance on incorrect or insufficient
7information provided by a marketplace seller, it shall be
8relieved of liability for the tax on that retail sale. In this
9case, a marketplace seller is liable for any resulting tax due.
10    (h) A marketplace facilitator and marketplace seller that
11are affiliates, as defined by subsection (a), are jointly and
12severally liable for tax liability resulting from a sale made
13by the affiliated marketplace seller through the marketplace.
14    (i) This Section does not affect the tax liability of a
15purchaser under this Act.
16    (j) The Department may adopt rules for the administration
17and enforcement of the provisions of this Section.
 
18    Section 10-15. The Service Use Tax Act is amended by
19changing Section 2 and by adding Section 2d as follows:
 
20    (35 ILCS 110/2)  (from Ch. 120, par. 439.32)
21    Sec. 2. Definitions. In this Act:
22    "Use" means the exercise by any person of any right or
23power over tangible personal property incident to the ownership
24of that property, but does not include the sale or use for

 

 

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1demonstration by him of that property in any form as tangible
2personal property in the regular course of business. "Use" does
3not mean the interim use of tangible personal property nor the
4physical incorporation of tangible personal property, as an
5ingredient or constituent, into other tangible personal
6property, (a) which is sold in the regular course of business
7or (b) which the person incorporating such ingredient or
8constituent therein has undertaken at the time of such purchase
9to cause to be transported in interstate commerce to
10destinations outside the State of Illinois.
11    "Purchased from a serviceman" means the acquisition of the
12ownership of, or title to, tangible personal property through a
13sale of service.
14    "Purchaser" means any person who, through a sale of
15service, acquires the ownership of, or title to, any tangible
16personal property.
17    "Cost price" means the consideration paid by the serviceman
18for a purchase valued in money, whether paid in money or
19otherwise, including cash, credits and services, and shall be
20determined without any deduction on account of the supplier's
21cost of the property sold or on account of any other expense
22incurred by the supplier. When a serviceman contracts out part
23or all of the services required in his sale of service, it
24shall be presumed that the cost price to the serviceman of the
25property transferred to him or her by his or her subcontractor
26is equal to 50% of the subcontractor's charges to the

 

 

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1serviceman in the absence of proof of the consideration paid by
2the subcontractor for the purchase of such property.
3    "Selling price" means the consideration for a sale valued
4in money whether received in money or otherwise, including
5cash, credits and service, and shall be determined without any
6deduction on account of the serviceman's cost of the property
7sold, the cost of materials used, labor or service cost or any
8other expense whatsoever, but does not include interest or
9finance charges which appear as separate items on the bill of
10sale or sales contract nor charges that are added to prices by
11sellers on account of the seller's duty to collect, from the
12purchaser, the tax that is imposed by this Act.
13    "Department" means the Department of Revenue.
14    "Person" means any natural individual, firm, partnership,
15association, joint stock company, joint venture, public or
16private corporation, limited liability company, and any
17receiver, executor, trustee, guardian or other representative
18appointed by order of any court.
19    "Sale of service" means any transaction except:
20        (1) a retail sale of tangible personal property taxable
21    under the Retailers' Occupation Tax Act or under the Use
22    Tax Act.
23        (2) a sale of tangible personal property for the
24    purpose of resale made in compliance with Section 2c of the
25    Retailers' Occupation Tax Act.
26        (3) except as hereinafter provided, a sale or transfer

 

 

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1    of tangible personal property as an incident to the
2    rendering of service for or by any governmental body, or
3    for or by any corporation, society, association,
4    foundation or institution organized and operated
5    exclusively for charitable, religious or educational
6    purposes or any not-for-profit corporation, society,
7    association, foundation, institution or organization which
8    has no compensated officers or employees and which is
9    organized and operated primarily for the recreation of
10    persons 55 years of age or older. A limited liability
11    company may qualify for the exemption under this paragraph
12    only if the limited liability company is organized and
13    operated exclusively for educational purposes.
14        (4) (blank).
15        (4a) a sale or transfer of tangible personal property
16    as an incident to the rendering of service for owners,
17    lessors, or shippers of tangible personal property which is
18    utilized by interstate carriers for hire for use as rolling
19    stock moving in interstate commerce so long as so used by
20    interstate carriers for hire, and equipment operated by a
21    telecommunications provider, licensed as a common carrier
22    by the Federal Communications Commission, which is
23    permanently installed in or affixed to aircraft moving in
24    interstate commerce.
25        (4a-5) on and after July 1, 2003 and through June 30,
26    2004, a sale or transfer of a motor vehicle of the second

 

 

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1    division with a gross vehicle weight in excess of 8,000
2    pounds as an incident to the rendering of service if that
3    motor vehicle is subject to the commercial distribution fee
4    imposed under Section 3-815.1 of the Illinois Vehicle Code.
5    Beginning on July 1, 2004 and through June 30, 2005, the
6    use in this State of motor vehicles of the second division:
7    (i) with a gross vehicle weight rating in excess of 8,000
8    pounds; (ii) that are subject to the commercial
9    distribution fee imposed under Section 3-815.1 of the
10    Illinois Vehicle Code; and (iii) that are primarily used
11    for commercial purposes. Through June 30, 2005, this
12    exemption applies to repair and replacement parts added
13    after the initial purchase of such a motor vehicle if that
14    motor vehicle is used in a manner that would qualify for
15    the rolling stock exemption otherwise provided for in this
16    Act. For purposes of this paragraph, "used for commercial
17    purposes" means the transportation of persons or property
18    in furtherance of any commercial or industrial enterprise
19    whether for-hire or not.
20        (5) a sale or transfer of machinery and equipment used
21    primarily in the process of the manufacturing or
22    assembling, either in an existing, an expanded or a new
23    manufacturing facility, of tangible personal property for
24    wholesale or retail sale or lease, whether such sale or
25    lease is made directly by the manufacturer or by some other
26    person, whether the materials used in the process are owned

 

 

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1    by the manufacturer or some other person, or whether such
2    sale or lease is made apart from or as an incident to the
3    seller's engaging in a service occupation and the
4    applicable tax is a Service Use Tax or Service Occupation
5    Tax, rather than Use Tax or Retailers' Occupation Tax. The
6    exemption provided by this paragraph (5) does not include
7    machinery and equipment used in (i) the generation of
8    electricity for wholesale or retail sale; (ii) the
9    generation or treatment of natural or artificial gas for
10    wholesale or retail sale that is delivered to customers
11    through pipes, pipelines, or mains; or (iii) the treatment
12    of water for wholesale or retail sale that is delivered to
13    customers through pipes, pipelines, or mains. The
14    provisions of Public Act 98-583 are declaratory of existing
15    law as to the meaning and scope of this exemption. The
16    exemption under this paragraph (5) is exempt from the
17    provisions of Section 3-75.
18        (5a) the repairing, reconditioning or remodeling, for
19    a common carrier by rail, of tangible personal property
20    which belongs to such carrier for hire, and as to which
21    such carrier receives the physical possession of the
22    repaired, reconditioned or remodeled item of tangible
23    personal property in Illinois, and which such carrier
24    transports, or shares with another common carrier in the
25    transportation of such property, out of Illinois on a
26    standard uniform bill of lading showing the person who

 

 

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1    repaired, reconditioned or remodeled the property to a
2    destination outside Illinois, for use outside Illinois.
3        (5b) a sale or transfer of tangible personal property
4    which is produced by the seller thereof on special order in
5    such a way as to have made the applicable tax the Service
6    Occupation Tax or the Service Use Tax, rather than the
7    Retailers' Occupation Tax or the Use Tax, for an interstate
8    carrier by rail which receives the physical possession of
9    such property in Illinois, and which transports such
10    property, or shares with another common carrier in the
11    transportation of such property, out of Illinois on a
12    standard uniform bill of lading showing the seller of the
13    property as the shipper or consignor of such property to a
14    destination outside Illinois, for use outside Illinois.
15        (6) until July 1, 2003, a sale or transfer of
16    distillation machinery and equipment, sold as a unit or kit
17    and assembled or installed by the retailer, which machinery
18    and equipment is certified by the user to be used only for
19    the production of ethyl alcohol that will be used for
20    consumption as motor fuel or as a component of motor fuel
21    for the personal use of such user and not subject to sale
22    or resale.
23        (7) at the election of any serviceman not required to
24    be otherwise registered as a retailer under Section 2a of
25    the Retailers' Occupation Tax Act, made for each fiscal
26    year sales of service in which the aggregate annual cost

 

 

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1    price of tangible personal property transferred as an
2    incident to the sales of service is less than 35%, or 75%
3    in the case of servicemen transferring prescription drugs
4    or servicemen engaged in graphic arts production, of the
5    aggregate annual total gross receipts from all sales of
6    service. The purchase of such tangible personal property by
7    the serviceman shall be subject to tax under the Retailers'
8    Occupation Tax Act and the Use Tax Act. However, if a
9    primary serviceman who has made the election described in
10    this paragraph subcontracts service work to a secondary
11    serviceman who has also made the election described in this
12    paragraph, the primary serviceman does not incur a Use Tax
13    liability if the secondary serviceman (i) has paid or will
14    pay Use Tax on his or her cost price of any tangible
15    personal property transferred to the primary serviceman
16    and (ii) certifies that fact in writing to the primary
17    serviceman.
18    Tangible personal property transferred incident to the
19completion of a maintenance agreement is exempt from the tax
20imposed pursuant to this Act.
21    Exemption (5) also includes machinery and equipment used in
22the general maintenance or repair of such exempt machinery and
23equipment or for in-house manufacture of exempt machinery and
24equipment. On and after July 1, 2017, exemption (5) also
25includes graphic arts machinery and equipment, as defined in
26paragraph (5) of Section 3-5. The machinery and equipment

 

 

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1exemption does not include machinery and equipment used in (i)
2the generation of electricity for wholesale or retail sale;
3(ii) the generation or treatment of natural or artificial gas
4for wholesale or retail sale that is delivered to customers
5through pipes, pipelines, or mains; or (iii) the treatment of
6water for wholesale or retail sale that is delivered to
7customers through pipes, pipelines, or mains. The provisions of
8Public Act 98-583 are declaratory of existing law as to the
9meaning and scope of this exemption. For the purposes of
10exemption (5), each of these terms shall have the following
11meanings: (1) "manufacturing process" shall mean the
12production of any article of tangible personal property,
13whether such article is a finished product or an article for
14use in the process of manufacturing or assembling a different
15article of tangible personal property, by procedures commonly
16regarded as manufacturing, processing, fabricating, or
17refining which changes some existing material or materials into
18a material with a different form, use or name. In relation to a
19recognized integrated business composed of a series of
20operations which collectively constitute manufacturing, or
21individually constitute manufacturing operations, the
22manufacturing process shall be deemed to commence with the
23first operation or stage of production in the series, and shall
24not be deemed to end until the completion of the final product
25in the last operation or stage of production in the series; and
26further, for purposes of exemption (5), photoprocessing is

 

 

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1deemed to be a manufacturing process of tangible personal
2property for wholesale or retail sale; (2) "assembling process"
3shall mean the production of any article of tangible personal
4property, whether such article is a finished product or an
5article for use in the process of manufacturing or assembling a
6different article of tangible personal property, by the
7combination of existing materials in a manner commonly regarded
8as assembling which results in a material of a different form,
9use or name; (3) "machinery" shall mean major mechanical
10machines or major components of such machines contributing to a
11manufacturing or assembling process; and (4) "equipment" shall
12include any independent device or tool separate from any
13machinery but essential to an integrated manufacturing or
14assembly process; including computers used primarily in a
15manufacturer's computer assisted design, computer assisted
16manufacturing (CAD/CAM) system; or any subunit or assembly
17comprising a component of any machinery or auxiliary, adjunct
18or attachment parts of machinery, such as tools, dies, jigs,
19fixtures, patterns and molds; or any parts which require
20periodic replacement in the course of normal operation; but
21shall not include hand tools. Equipment includes chemicals or
22chemicals acting as catalysts but only if the chemicals or
23chemicals acting as catalysts effect a direct and immediate
24change upon a product being manufactured or assembled for
25wholesale or retail sale or lease. The purchaser of such
26machinery and equipment who has an active resale registration

 

 

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1number shall furnish such number to the seller at the time of
2purchase. The user of such machinery and equipment and tools
3without an active resale registration number shall prepare a
4certificate of exemption for each transaction stating facts
5establishing the exemption for that transaction, which
6certificate shall be available to the Department for inspection
7or audit. The Department shall prescribe the form of the
8certificate.
9    Any informal rulings, opinions or letters issued by the
10Department in response to an inquiry or request for any opinion
11from any person regarding the coverage and applicability of
12exemption (5) to specific devices shall be published,
13maintained as a public record, and made available for public
14inspection and copying. If the informal ruling, opinion or
15letter contains trade secrets or other confidential
16information, where possible the Department shall delete such
17information prior to publication. Whenever such informal
18rulings, opinions, or letters contain any policy of general
19applicability, the Department shall formulate and adopt such
20policy as a rule in accordance with the provisions of the
21Illinois Administrative Procedure Act.
22    On and after July 1, 1987, no entity otherwise eligible
23under exemption (3) of this Section shall make tax-free
24purchases unless it has an active exemption identification
25number issued by the Department.
26    The purchase, employment and transfer of such tangible

 

 

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1personal property as newsprint and ink for the primary purpose
2of conveying news (with or without other information) is not a
3purchase, use or sale of service or of tangible personal
4property within the meaning of this Act.
5    "Serviceman" means any person who is engaged in the
6occupation of making sales of service.
7    "Sale at retail" means "sale at retail" as defined in the
8Retailers' Occupation Tax Act.
9    "Supplier" means any person who makes sales of tangible
10personal property to servicemen for the purpose of resale as an
11incident to a sale of service.
12    "Serviceman maintaining a place of business in this State",
13or any like term, means and includes any serviceman:
14        (1) having or maintaining within this State, directly
15    or by a subsidiary, an office, distribution house, sales
16    house, warehouse or other place of business, or any agent
17    or other representative operating within this State under
18    the authority of the serviceman or its subsidiary,
19    irrespective of whether such place of business or agent or
20    other representative is located here permanently or
21    temporarily, or whether such serviceman or subsidiary is
22    licensed to do business in this State;
23        (1.1) having a contract with a person located in this
24    State under which the person, for a commission or other
25    consideration based on the sale of service by the
26    serviceman, directly or indirectly refers potential

 

 

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1    customers to the serviceman by providing to the potential
2    customers a promotional code or other mechanism that allows
3    the serviceman to track purchases referred by such persons.
4    Examples of mechanisms that allow the serviceman to track
5    purchases referred by such persons include but are not
6    limited to the use of a link on the person's Internet
7    website, promotional codes distributed through the
8    person's hand-delivered or mailed material, and
9    promotional codes distributed by the person through radio
10    or other broadcast media. The provisions of this paragraph
11    (1.1) shall apply only if the cumulative gross receipts
12    from sales of service by the serviceman to customers who
13    are referred to the serviceman by all persons in this State
14    under such contracts exceed $10,000 during the preceding 4
15    quarterly periods ending on the last day of March, June,
16    September, and December; a serviceman meeting the
17    requirements of this paragraph (1.1) shall be presumed to
18    be maintaining a place of business in this State but may
19    rebut this presumption by submitting proof that the
20    referrals or other activities pursued within this State by
21    such persons were not sufficient to meet the nexus
22    standards of the United States Constitution during the
23    preceding 4 quarterly periods;
24        (1.2) beginning July 1, 2011, having a contract with a
25    person located in this State under which:
26            (A) the serviceman sells the same or substantially

 

 

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1        similar line of services as the person located in this
2        State and does so using an identical or substantially
3        similar name, trade name, or trademark as the person
4        located in this State; and
5            (B) the serviceman provides a commission or other
6        consideration to the person located in this State based
7        upon the sale of services by the serviceman.
8    The provisions of this paragraph (1.2) shall apply only if
9    the cumulative gross receipts from sales of service by the
10    serviceman to customers in this State under all such
11    contracts exceed $10,000 during the preceding 4 quarterly
12    periods ending on the last day of March, June, September,
13    and December;
14        (2) soliciting orders for tangible personal property
15    by means of a telecommunication or television shopping
16    system (which utilizes toll free numbers) which is intended
17    by the retailer to be broadcast by cable television or
18    other means of broadcasting, to consumers located in this
19    State;
20        (3) pursuant to a contract with a broadcaster or
21    publisher located in this State, soliciting orders for
22    tangible personal property by means of advertising which is
23    disseminated primarily to consumers located in this State
24    and only secondarily to bordering jurisdictions;
25        (4) soliciting orders for tangible personal property
26    by mail if the solicitations are substantial and recurring

 

 

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1    and if the retailer benefits from any banking, financing,
2    debt collection, telecommunication, or marketing
3    activities occurring in this State or benefits from the
4    location in this State of authorized installation,
5    servicing, or repair facilities;
6        (5) being owned or controlled by the same interests
7    which own or control any retailer engaging in business in
8    the same or similar line of business in this State;
9        (6) having a franchisee or licensee operating under its
10    trade name if the franchisee or licensee is required to
11    collect the tax under this Section;
12        (7) pursuant to a contract with a cable television
13    operator located in this State, soliciting orders for
14    tangible personal property by means of advertising which is
15    transmitted or distributed over a cable television system
16    in this State;
17        (8) engaging in activities in Illinois, which
18    activities in the state in which the supply business
19    engaging in such activities is located would constitute
20    maintaining a place of business in that state; or
21        (9) beginning October 1, 2018, making sales of service
22    to purchasers in Illinois from outside of Illinois if:
23            (A) the cumulative gross receipts from sales of
24        service to purchasers in Illinois are $100,000 or more;
25        or
26            (B) the serviceman enters into 200 or more separate

 

 

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1        transactions for sales of service to purchasers in
2        Illinois.
3        The serviceman shall determine on a quarterly basis,
4    ending on the last day of March, June, September, and
5    December, whether he or she meets the criteria of either
6    subparagraph (A) or (B) of this paragraph (9) for the
7    preceding 12-month period. If the serviceman meets the
8    criteria of either subparagraph (A) or (B) for a 12-month
9    period, he or she is considered a serviceman maintaining a
10    place of business in this State and is required to collect
11    and remit the tax imposed under this Act and file returns
12    for one year. At the end of that one-year period, the
13    serviceman shall determine whether the serviceman met the
14    criteria of either subparagraph (A) or (B) during the
15    preceding 12-month period. If the serviceman met the
16    criteria in either subparagraph (A) or (B) for the
17    preceding 12-month period, he or she is considered a
18    serviceman maintaining a place of business in this State
19    and is required to collect and remit the tax imposed under
20    this Act and file returns for the subsequent year. If at
21    the end of a one-year period a serviceman that was required
22    to collect and remit the tax imposed under this Act
23    determines that he or she did not meet the criteria in
24    either subparagraph (A) or (B) during the preceding
25    12-month period, the serviceman subsequently shall
26    determine on a quarterly basis, ending on the last day of

 

 

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1    March, June, September, and December, whether he or she
2    meets the criteria of either subparagraph (A) or (B) for
3    the preceding 12-month period.
4        Beginning January 1, 2020, neither the gross receipts
5    from nor the number of separate transactions for sales of
6    service to purchasers in Illinois that a serviceman makes
7    through a marketplace facilitator and for which the
8    serviceman has received a certification from the
9    marketplace facilitator pursuant to Section 2d of this Act
10    shall be included for purposes of determining whether he or
11    she has met the thresholds of this paragraph (9).
12        (10) Beginning January 1, 2020, a marketplace
13    facilitator, as defined in Section 2d of this Act.
14(Source: P.A. 100-22, eff. 7-6-17; 100-321, eff. 8-24-17;
15100-587, eff. 6-4-18; 100-863, eff. 8-14-18.)
 
16    (35 ILCS 110/2d new)
17    Sec. 2d. Marketplace facilitators and marketplace
18servicemen.
19    (a) Definitions. For purposes of this Section:
20    "Affiliate" means a person that, with respect to another
21person: (i) has a direct or indirect ownership interest of more
22than 5% in the other person; or (ii) is related to the other
23person because a third person, or group of third persons who
24are affiliated with each other as defined in this subsection,
25holds a direct or indirect ownership interest of more than 5%

 

 

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1in the related person.
2    "Marketplace" means a physical or electronic place, forum,
3platform, application or other method by which a marketplace
4serviceman makes or offers to make sales of service.
5    "Marketplace facilitator" means a person who, pursuant to
6an agreement with a marketplace serviceman, facilitates sales
7of service by that marketplace serviceman. A person facilitates
8a sale of service by, directly or indirectly through one or
9more affiliates, doing both of the following: (i) listing or
10otherwise making available a sale of service of the marketplace
11serviceman through a marketplace owned or operated by the
12marketplace facilitator; and (ii) processing sales of service
13for, or payments for sales of service by, marketplace
14servicemen.
15    "Marketplace serviceman" means a person that makes or
16offers to make a sale of service through a marketplace.
17    (b) Beginning January 1, 2020, a marketplace facilitator
18who meets either of the following criteria is considered the
19serviceman for each sale of service made on the marketplace:
20        (1) the cumulative gross receipts from sales of service
21    to purchasers in Illinois by the marketplace facilitator
22    and by marketplace servicemen are $100,000 or more; or
23        (2) the marketplace facilitator and marketplace
24    servicemen cumulatively enter into 200 or more separate
25    transactions for the sale of service to purchasers in
26    Illinois.

 

 

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1    A marketplace facilitator shall determine on a quarterly
2basis, ending on the last day of March, June, September, and
3December, whether he or she meets the criteria of either
4paragraph (1) or (2) of this subsection (b) for the preceding
512-month period. If the marketplace facilitator meets the
6criteria of either paragraph (1) or (2) for a 12-month period,
7he or she is considered a serviceman maintaining a place of
8business in this State and is required to collect and remit the
9tax imposed under this Act and file returns for one year. At
10the end of that one-year period, the marketplace facilitator
11shall determine whether the marketplace facilitator met the
12criteria of either paragraph (1) or (2) during the preceding
1312-month period. If the marketplace facilitator met the
14criteria in either paragraph (1) or (2) for the preceding
1512-month period, he or she is considered a serviceman
16maintaining a place of business in this State and is required
17to collect and remit the tax imposed under this Act and file
18returns for the subsequent year. If, at the end of a one-year
19period, a marketplace facilitator that was required to collect
20and remit the tax imposed under this Act determines that he or
21she did not meet the criteria in either paragraph (1) or (2)
22during the preceding 12-month period, the marketplace
23facilitator shall subsequently determine on a quarterly basis,
24ending on the last day of March, June, September, and December,
25whether he or she meets the criteria of either paragraph (1) or
26(2) for the preceding 12-month period.

 

 

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1    (c) A marketplace facilitator that meets either of the
2thresholds in subsection (b) of this Section is considered the
3serviceman for each sale of service made through its
4marketplace and is liable for collecting and remitting the tax
5under this Act on all such sales. The marketplace facilitator
6has all the rights and duties, and is required to comply with
7the same requirements and procedures, as all other servicemen
8maintaining a place of business in this State who are
9registered or who are required to be registered to collect and
10remit the tax imposed by this Act.
11    (d) A marketplace facilitator shall:
12        (1) certify to each marketplace serviceman that the
13    marketplace facilitator assumes the rights and duties of a
14    serviceman under this Act with respect to sales of service
15    made by the marketplace serviceman through the
16    marketplace; and
17        (2) collect taxes imposed by this Act as required by
18    Section 3-40 of this Act for sales of service made through
19    the marketplace.
20    (e) A marketplace serviceman shall retain books and records
21for all sales of service made through a marketplace in
22accordance with the requirements of Section 11.
23    (f) A marketplace serviceman shall furnish to the
24marketplace facilitator information that is necessary for the
25marketplace facilitator to correctly collect and remit taxes
26for a sale of service. The information may include a

 

 

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1certification that an item transferred incident to a sale of
2service under this Act is taxable, not taxable, exempt from
3taxation, or taxable at a specified rate. A marketplace
4serviceman shall be held harmless for liability for the tax
5imposed under this Act when a marketplace facilitator fails to
6correctly collect and remit tax after having been provided with
7information by a marketplace serviceman to correctly collect
8and remit taxes imposed under this Act.
9    (g) Except as provided in subsection (h), if the
10marketplace facilitator demonstrates to the satisfaction of
11the Department that its failure to correctly collect and remit
12tax on a sale of service resulted from the marketplace
13facilitator's good faith reliance on incorrect or insufficient
14information provided by a marketplace serviceman, it shall be
15relieved of liability for the tax on that sale of service. In
16this case, a marketplace serviceman is liable for any resulting
17tax due.
18    (h) A marketplace facilitator and marketplace serviceman
19that are affiliates, as defined by subsection (a), are jointly
20and severally liable for tax liability resulting from a sale of
21service made by the affiliated marketplace serviceman through
22the marketplace.
23    (i) This Section does not affect the tax liability of a
24purchaser under this Act.
25    (j) The Department may adopt rules for the administration
26and enforcement of the provisions of this Section.
 

 

 

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1    Section 10-35. The Tax Delinquency Amnesty Act is amended
2by changing Section 10 as follows:
 
3    (35 ILCS 745/10)
4    Sec. 10. Amnesty program. The Department shall establish an
5amnesty program for all taxpayers owing any tax imposed by
6reason of or pursuant to authorization by any law of the State
7of Illinois and collected by the Department.
8    The amnesty program shall be for a period from October 1,
92003 through November 15, 2003 and for a period beginning on
10October 1, 2010 and ending November 8, 2010 and for a period
11beginning on October 1, 2019 and ending on November 15, 2019.
12    The amnesty program shall provide that, upon payment by a
13taxpayer of all taxes due from that taxpayer to the State of
14Illinois for any taxable period ending (i) after June 30, 1983
15and prior to July 1, 2002 for the tax amnesty period occurring
16from October 1, 2003 through November 15, 2003, and (ii) after
17June 30, 2002 and prior to July 1, 2009 for the tax amnesty
18period beginning on October 1, 2010 through November 8, 2010,
19and (iii) after June 30, 2011 and prior to July 1, 2018 for the
20tax amnesty period beginning on October 1, 2019 through
21November 15, 2019, the Department shall abate and not seek to
22collect any interest or penalties that may be applicable and
23the Department shall not seek civil or criminal prosecution for
24any taxpayer for the period of time for which amnesty has been

 

 

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1granted to the taxpayer. Failure to pay all taxes due to the
2State for a taxable period shall invalidate any amnesty granted
3under this Act. Amnesty shall be granted only if all amnesty
4conditions are satisfied by the taxpayer.
5    Amnesty shall not be granted to taxpayers who are a party
6to any criminal investigation or to any civil or criminal
7litigation that is pending in any circuit court or appellate
8court or the Supreme Court of this State for nonpayment,
9delinquency, or fraud in relation to any State tax imposed by
10any law of the State of Illinois.
11    Participation in an amnesty program shall not preclude a
12taxpayer from claiming a refund for an overpayment of tax on an
13issue unrelated to the issues for which the taxpayer claimed
14amnesty or for an overpayment of tax by taxpayers estimating a
15non-final liability for the amnesty program pursuant to Section
16506(b) of the Illinois Income Tax Act (35 ILCS 5/506(b)).
17    Voluntary payments made under this Act shall be made by
18cash, check, guaranteed remittance, or ACH debit.
19    The Department shall adopt rules as necessary to implement
20the provisions of this Act.
21    Except as otherwise provided in this Section, all money
22collected under this Act that would otherwise be deposited into
23the General Revenue Fund shall be deposited as follows: (i)
24one-half into the Common School Fund; (ii) one-half into the
25General Revenue Fund. Two percent of all money collected under
26this Act shall be deposited by the State Treasurer into the Tax

 

 

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1Compliance and Administration Fund and, subject to
2appropriation, shall be used by the Department to cover costs
3associated with the administration of this Act.
4(Source: P.A. 96-1435, eff. 8-16-10.)
 
5    Section 10-40. The Health Maintenance Organization Act is
6amended by changing Section 5-5 and by adding Section 5-10 as
7follows:
 
8    (215 ILCS 125/5-5)  (from Ch. 111 1/2, par. 1413)
9    Sec. 5-5. Suspension, revocation or denial of
10certification of authority. The Director may suspend or revoke
11any certificate of authority issued to a health maintenance
12organization under this Act or deny an application for a
13certificate of authority if he finds any of the following:
14    (a) The health maintenance organization is operating
15significantly in contravention of its basic organizational
16document, its health care plan, or in a manner contrary to that
17described in any information submitted under Section 2-1 or
184-12.
19    (b) The health maintenance organization issues contracts
20or evidences of coverage or uses a schedule of charges for
21health care services that do not comply with the requirement of
22Section 2-1 or 4-12.
23    (c) The health care plan does not provide or arrange for
24basic health care services, except as provided in Section 4-13

 

 

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1concerning mental health services for clients of the Department
2of Children and Family Services.
3    (d) The Director of Public Health certifies to the Director
4that (1) the health maintenance organization does not meet the
5requirements of Section 2-2 or (2) the health maintenance
6organization is unable to fulfill its obligations to furnish
7health care services as required under its health care plan.
8The Department of Public Health shall promulgate by rule,
9pursuant to the Illinois Administrative Procedure Act, the
10precise standards used for determining what constitutes a
11material misrepresentation, what constitutes a material
12violation of a contract or evidence of coverage, or what
13constitutes good faith with regard to certification under this
14paragraph.
15    (e) The health maintenance organization is no longer
16financially responsible and may reasonably be expected to be
17unable to meet its obligations to enrollees or prospective
18enrollees.
19    (f) The health maintenance organization, or any person on
20its behalf, has advertised or merchandised its services in an
21untrue, misrepresentative, misleading, deceptive, or unfair
22manner.
23    (g) The continued operation of the health maintenance
24organization would be hazardous to its enrollees.
25    (h) The health maintenance organization has neglected to
26correct, within the time prescribed by subsection (c) of

 

 

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1Section 2-4, any deficiency occurring due to the organization's
2prescribed minimum net worth or special contingent reserve
3being impaired.
4    (i) The health maintenance organization has otherwise
5failed to substantially comply with this Act.
6    (j) The health maintenance organization has failed to meet
7the requirements for issuance of a certificate of authority set
8forth in Section 2-2.
9    When the certificate of authority of a health maintenance
10organization is revoked, the organization shall proceed,
11immediately following the effective date of the order of
12revocation, to wind up its affairs and shall conduct no further
13business except as may be essential to the orderly conclusion
14of the affairs of the organization. The Director may permit
15further operation of the organization that he finds to be in
16the best interest of enrollees to the end that the enrollees
17will be afforded the greatest practical opportunity to obtain
18health care services.
19    (k) The health maintenance organization has failed to pay
20any assessment due under Article V-H of the Public Aid Code for
2160 days following the due date of the payment (as extended by
22any grace period granted).
23(Source: P.A. 88-487.)
 
24    (215 ILCS 125/5-10 new)
25    Sec. 5-10. Managed care organizations; revenue data.

 

 

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1    (a) No managed care organization shall pass the cost of the
2assessment imposed pursuant to Article V-H of the Public Aid
3Code on to consumers as a discrete addition to their premiums.
4    (b) The Department shall provide the Department of
5Healthcare and Family Services with member months and premium
6revenue data needed for implementing the assessment imposed
7under Article V-H of the Public Aid Code.
 
8    Section 10-45. The Illinois Public Aid Code is amended by
9adding the Article V-H as follows:
 
10    (305 ILCS 5/Art. V-H heading new)
11
ARTICLE V-H. MANAGED CARE ORGANIZATION PROVIDER ASSESSMENT.

 
12    (305 ILCS 5/5H-1 new)
13    Sec. 5H-1. Definitions. As used in this Article:
14    "Base year" means the 12-month period from January 1, 2018
15to December 31, 2018.
16    "Department" means the Department of Healthcare and Family
17Services.
18    "Federal employee health benefit" means the program of
19health benefits plans, as defined in 5 U.S.C. 8901, available
20to federal employees under 5 U.S.C. 8901 to 8914.
21    "Fund" means the Healthcare Provider Relief Fund.
22    "Managed care organization" means an entity operating
23under a certificate of authority issued pursuant to the Health

 

 

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1Maintenance Organization Act or as a Managed Care Community
2Network pursuant to Section 5-11 of the Public Aid Code.
3    "Medicaid managed care organization" means a managed care
4organization under contract with the Department to provide
5services to recipients of benefits in the medical assistance
6program pursuant to Article V of the Public Aid Code, the
7Children's Health Insurance Program Act, or the Covering ALL
8KIDS Health Insurance Act. It does not include contracts the
9same entity or an affiliated entity has for other business.
10    "Medicare" means the federal Medicare program established
11under Title XVIII of the federal Social Security Act.
12    "Member months" means the aggregate total number of months
13all individuals are enrolled for coverage in a Managed Care
14Organization during the base year. Member months are determined
15by the Department for Medicaid Managed Care Organizations based
16on enrollment data in its Medicaid Management Information
17System and by the Department of Insurance for other Managed
18Care Organizations based on required filings with the
19Department of Insurance. Member months do not include months
20individuals are enrolled in a Limited Health Services
21Organization, including stand-alone dental or vision plans, a
22Medicare Advantage Plan, a Medicare Supplement Plan, a Medicaid
23Medicare Alignment Initiate Plan pursuant to a Memorandum of
24Understanding between the Department and the Federal Centers
25for Medicare and Medicaid Services or a Federal Employee Health
26Benefits Plan.
 

 

 

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1    (305 ILCS 5/5H-2 new)
2    Sec. 5H-2. Federal waivers. The Department shall request a
3waiver from the federal Centers for Medicare and Medicaid
4Services of the broad-based and uniformity provisions of
5Section 1903(w)(3)(B) and (C) of Title XIX of the Social
6Security Act, 42 U.S.C. 1396b, relating to the assessment
7imposed under this Article. The assessment required pursuant to
8Section 5H-3 shall not be due and payable until such waiver has
9been approved and all other federal requirements necessary to
10obtain federal financial participation have been approved by
11the Centers for Medicare and Medicaid Services.
 
12    (305 ILCS 5/5H-3 new)
13    Sec. 5H-3. Managed care assessment.
14    (a) For State Fiscal year 2020 through State Fiscal Year
152025, there is imposed upon managed care organization member
16months an assessment, calculated on base year data, as set
17forth below for the appropriate tier:
18        (1) Tier 1: $60.20 per member month.
19        (2) Tier 2: $1.20 per member month.
20        (3) Tier 3: $2.40 per member month.
21    (b) The tiers are established as follows:
22        (1) Tier 1 includes the first 4,195,000 member months
23    in a Medicaid managed care organization for the base year;
24        (ii) Tier 2 includes member months over 4,195,000 in a

 

 

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1    Medicaid managed care organization during the base year;
2    and
3        (iv) Tier 3 includes member months during the base year
4    in a managed care organization that is not a Medicaid
5    managed care organization.
6    (c) For State fiscal year 2020 through State fiscal year
72025, the Department may by rule adjust rates or tier
8parameters or both in order to maximize the revenue generated
9by the assessment consistent with federal regulations and to
10meet federal statistical tests necessary for federal financial
11participation. Any upward adjustment to the Tier 3 rate shall
12be the minimum necessary to meet federal statistical tests.
 
13    (305 ILCS 5/5H-4 new)
14    Sec. 5H-4. Payment of assessment.
15    (a) The assessment payable pursuant to Section 5H-3 shall
16be due and payable in monthly installments, each equaling
17one-twelfth of the assessment for the year, on the first State
18business day of each month.
19    (b) If the approval of the waivers required under Section
205H-2 is delayed beyond the start of State fiscal year 2020,
21then the first installment shall be due on the first business
22day of the first month that begins more than 15 days after the
23date of such approval. In the event approval results in
24installments beginning after July 1, 2019, the amount of each
25installment for that fiscal year shall equal the full amount of

 

 

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1the annual assessment divided by the number of payments that
2will be paid in fiscal year 2020.
3    (c) The Department shall notify each managed care
4organization of its annual fiscal year 2020 assessment and the
5installment due dates no later than 30 days prior to the first
6installment due date and the annual assessment and due dates
7for each subsequent year at least 30 days prior to the start of
8each fiscal year.
9    (d) Proceeds from the assessment levied pursuant to Section
105H-3 shall be deposited into the Fund.
 
11    (305 ILCS 5/5H-5 new)
12    Sec. 5H-5. Liability or resultant entities. In the event of
13a merger, acquisition, or any similar transaction involving
14entities subject to the assessment under this Article, the
15resultant entity shall be responsible for the full amount of
16the assessment for all entities involved in the transaction
17with the member months allotted to tiers as they were prior to
18the transaction and no member months shall change tiers as a
19result of any transaction. A managed care organization that
20ceases doing business in the State during any fiscal year shall
21be liable only for the monthly installments due in months that
22they operated in the State. The Department shall by rule
23establish a methodology to set the assessment base member
24months for a managed care organization that begins operating in
25the State at any time after 2018. Nothing in this Section shall

 

 

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1be construed to limit authority granted in subsection (c) of
2Section 5H-3.
 
3    (305 ILCS 5/5H-6 new)
4    Sec. 5H-6. Recordkeeping; penalties.
5    (a) A managed care organization that is liable for the
6assessment under this Article shall keep accurate and complete
7records and pertinent documents as may be required by the
8Department. Records required by the Department shall be
9retained for a period of 4 years after the assessment imposed
10under this Act to which the records apply is due or as
11otherwise provided by law. The Department or the Department of
12Insurance may audit all records necessary to ensure compliance
13with this Article and make adjustments to assessment amounts
14previously calculated based on the results of any such audit.
15    (b) If a managed care organization fails to make a payment
16due under this Article in a timely fashion, they shall pay an
17additional penalty of 5% of the amount of the installment not
18paid on or before the due date, or any grace period granted,
19plus 5% of the portion thereof remaining unpaid on the last day
20of each 30-day period thereafter. The Department is authorized
21to grant grace periods of up to 30 days upon request of a
22managed care organization for good cause due to financial or
23other difficulties, as determined by the Department. If a
24managed care organization fails to make a payment within 60
25days after the due date the Department shall additionally

 

 

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1impose a contractual sanction allowed against a Medicaid
2managed care organization and may terminate any such contract.
3The Department of Insurance shall take action against the
4certificate of authority of a non-Medicaid managed care
5organization that fails to pay an installment within 60 days
6after the due date.
 
7    (305 ILCS 5/5H-7 new)
8    Sec. 5H-7. Rulemaking. The Department may by rule modify or
9make adjustments to any methodology, assessment amount,
10assessment tier, or other similar provision specified in this
11Article, including broadening the tax base in subsection (a) of
12Section 5H-3, to the extent necessary to meet the requirements
13of federal law or regulations, obtain federal approval, or to
14ensure federal financial participation is available. However,
15upward adjustments to Tier 3 rates shall be the minimum
16necessary to meet federal statistical tests to receive federal
17financial participation. The Department shall adopt rules to
18implement this Article under the Illinois Administrative
19Procedure Act.
 
20    (305 ILCS 5/5H-8 new)
21    Sec. 5H-8. Duties of the Department.
22    (a) The Department shall ensure that rates to Medicaid
23managed care organizations are actuarially sound including
24appropriate incorporation of assessments under this Article,

 

 

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1other taxes and administrative expenses, including
2standardization of processes, and cost of medical care.
3    (b) The Department shall pay to each Medicaid managed care
4organization the amount required to be included in its rates
5due to the assessment under this Article in order to ensure
6actuarial soundness within 10 business days of receipt of each
7assessment payment from the Medicaid managed care
8organization. The Department shall extend the deadline for any
9assessment payment due after the initial assessment payment if
10the payment to the managed care organizations under this
11subsection for the previous assessment payment has not been
12paid. Such extension shall extend until 7 business days after
13receipt by the managed care organization of the late payment
14under this subsection.
15    (c) Reimbursement of assessments paid under this Article
16shall not be required to count as revenue towards any
17calculation of the managed care organization's medical loss
18ratio, net worth, risk based capital or other deposit
19requirements as may otherwise be required under the Insurance
20Code. Such reimbursements will be considered revenue in
21calculating the 6% limit under 42 U.S.C. 433.68(f)(3).
22    (d) The Department shall include in its annual report,
23beginning with its fiscal year 2020 report, and every year
24thereafter, information on the revenues collected from this
25assessment, the federal funds drawn based on those revenues,
26the rates set in Section 5H-3 or any alterations thereof by

 

 

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1administrative rule, and other impacts this gross revenue has
2had on the Medicaid program.
 
3    Section 10-50. The Franchise Tax and License Fee Amnesty
4Act of 2007 is amended by changing Section 5-10 as follows:
 
5    (805 ILCS 8/5-10)
6    Sec. 5-10. Amnesty program. The Secretary shall establish
7an amnesty program for all taxpayers owing any franchise tax or
8license fee imposed by Article XV of the Business Corporation
9Act of 1983. The amnesty program shall be for a period from
10February 1, 2008 through March 15, 2008. The amnesty program
11shall also be for a period between October 1, 2019 and November
1215, 2019, and shall apply to franchise tax or license fee
13liabilities for any tax period ending after March 15, 2008 and
14on or before June 30, 2019. The amnesty program shall provide
15that, upon payment by a taxpayer of all franchise taxes and
16license fees due from that taxpayer to the State of Illinois
17for any taxable period, the Secretary shall abate and not seek
18to collect any interest or penalties that may be applicable,
19and the Secretary shall not seek civil or criminal prosecution
20for any taxpayer for the period of time for which amnesty has
21been granted to the taxpayer. Failure to pay all taxes due to
22the State for a taxable period shall not invalidate any amnesty
23granted under this Act with respect to the taxes paid pursuant
24to the amnesty program. Amnesty shall be granted only if all

 

 

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1amnesty conditions are satisfied by the taxpayer. Amnesty shall
2not be granted to taxpayers who are a party to any criminal
3investigation or to any civil or criminal litigation that is
4pending in any circuit court or appellate court or the Supreme
5Court of this State for nonpayment, delinquency, or fraud in
6relation to any franchise tax or license fee imposed by Article
7XV of the Business Corporation Act of 1983. Voluntary payments
8made under this Act shall be made by check, guaranteed
9remittance, or ACH debit. The Secretary shall adopt rules as
10necessary to implement the provisions of this Act. Except as
11otherwise provided in this Section, all money collected under
12this Act that would otherwise be deposited into the General
13Revenue Fund shall be deposited into the General Revenue Fund.
14Two percent of all money collected under this Act shall be
15deposited by the State Treasurer into the Franchise Tax and
16License Fee Amnesty Administration Fund and, subject to
17appropriation, shall be used by the Secretary to cover costs
18associated with the administration of this Act.
19(Source: P.A. 95-233, eff. 8-16-07; 95-707, eff. 1-11-08.)
 
20
ARTICLE 20. BLUE COLLAR JOBS ACT

 
21    Section 20-1. This Act may be referred to as the Blue
22Collar Jobs Act.
 
23    Section 20-5. The Illinois Enterprise Zone Act is amended

 

 

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1by changing Section 5.5 and by adding Section 13 as follows:
 
2    (20 ILCS 655/5.5)   (from Ch. 67 1/2, par. 609.1)
3    Sec. 5.5. High Impact Business.
4    (a) In order to respond to unique opportunities to assist
5in the encouragement, development, growth and expansion of the
6private sector through large scale investment and development
7projects, the Department is authorized to receive and approve
8applications for the designation of "High Impact Businesses" in
9Illinois subject to the following conditions:
10        (1) such applications may be submitted at any time
11    during the year;
12        (2) such business is not located, at the time of
13    designation, in an enterprise zone designated pursuant to
14    this Act;
15        (3) the business intends to do one or more of the
16    following:
17            (A) the business intends to make a minimum
18        investment of $12,000,000 which will be placed in
19        service in qualified property and intends to create 500
20        full-time equivalent jobs at a designated location in
21        Illinois or intends to make a minimum investment of
22        $30,000,000 which will be placed in service in
23        qualified property and intends to retain 1,500
24        full-time retained jobs at a designated location in
25        Illinois. The business must certify in writing that the

 

 

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1        investments would not be placed in service in qualified
2        property and the job creation or job retention would
3        not occur without the tax credits and exemptions set
4        forth in subsection (b) of this Section. The terms
5        "placed in service" and "qualified property" have the
6        same meanings as described in subsection (h) of Section
7        201 of the Illinois Income Tax Act; or
8            (B) the business intends to establish a new
9        electric generating facility at a designated location
10        in Illinois. "New electric generating facility", for
11        purposes of this Section, means a newly-constructed
12        electric generation plant or a newly-constructed
13        generation capacity expansion at an existing electric
14        generation plant, including the transmission lines and
15        associated equipment that transfers electricity from
16        points of supply to points of delivery, and for which
17        such new foundation construction commenced not sooner
18        than July 1, 2001. Such facility shall be designed to
19        provide baseload electric generation and shall operate
20        on a continuous basis throughout the year; and (i)
21        shall have an aggregate rated generating capacity of at
22        least 1,000 megawatts for all new units at one site if
23        it uses natural gas as its primary fuel and foundation
24        construction of the facility is commenced on or before
25        December 31, 2004, or shall have an aggregate rated
26        generating capacity of at least 400 megawatts for all

 

 

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1        new units at one site if it uses coal or gases derived
2        from coal as its primary fuel and shall support the
3        creation of at least 150 new Illinois coal mining jobs,
4        or (ii) shall be funded through a federal Department of
5        Energy grant before December 31, 2010 and shall support
6        the creation of Illinois coal-mining jobs, or (iii)
7        shall use coal gasification or integrated
8        gasification-combined cycle units that generate
9        electricity or chemicals, or both, and shall support
10        the creation of Illinois coal-mining jobs. The
11        business must certify in writing that the investments
12        necessary to establish a new electric generating
13        facility would not be placed in service and the job
14        creation in the case of a coal-fueled plant would not
15        occur without the tax credits and exemptions set forth
16        in subsection (b-5) of this Section. The term "placed
17        in service" has the same meaning as described in
18        subsection (h) of Section 201 of the Illinois Income
19        Tax Act; or
20            (B-5) the business intends to establish a new
21        gasification facility at a designated location in
22        Illinois. As used in this Section, "new gasification
23        facility" means a newly constructed coal gasification
24        facility that generates chemical feedstocks or
25        transportation fuels derived from coal (which may
26        include, but are not limited to, methane, methanol, and

 

 

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1        nitrogen fertilizer), that supports the creation or
2        retention of Illinois coal-mining jobs, and that
3        qualifies for financial assistance from the Department
4        before December 31, 2010. A new gasification facility
5        does not include a pilot project located within
6        Jefferson County or within a county adjacent to
7        Jefferson County for synthetic natural gas from coal;
8        or
9            (C) the business intends to establish production
10        operations at a new coal mine, re-establish production
11        operations at a closed coal mine, or expand production
12        at an existing coal mine at a designated location in
13        Illinois not sooner than July 1, 2001; provided that
14        the production operations result in the creation of 150
15        new Illinois coal mining jobs as described in
16        subdivision (a)(3)(B) of this Section, and further
17        provided that the coal extracted from such mine is
18        utilized as the predominant source for a new electric
19        generating facility. The business must certify in
20        writing that the investments necessary to establish a
21        new, expanded, or reopened coal mine would not be
22        placed in service and the job creation would not occur
23        without the tax credits and exemptions set forth in
24        subsection (b-5) of this Section. The term "placed in
25        service" has the same meaning as described in
26        subsection (h) of Section 201 of the Illinois Income

 

 

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1        Tax Act; or
2            (D) the business intends to construct new
3        transmission facilities or upgrade existing
4        transmission facilities at designated locations in
5        Illinois, for which construction commenced not sooner
6        than July 1, 2001. For the purposes of this Section,
7        "transmission facilities" means transmission lines
8        with a voltage rating of 115 kilovolts or above,
9        including associated equipment, that transfer
10        electricity from points of supply to points of delivery
11        and that transmit a majority of the electricity
12        generated by a new electric generating facility
13        designated as a High Impact Business in accordance with
14        this Section. The business must certify in writing that
15        the investments necessary to construct new
16        transmission facilities or upgrade existing
17        transmission facilities would not be placed in service
18        without the tax credits and exemptions set forth in
19        subsection (b-5) of this Section. The term "placed in
20        service" has the same meaning as described in
21        subsection (h) of Section 201 of the Illinois Income
22        Tax Act; or
23            (E) the business intends to establish a new wind
24        power facility at a designated location in Illinois.
25        For purposes of this Section, "new wind power facility"
26        means a newly constructed electric generation

 

 

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1        facility, or a newly constructed expansion of an
2        existing electric generation facility, placed in
3        service on or after July 1, 2009, that generates
4        electricity using wind energy devices, and such
5        facility shall be deemed to include all associated
6        transmission lines, substations, and other equipment
7        related to the generation of electricity from wind
8        energy devices. For purposes of this Section, "wind
9        energy device" means any device, with a nameplate
10        capacity of at least 0.5 megawatts, that is used in the
11        process of converting kinetic energy from the wind to
12        generate electricity; or
13            (F) the business commits to (i) make a minimum
14        investment of $500,000,000, which will be placed in
15        service in a qualified property, (ii) create 125
16        full-time equivalent jobs at a designated location in
17        Illinois, (iii) establish a fertilizer plant at a
18        designated location in Illinois that complies with the
19        set-back standards as described in Table 1: Initial
20        Isolation and Protective Action Distances in the 2012
21        Emergency Response Guidebook published by the United
22        States Department of Transportation, (iv) pay a
23        prevailing wage for employees at that location who are
24        engaged in construction activities, and (v) secure an
25        appropriate level of general liability insurance to
26        protect against catastrophic failure of the fertilizer

 

 

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1        plant or any of its constituent systems; in addition,
2        the business must agree to enter into a construction
3        project labor agreement including provisions
4        establishing wages, benefits, and other compensation
5        for employees performing work under the project labor
6        agreement at that location; for the purposes of this
7        Section, "fertilizer plant" means a newly constructed
8        or upgraded plant utilizing gas used in the production
9        of anhydrous ammonia and downstream nitrogen
10        fertilizer products for resale; for the purposes of
11        this Section, "prevailing wage" means the hourly cash
12        wages plus fringe benefits for training and
13        apprenticeship programs approved by the U.S.
14        Department of Labor, Bureau of Apprenticeship and
15        Training, health and welfare, insurance, vacations and
16        pensions paid generally, in the locality in which the
17        work is being performed, to employees engaged in work
18        of a similar character on public works; this paragraph
19        (F) applies only to businesses that submit an
20        application to the Department within 60 days after the
21        effective date of this amendatory Act of the 98th
22        General Assembly; and
23        (4) no later than 90 days after an application is
24    submitted, the Department shall notify the applicant of the
25    Department's determination of the qualification of the
26    proposed High Impact Business under this Section.

 

 

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1    (b) Businesses designated as High Impact Businesses
2pursuant to subdivision (a)(3)(A) of this Section shall qualify
3for the credits and exemptions described in the following Acts:
4Section 9-222 and Section 9-222.1A of the Public Utilities Act,
5subsection (h) of Section 201 of the Illinois Income Tax Act,
6and Section 1d of the Retailers' Occupation Tax Act; provided
7that these credits and exemptions described in these Acts shall
8not be authorized until the minimum investments set forth in
9subdivision (a)(3)(A) of this Section have been placed in
10service in qualified properties and, in the case of the
11exemptions described in the Public Utilities Act and Section 1d
12of the Retailers' Occupation Tax Act, the minimum full-time
13equivalent jobs or full-time retained jobs set forth in
14subdivision (a)(3)(A) of this Section have been created or
15retained. Businesses designated as High Impact Businesses
16under this Section shall also qualify for the exemption
17described in Section 5l of the Retailers' Occupation Tax Act.
18The credit provided in subsection (h) of Section 201 of the
19Illinois Income Tax Act shall be applicable to investments in
20qualified property as set forth in subdivision (a)(3)(A) of
21this Section.
22    (b-5) Businesses designated as High Impact Businesses
23pursuant to subdivisions (a)(3)(B), (a)(3)(B-5), (a)(3)(C),
24and (a)(3)(D) of this Section shall qualify for the credits and
25exemptions described in the following Acts: Section 51 of the
26Retailers' Occupation Tax Act, Section 9-222 and Section

 

 

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19-222.1A of the Public Utilities Act, and subsection (h) of
2Section 201 of the Illinois Income Tax Act; however, the
3credits and exemptions authorized under Section 9-222 and
4Section 9-222.1A of the Public Utilities Act, and subsection
5(h) of Section 201 of the Illinois Income Tax Act shall not be
6authorized until the new electric generating facility, the new
7gasification facility, the new transmission facility, or the
8new, expanded, or reopened coal mine is operational, except
9that a new electric generating facility whose primary fuel
10source is natural gas is eligible only for the exemption under
11Section 5l of the Retailers' Occupation Tax Act.
12    (b-6) Businesses designated as High Impact Businesses
13pursuant to subdivision (a)(3)(E) of this Section shall qualify
14for the exemptions described in Section 5l of the Retailers'
15Occupation Tax Act; any business so designated as a High Impact
16Business being, for purposes of this Section, a "Wind Energy
17Business".
18    (b-7) Beginning on January 1, 2021, businesses designated
19as High Impact Businesses by the Department shall qualify for
20the High Impact Business construction jobs credit under
21subsection (h-5) of Section 201 of the Illinois Income Tax Act
22if the business meets the criteria set forth in subsection (i)
23of this Section. The total aggregate amount of credits awarded
24under the Blue Collar Jobs Act (Article 20 of this amendatory
25Act of the 101st General Assembly) shall not exceed $20,000,000
26in any State fiscal year.

 

 

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1    (c) High Impact Businesses located in federally designated
2foreign trade zones or sub-zones are also eligible for
3additional credits, exemptions and deductions as described in
4the following Acts: Section 9-221 and Section 9-222.1 of the
5Public Utilities Act; and subsection (g) of Section 201, and
6Section 203 of the Illinois Income Tax Act.
7    (d) Except for businesses contemplated under subdivision
8(a)(3)(E) of this Section, existing Illinois businesses which
9apply for designation as a High Impact Business must provide
10the Department with the prospective plan for which 1,500
11full-time retained jobs would be eliminated in the event that
12the business is not designated.
13    (e) Except for new wind power facilities contemplated under
14subdivision (a)(3)(E) of this Section, new proposed facilities
15which apply for designation as High Impact Business must
16provide the Department with proof of alternative non-Illinois
17sites which would receive the proposed investment and job
18creation in the event that the business is not designated as a
19High Impact Business.
20    (f) Except for businesses contemplated under subdivision
21(a)(3)(E) of this Section, in the event that a business is
22designated a High Impact Business and it is later determined
23after reasonable notice and an opportunity for a hearing as
24provided under the Illinois Administrative Procedure Act, that
25the business would have placed in service in qualified property
26the investments and created or retained the requisite number of

 

 

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1jobs without the benefits of the High Impact Business
2designation, the Department shall be required to immediately
3revoke the designation and notify the Director of the
4Department of Revenue who shall begin proceedings to recover
5all wrongfully exempted State taxes with interest. The business
6shall also be ineligible for all State funded Department
7programs for a period of 10 years.
8    (g) The Department shall revoke a High Impact Business
9designation if the participating business fails to comply with
10the terms and conditions of the designation. However, the
11penalties for new wind power facilities or Wind Energy
12Businesses for failure to comply with any of the terms or
13conditions of the Illinois Prevailing Wage Act shall be only
14those penalties identified in the Illinois Prevailing Wage Act,
15and the Department shall not revoke a High Impact Business
16designation as a result of the failure to comply with any of
17the terms or conditions of the Illinois Prevailing Wage Act in
18relation to a new wind power facility or a Wind Energy
19Business.
20    (h) Prior to designating a business, the Department shall
21provide the members of the General Assembly and Commission on
22Government Forecasting and Accountability with a report
23setting forth the terms and conditions of the designation and
24guarantees that have been received by the Department in
25relation to the proposed business being designated.
26    (i) High Impact Business construction jobs credit.

 

 

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1Beginning on January 1, 2021, a High Impact Business may
2receive a tax credit against the tax imposed under subsections
3(a) and (b) of Section 201 of the Illinois Income Tax Act in an
4amount equal to 50% of the amount of the incremental income tax
5attributable to High Impact Business construction jobs credit
6employees employed in the course of completing a High Impact
7Business construction jobs project. However, the High Impact
8Business construction jobs credit may equal 75% of the amount
9of the incremental income tax attributable to High Impact
10Business construction jobs credit employees if the High Impact
11Business construction jobs credit project is located in an
12underserved area.
13    The Department shall certify to the Department of Revenue:
14(1) the identity of taxpayers that are eligible for the High
15Impact Business construction jobs credit; and (2) the amount of
16High Impact Business construction jobs credits that are claimed
17pursuant to subsection (h-5) of Section 201 of the Illinois
18Income Tax Act in each taxable year. Any business entity that
19receives a High Impact Business construction jobs credit shall
20maintain a certified payroll pursuant to subsection (j) of this
21Section.
22    As used in this subsection (i):
23    "High Impact Business construction jobs credit" means an
24amount equal to 50% (or 75% if the High Impact Business
25construction project is located in an underserved area) of the
26incremental income tax attributable to High Impact Business

 

 

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1construction job employees. The total aggregate amount of
2credits awarded under the Blue Collar Jobs Act (Article 20 of
3this amendatory Act of the 101st General Assembly) shall not
4exceed $20,000,000 in any State fiscal year
5    "High Impact Business construction job employee" means a
6laborer or worker who is employed by an Illinois contractor or
7subcontractor in the actual construction work on the site of a
8High Impact Business construction job project.
9    "High Impact Business construction jobs project" means
10building a structure or building or making improvements of any
11kind to real property, undertaken and commissioned by a
12business that was designated as a High Impact Business by the
13Department. The term "High Impact Business construction jobs
14project" does not include the routine operation, routine
15repair, or routine maintenance of existing structures,
16buildings, or real property.
17    "Incremental income tax" means the total amount withheld
18during the taxable year from the compensation of High Impact
19Business construction job employees.
20    "Underserved area" means a geographic area that meets one
21or more of the following conditions:
22        (1) the area has a poverty rate of at least 20%
23    according to the latest federal decennial census;
24        (2) 75% or more of the children in the area participate
25    in the federal free lunch program according to reported
26    statistics from the State Board of Education;

 

 

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1        (3) at least 20% of the households in the area receive
2    assistance under the Supplemental Nutrition Assistance
3    Program (SNAP); or
4        (4) the area has an average unemployment rate, as
5    determined by the Illinois Department of Employment
6    Security, that is more than 120% of the national
7    unemployment average, as determined by the U.S. Department
8    of Labor, for a period of at least 2 consecutive calendar
9    years preceding the date of the application.
10    (j) Each contractor and subcontractor who is engaged in and
11executing a High Impact Business Construction jobs project, as
12defined under subsection (i) of this Section, for a business
13that is entitled to a credit pursuant to subsection (i) of this
14Section shall:
15        (1) make and keep, for a period of 5 years from the
16    date of the last payment made on or after the effective
17    date of this amendatory Act of the 101st General Assembly
18    on a contract or subcontract for a High Impact Business
19    Construction Jobs Project, records for all laborers and
20    other workers employed by the contractor or subcontractor
21    on the project; the records shall include:
22            (A) the worker's name;
23            (B) the worker's address;
24            (C) the worker's telephone number, if available;
25            (D) the worker's social security number;
26            (E) the worker's classification or

 

 

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1        classifications;
2            (F) the worker's gross and net wages paid in each
3        pay period;
4            (G) the worker's number of hours worked each day;
5            (H) the worker's starting and ending times of work
6        each day;
7            (I) the worker's hourly wage rate; and
8            (J) the worker's hourly overtime wage rate;
9        (2) no later than the 15th day of each calendar month,
10    provide a certified payroll for the immediately preceding
11    month to the taxpayer in charge of the High Impact Business
12    construction jobs project; within 5 business days after
13    receiving the certified payroll, the taxpayer shall file
14    the certified payroll with the Department of Labor and the
15    Department of Commerce and Economic Opportunity; a
16    certified payroll must be filed for only those calendar
17    months during which construction on a High Impact Business
18    construction jobs project has occurred; the certified
19    payroll shall consist of a complete copy of the records
20    identified in paragraph (1) of this subsection (j), but may
21    exclude the starting and ending times of work each day; the
22    certified payroll shall be accompanied by a statement
23    signed by the contractor or subcontractor or an officer,
24    employee, or agent of the contractor or subcontractor which
25    avers that:
26            (A) he or she has examined the certified payroll

 

 

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1        records required to be submitted by the Act and such
2        records are true and accurate; and
3            (B) the contractor or subcontractor is aware that
4        filing a certified payroll that he or she knows to be
5        false is a Class A misdemeanor.
6    A general contractor is not prohibited from relying on a
7certified payroll of a lower-tier subcontractor, provided the
8general contractor does not knowingly rely upon a
9subcontractor's false certification.
10    Any contractor or subcontractor subject to this
11subsection, and any officer, employee, or agent of such
12contractor or subcontractor whose duty as an officer, employee,
13or agent it is to file a certified payroll under this
14subsection, who willfully fails to file such a certified
15payroll on or before the date such certified payroll is
16required by this paragraph to be filed and any person who
17willfully files a false certified payroll that is false as to
18any material fact is in violation of this Act and guilty of a
19Class A misdemeanor.
20    The taxpayer in charge of the project shall keep the
21records submitted in accordance with this subsection on or
22after the effective date of this amendatory Act of the 101st
23General Assembly for a period of 5 years from the date of the
24last payment for work on a contract or subcontract for the High
25Impact Business construction jobs project.
26    The records submitted in accordance with this subsection

 

 

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1shall be considered public records, except an employee's
2address, telephone number, and social security number, and made
3available in accordance with the Freedom of Information Act.
4The Department of Labor shall accept any reasonable submissions
5by the contractor that meet the requirements of this subsection
6(j) and shall share the information with the Department in
7order to comply with the awarding of a High Impact Business
8construction jobs credit. A contractor, subcontractor, or
9public body may retain records required under this Section in
10paper or electronic format.
11    (k) Upon 7 business days' notice, each contractor and
12subcontractor shall make available for inspection and copying
13at a location within this State during reasonable hours, the
14records identified in this subsection (j) to the taxpayer in
15charge of the High Impact Business construction jobs project,
16its officers and agents, the Director of the Department of
17Labor and his deputies and agents, and to federal, State, or
18local law enforcement agencies and prosecutors.
19(Source: P.A. 97-905, eff. 8-7-12; 98-109, eff. 7-25-13.)
 
20    (20 ILCS 655/13 new)
21    Sec. 13. Enterprise Zone construction jobs credit.
22    (a) Beginning on January 1, 2021, a business entity in a
23certified Enterprise Zone that makes a capital investment of at
24least $10,000,000 in an Enterprise Zone construction jobs
25project may receive an Enterprise Zone construction jobs credit

 

 

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1against the tax imposed under subsections (a) and (b) of
2Section 201 of the Illinois Income Tax Act in an amount equal
3to 50% of the amount of the incremental income tax attributable
4to Enterprise Zone construction jobs credit employees employed
5in the course of completing an Enterprise Zone construction
6jobs project. However, the Enterprise Zone construction jobs
7credit may equal 75% of the amount of the incremental income
8tax attributable to Enterprise Zone construction jobs credit
9employees if the project is located in an underserved area.
10    (b) A business entity seeking a credit under this Section
11must submit an application to the Department and must receive
12approval from the designating municipality or county and the
13Department for the Enterprise Zone construction jobs credit
14project. The application must describe the nature and benefit
15of the project to the certified Enterprise Zone and its
16potential contributors. The total aggregate amount of credits
17awarded under the Blue Collar Jobs Act (Article 20 of this
18amendatory Act of the 101st General Assembly) shall not exceed
19$20,000,000 in any State fiscal year.
20    Within 45 days after receipt of an application, the
21Department shall give notice to the applicant as to whether the
22application has been approved or disapproved. If the Department
23disapproves the application, it shall specify the reasons for
24this decision and allow 60 days for the applicant to amend and
25resubmit its application. The Department shall provide
26assistance upon request to applicants. Resubmitted

 

 

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1applications shall receive the Department's approval or
2disapproval within 30 days after the application is
3resubmitted. Those resubmitted applications satisfying initial
4Department objectives shall be approved unless reasonable
5circumstances warrant disapproval.
6    On an annual basis, the designated zone organization shall
7furnish a statement to the Department on the programmatic and
8financial status of any approved project and an audited
9financial statement of the project.
10    The Department shall certify to the Department of Revenue
11the identity of taxpayers who are eligible for the credits and
12the amount of credits that are claimed pursuant to subparagraph
13(8) of subsection (f) of Section 201 the Illinois Income Tax
14Act.
15    The Enterprise Zone construction jobs credit project must
16be undertaken by the business entity in the course of
17completing a project that complies with the criteria contained
18in Section 4 of this Act and is undertaken in a certified
19Enterprise Zone. The Department shall adopt any necessary rules
20for the implementation of this subsection (b).
21    (c) Any business entity that receives an Enterprise Zone
22construction jobs credit shall maintain a certified payroll
23pursuant to subsection (d) of this Section.
24    (d) Each contractor and subcontractor who is engaged in and
25is executing an Enterprise Zone Construction jobs credit
26project for a business that is entitled to a credit pursuant to

 

 

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1this Section shall:
2        (1) make and keep, for a period of 5 years from the
3    date of the last payment made on or after the effective
4    date of this amendatory Act of the 101st General Assembly
5    on a contract or subcontract for an Enterprise Zone
6    construction jobs credit project, records for all laborers
7    and other workers employed by them on the project; the
8    records shall include:
9            (A) the worker's name;
10            (B) the worker's address;
11            (C) the worker's telephone number, if available;
12            (D) the worker's social security number;
13            (E) the worker's classification or
14        classifications;
15            (F) the worker's gross and net wages paid in each
16        pay period;
17            (G) the worker's number of hours worked each day;
18            (H) the worker's starting and ending times of work
19        each day;
20            (I) the worker's hourly wage rate; and
21            (J) the worker's hourly overtime wage rate;
22        (2) no later than the 15th day of each calendar month,
23    provide a certified payroll for the immediately preceding
24    month to the taxpayer in charge of the project; within 5
25    business days after receiving the certified payroll, the
26    taxpayer shall file the certified payroll with the

 

 

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1    Department of Labor and the Department of Commerce and
2    Economic Opportunity; a certified payroll must be filed for
3    only those calendar months during which construction on an
4    Enterprise Zone construction jobs project has occurred;
5    the certified payroll shall consist of a complete copy of
6    the records identified in paragraph (1) of this subsection
7    (d), but may exclude the starting and ending times of work
8    each day; the certified payroll shall be accompanied by a
9    statement signed by the contractor or subcontractor or an
10    officer, employee, or agent of the contractor or
11    subcontractor which avers that:
12            (A) he or she has examined the certified payroll
13        records required to be submitted by the Act and such
14        records are true and accurate; and
15            (B) the contractor or subcontractor is aware that
16        filing a certified payroll that he or she knows to be
17        false is a Class A misdemeanor.
18    A general contractor is not prohibited from relying on a
19certified payroll of a lower-tier subcontractor, provided the
20general contractor does not knowingly rely upon a
21subcontractor's false certification.
22    Any contractor or subcontractor subject to this
23subsection, and any officer, employee, or agent of such
24contractor or subcontractor whose duty as an officer, employee,
25or agent it is to file a certified payroll under this
26subsection, who willfully fails to file such a certified

 

 

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1payroll on or before the date such certified payroll is
2required by this paragraph to be filed and any person who
3willfully files a false certified payroll that is false as to
4any material fact is in violation of this Act and guilty of a
5Class A misdemeanor.
6    The taxpayer in charge of the project shall keep the
7records submitted in accordance with this subsection on or
8after the effective date of this amendatory Act of the 101st
9General Assembly for a period of 5 years from the date of the
10last payment for work on a contract or subcontract for the
11project.
12    The records submitted in accordance with this subsection
13shall be considered public records, except an employee's
14address, telephone number, and social security number, and made
15available in accordance with the Freedom of Information Act.
16The Department of Labor shall accept any reasonable submissions
17by the contractor that meet the requirements of this subsection
18and shall share the information with the Department in order to
19comply with the awarding of Enterprise Zone construction jobs
20credits. A contractor, subcontractor, or public body may retain
21records required under this Section in paper or electronic
22format.
23    Upon 7 business days' notice, the contractor and each
24subcontractor shall make available for inspection and copying
25at a location within this State during reasonable hours, the
26records identified in paragraph (1) of this subsection to the

 

 

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1taxpayer in charge of the project, its officers and agents, the
2Director of Labor and his deputies and agents, and to federal,
3State, or local law enforcement agencies and prosecutors.
4    (e) As used in this Section:
5    "Enterprise Zone construction jobs credit" means an amount
6equal to 50% (or 75% if the project is located in an
7underserved area) of the incremental income tax attributable to
8Enterprise Zone construction jobs credit employees.
9    "Enterprise Zone construction jobs credit employee" means
10a laborer or worker who is employed by an Illinois contractor
11or subcontractor in the actual construction work on the site of
12an Enterprise Zone construction jobs credit project.
13    "Enterprise Zone construction jobs credit project" means
14building a structure or building or making improvements of any
15kind to real property commissioned and paid for by a business
16that has applied and been approved for an Enterprise Zone
17construction jobs credit pursuant to this Section. "Enterprise
18Zone construction jobs credit project" does not include the
19routine operation, routine repair, or routine maintenance of
20existing structures, buildings, or real property.
21    "Incremental income tax" means the total amount withheld
22during the taxable year from the compensation of Enterprise
23Zone construction jobs credit employees.
24    "Underserved area" means a geographic area that meets one
25or more of the following conditions:
26        (1) the area has a poverty rate of at least 20%

 

 

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1    according to the latest federal decennial census;
2        (2) 75% or more of the children in the area participate
3    in the federal free lunch program according to reported
4    statistics from the State Board of Education;
5        (3) at least 20% of the households in the area receive
6    assistance under the Supplemental Nutrition Assistance
7    Program (SNAP); or
8        (4) the area has an average unemployment rate, as
9    determined by the Illinois Department of Employment
10    Security, that is more than 120% of the national
11    unemployment average, as determined by the U.S. Department
12    of Labor, for a period of at least 2 consecutive calendar
13    years preceding the date of the application.
 
14    Section 20-10. The Illinois Income Tax Act is amended by
15changing Sections 201, 211, and 221 as follows:
 
16    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
17    Sec. 201. Tax imposed.
18    (a) In general. A tax measured by net income is hereby
19imposed on every individual, corporation, trust and estate for
20each taxable year ending after July 31, 1969 on the privilege
21of earning or receiving income in or as a resident of this
22State. Such tax shall be in addition to all other occupation or
23privilege taxes imposed by this State or by any municipal
24corporation or political subdivision thereof.

 

 

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1    (b) Rates. The tax imposed by subsection (a) of this
2Section shall be determined as follows, except as adjusted by
3subsection (d-1):
4        (1) In the case of an individual, trust or estate, for
5    taxable years ending prior to July 1, 1989, an amount equal
6    to 2 1/2% of the taxpayer's net income for the taxable
7    year.
8        (2) In the case of an individual, trust or estate, for
9    taxable years beginning prior to July 1, 1989 and ending
10    after June 30, 1989, an amount equal to the sum of (i) 2
11    1/2% of the taxpayer's net income for the period prior to
12    July 1, 1989, as calculated under Section 202.3, and (ii)
13    3% of the taxpayer's net income for the period after June
14    30, 1989, as calculated under Section 202.3.
15        (3) In the case of an individual, trust or estate, for
16    taxable years beginning after June 30, 1989, and ending
17    prior to January 1, 2011, an amount equal to 3% of the
18    taxpayer's net income for the taxable year.
19        (4) In the case of an individual, trust, or estate, for
20    taxable years beginning prior to January 1, 2011, and
21    ending after December 31, 2010, an amount equal to the sum
22    of (i) 3% of the taxpayer's net income for the period prior
23    to January 1, 2011, as calculated under Section 202.5, and
24    (ii) 5% of the taxpayer's net income for the period after
25    December 31, 2010, as calculated under Section 202.5.
26        (5) In the case of an individual, trust, or estate, for

 

 

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1    taxable years beginning on or after January 1, 2011, and
2    ending prior to January 1, 2015, an amount equal to 5% of
3    the taxpayer's net income for the taxable year.
4        (5.1) In the case of an individual, trust, or estate,
5    for taxable years beginning prior to January 1, 2015, and
6    ending after December 31, 2014, an amount equal to the sum
7    of (i) 5% of the taxpayer's net income for the period prior
8    to January 1, 2015, as calculated under Section 202.5, and
9    (ii) 3.75% of the taxpayer's net income for the period
10    after December 31, 2014, as calculated under Section 202.5.
11        (5.2) In the case of an individual, trust, or estate,
12    for taxable years beginning on or after January 1, 2015,
13    and ending prior to July 1, 2017, an amount equal to 3.75%
14    of the taxpayer's net income for the taxable year.
15        (5.3) In the case of an individual, trust, or estate,
16    for taxable years beginning prior to July 1, 2017, and
17    ending after June 30, 2017, an amount equal to the sum of
18    (i) 3.75% of the taxpayer's net income for the period prior
19    to July 1, 2017, as calculated under Section 202.5, and
20    (ii) 4.95% of the taxpayer's net income for the period
21    after June 30, 2017, as calculated under Section 202.5.
22        (5.4) In the case of an individual, trust, or estate,
23    for taxable years beginning on or after July 1, 2017, an
24    amount equal to 4.95% of the taxpayer's net income for the
25    taxable year.
26        (6) In the case of a corporation, for taxable years

 

 

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1    ending prior to July 1, 1989, an amount equal to 4% of the
2    taxpayer's net income for the taxable year.
3        (7) In the case of a corporation, for taxable years
4    beginning prior to July 1, 1989 and ending after June 30,
5    1989, an amount equal to the sum of (i) 4% of the
6    taxpayer's net income for the period prior to July 1, 1989,
7    as calculated under Section 202.3, and (ii) 4.8% of the
8    taxpayer's net income for the period after June 30, 1989,
9    as calculated under Section 202.3.
10        (8) In the case of a corporation, for taxable years
11    beginning after June 30, 1989, and ending prior to January
12    1, 2011, an amount equal to 4.8% of the taxpayer's net
13    income for the taxable year.
14        (9) In the case of a corporation, for taxable years
15    beginning prior to January 1, 2011, and ending after
16    December 31, 2010, an amount equal to the sum of (i) 4.8%
17    of the taxpayer's net income for the period prior to
18    January 1, 2011, as calculated under Section 202.5, and
19    (ii) 7% of the taxpayer's net income for the period after
20    December 31, 2010, as calculated under Section 202.5.
21        (10) In the case of a corporation, for taxable years
22    beginning on or after January 1, 2011, and ending prior to
23    January 1, 2015, an amount equal to 7% of the taxpayer's
24    net income for the taxable year.
25        (11) In the case of a corporation, for taxable years
26    beginning prior to January 1, 2015, and ending after

 

 

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1    December 31, 2014, an amount equal to the sum of (i) 7% of
2    the taxpayer's net income for the period prior to January
3    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
4    of the taxpayer's net income for the period after December
5    31, 2014, as calculated under Section 202.5.
6        (12) In the case of a corporation, for taxable years
7    beginning on or after January 1, 2015, and ending prior to
8    July 1, 2017, an amount equal to 5.25% of the taxpayer's
9    net income for the taxable year.
10        (13) In the case of a corporation, for taxable years
11    beginning prior to July 1, 2017, and ending after June 30,
12    2017, an amount equal to the sum of (i) 5.25% of the
13    taxpayer's net income for the period prior to July 1, 2017,
14    as calculated under Section 202.5, and (ii) 7% of the
15    taxpayer's net income for the period after June 30, 2017,
16    as calculated under Section 202.5.
17        (14) In the case of a corporation, for taxable years
18    beginning on or after July 1, 2017, an amount equal to 7%
19    of the taxpayer's net income for the taxable year.
20    The rates under this subsection (b) are subject to the
21provisions of Section 201.5.
22    (c) Personal Property Tax Replacement Income Tax.
23Beginning on July 1, 1979 and thereafter, in addition to such
24income tax, there is also hereby imposed the Personal Property
25Tax Replacement Income Tax measured by net income on every
26corporation (including Subchapter S corporations), partnership

 

 

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1and trust, for each taxable year ending after June 30, 1979.
2Such taxes are imposed on the privilege of earning or receiving
3income in or as a resident of this State. The Personal Property
4Tax Replacement Income Tax shall be in addition to the income
5tax imposed by subsections (a) and (b) of this Section and in
6addition to all other occupation or privilege taxes imposed by
7this State or by any municipal corporation or political
8subdivision thereof.
9    (d) Additional Personal Property Tax Replacement Income
10Tax Rates. The personal property tax replacement income tax
11imposed by this subsection and subsection (c) of this Section
12in the case of a corporation, other than a Subchapter S
13corporation and except as adjusted by subsection (d-1), shall
14be an additional amount equal to 2.85% of such taxpayer's net
15income for the taxable year, except that beginning on January
161, 1981, and thereafter, the rate of 2.85% specified in this
17subsection shall be reduced to 2.5%, and in the case of a
18partnership, trust or a Subchapter S corporation shall be an
19additional amount equal to 1.5% of such taxpayer's net income
20for the taxable year.
21    (d-1) Rate reduction for certain foreign insurers. In the
22case of a foreign insurer, as defined by Section 35A-5 of the
23Illinois Insurance Code, whose state or country of domicile
24imposes on insurers domiciled in Illinois a retaliatory tax
25(excluding any insurer whose premiums from reinsurance assumed
26are 50% or more of its total insurance premiums as determined

 

 

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1under paragraph (2) of subsection (b) of Section 304, except
2that for purposes of this determination premiums from
3reinsurance do not include premiums from inter-affiliate
4reinsurance arrangements), beginning with taxable years ending
5on or after December 31, 1999, the sum of the rates of tax
6imposed by subsections (b) and (d) shall be reduced (but not
7increased) to the rate at which the total amount of tax imposed
8under this Act, net of all credits allowed under this Act,
9shall equal (i) the total amount of tax that would be imposed
10on the foreign insurer's net income allocable to Illinois for
11the taxable year by such foreign insurer's state or country of
12domicile if that net income were subject to all income taxes
13and taxes measured by net income imposed by such foreign
14insurer's state or country of domicile, net of all credits
15allowed or (ii) a rate of zero if no such tax is imposed on such
16income by the foreign insurer's state of domicile. For the
17purposes of this subsection (d-1), an inter-affiliate includes
18a mutual insurer under common management.
19        (1) For the purposes of subsection (d-1), in no event
20    shall the sum of the rates of tax imposed by subsections
21    (b) and (d) be reduced below the rate at which the sum of:
22            (A) the total amount of tax imposed on such foreign
23        insurer under this Act for a taxable year, net of all
24        credits allowed under this Act, plus
25            (B) the privilege tax imposed by Section 409 of the
26        Illinois Insurance Code, the fire insurance company

 

 

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1        tax imposed by Section 12 of the Fire Investigation
2        Act, and the fire department taxes imposed under
3        Section 11-10-1 of the Illinois Municipal Code,
4    equals 1.25% for taxable years ending prior to December 31,
5    2003, or 1.75% for taxable years ending on or after
6    December 31, 2003, of the net taxable premiums written for
7    the taxable year, as described by subsection (1) of Section
8    409 of the Illinois Insurance Code. This paragraph will in
9    no event increase the rates imposed under subsections (b)
10    and (d).
11        (2) Any reduction in the rates of tax imposed by this
12    subsection shall be applied first against the rates imposed
13    by subsection (b) and only after the tax imposed by
14    subsection (a) net of all credits allowed under this
15    Section other than the credit allowed under subsection (i)
16    has been reduced to zero, against the rates imposed by
17    subsection (d).
18    This subsection (d-1) is exempt from the provisions of
19Section 250.
20    (e) Investment credit. A taxpayer shall be allowed a credit
21against the Personal Property Tax Replacement Income Tax for
22investment in qualified property.
23        (1) A taxpayer shall be allowed a credit equal to .5%
24    of the basis of qualified property placed in service during
25    the taxable year, provided such property is placed in
26    service on or after July 1, 1984. There shall be allowed an

 

 

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1    additional credit equal to .5% of the basis of qualified
2    property placed in service during the taxable year,
3    provided such property is placed in service on or after
4    July 1, 1986, and the taxpayer's base employment within
5    Illinois has increased by 1% or more over the preceding
6    year as determined by the taxpayer's employment records
7    filed with the Illinois Department of Employment Security.
8    Taxpayers who are new to Illinois shall be deemed to have
9    met the 1% growth in base employment for the first year in
10    which they file employment records with the Illinois
11    Department of Employment Security. The provisions added to
12    this Section by Public Act 85-1200 (and restored by Public
13    Act 87-895) shall be construed as declaratory of existing
14    law and not as a new enactment. If, in any year, the
15    increase in base employment within Illinois over the
16    preceding year is less than 1%, the additional credit shall
17    be limited to that percentage times a fraction, the
18    numerator of which is .5% and the denominator of which is
19    1%, but shall not exceed .5%. The investment credit shall
20    not be allowed to the extent that it would reduce a
21    taxpayer's liability in any tax year below zero, nor may
22    any credit for qualified property be allowed for any year
23    other than the year in which the property was placed in
24    service in Illinois. For tax years ending on or after
25    December 31, 1987, and on or before December 31, 1988, the
26    credit shall be allowed for the tax year in which the

 

 

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1    property is placed in service, or, if the amount of the
2    credit exceeds the tax liability for that year, whether it
3    exceeds the original liability or the liability as later
4    amended, such excess may be carried forward and applied to
5    the tax liability of the 5 taxable years following the
6    excess credit years if the taxpayer (i) makes investments
7    which cause the creation of a minimum of 2,000 full-time
8    equivalent jobs in Illinois, (ii) is located in an
9    enterprise zone established pursuant to the Illinois
10    Enterprise Zone Act and (iii) is certified by the
11    Department of Commerce and Community Affairs (now
12    Department of Commerce and Economic Opportunity) as
13    complying with the requirements specified in clause (i) and
14    (ii) by July 1, 1986. The Department of Commerce and
15    Community Affairs (now Department of Commerce and Economic
16    Opportunity) shall notify the Department of Revenue of all
17    such certifications immediately. For tax years ending
18    after December 31, 1988, the credit shall be allowed for
19    the tax year in which the property is placed in service,
20    or, if the amount of the credit exceeds the tax liability
21    for that year, whether it exceeds the original liability or
22    the liability as later amended, such excess may be carried
23    forward and applied to the tax liability of the 5 taxable
24    years following the excess credit years. The credit shall
25    be applied to the earliest year for which there is a
26    liability. If there is credit from more than one tax year

 

 

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1    that is available to offset a liability, earlier credit
2    shall be applied first.
3        (2) The term "qualified property" means property
4    which:
5            (A) is tangible, whether new or used, including
6        buildings and structural components of buildings and
7        signs that are real property, but not including land or
8        improvements to real property that are not a structural
9        component of a building such as landscaping, sewer
10        lines, local access roads, fencing, parking lots, and
11        other appurtenances;
12            (B) is depreciable pursuant to Section 167 of the
13        Internal Revenue Code, except that "3-year property"
14        as defined in Section 168(c)(2)(A) of that Code is not
15        eligible for the credit provided by this subsection
16        (e);
17            (C) is acquired by purchase as defined in Section
18        179(d) of the Internal Revenue Code;
19            (D) is used in Illinois by a taxpayer who is
20        primarily engaged in manufacturing, or in mining coal
21        or fluorite, or in retailing, or was placed in service
22        on or after July 1, 2006 in a River Edge Redevelopment
23        Zone established pursuant to the River Edge
24        Redevelopment Zone Act; and
25            (E) has not previously been used in Illinois in
26        such a manner and by such a person as would qualify for

 

 

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1        the credit provided by this subsection (e) or
2        subsection (f).
3        (3) For purposes of this subsection (e),
4    "manufacturing" means the material staging and production
5    of tangible personal property by procedures commonly
6    regarded as manufacturing, processing, fabrication, or
7    assembling which changes some existing material into new
8    shapes, new qualities, or new combinations. For purposes of
9    this subsection (e) the term "mining" shall have the same
10    meaning as the term "mining" in Section 613(c) of the
11    Internal Revenue Code. For purposes of this subsection (e),
12    the term "retailing" means the sale of tangible personal
13    property for use or consumption and not for resale, or
14    services rendered in conjunction with the sale of tangible
15    personal property for use or consumption and not for
16    resale. For purposes of this subsection (e), "tangible
17    personal property" has the same meaning as when that term
18    is used in the Retailers' Occupation Tax Act, and, for
19    taxable years ending after December 31, 2008, does not
20    include the generation, transmission, or distribution of
21    electricity.
22        (4) The basis of qualified property shall be the basis
23    used to compute the depreciation deduction for federal
24    income tax purposes.
25        (5) If the basis of the property for federal income tax
26    depreciation purposes is increased after it has been placed

 

 

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1    in service in Illinois by the taxpayer, the amount of such
2    increase shall be deemed property placed in service on the
3    date of such increase in basis.
4        (6) The term "placed in service" shall have the same
5    meaning as under Section 46 of the Internal Revenue Code.
6        (7) If during any taxable year, any property ceases to
7    be qualified property in the hands of the taxpayer within
8    48 months after being placed in service, or the situs of
9    any qualified property is moved outside Illinois within 48
10    months after being placed in service, the Personal Property
11    Tax Replacement Income Tax for such taxable year shall be
12    increased. Such increase shall be determined by (i)
13    recomputing the investment credit which would have been
14    allowed for the year in which credit for such property was
15    originally allowed by eliminating such property from such
16    computation and, (ii) subtracting such recomputed credit
17    from the amount of credit previously allowed. For the
18    purposes of this paragraph (7), a reduction of the basis of
19    qualified property resulting from a redetermination of the
20    purchase price shall be deemed a disposition of qualified
21    property to the extent of such reduction.
22        (8) Unless the investment credit is extended by law,
23    the basis of qualified property shall not include costs
24    incurred after December 31, 2018, except for costs incurred
25    pursuant to a binding contract entered into on or before
26    December 31, 2018.

 

 

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1        (9) Each taxable year ending before December 31, 2000,
2    a partnership may elect to pass through to its partners the
3    credits to which the partnership is entitled under this
4    subsection (e) for the taxable year. A partner may use the
5    credit allocated to him or her under this paragraph only
6    against the tax imposed in subsections (c) and (d) of this
7    Section. If the partnership makes that election, those
8    credits shall be allocated among the partners in the
9    partnership in accordance with the rules set forth in
10    Section 704(b) of the Internal Revenue Code, and the rules
11    promulgated under that Section, and the allocated amount of
12    the credits shall be allowed to the partners for that
13    taxable year. The partnership shall make this election on
14    its Personal Property Tax Replacement Income Tax return for
15    that taxable year. The election to pass through the credits
16    shall be irrevocable.
17        For taxable years ending on or after December 31, 2000,
18    a partner that qualifies its partnership for a subtraction
19    under subparagraph (I) of paragraph (2) of subsection (d)
20    of Section 203 or a shareholder that qualifies a Subchapter
21    S corporation for a subtraction under subparagraph (S) of
22    paragraph (2) of subsection (b) of Section 203 shall be
23    allowed a credit under this subsection (e) equal to its
24    share of the credit earned under this subsection (e) during
25    the taxable year by the partnership or Subchapter S
26    corporation, determined in accordance with the

 

 

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1    determination of income and distributive share of income
2    under Sections 702 and 704 and Subchapter S of the Internal
3    Revenue Code. This paragraph is exempt from the provisions
4    of Section 250.
5    (f) Investment credit; Enterprise Zone; River Edge
6Redevelopment Zone.
7        (1) A taxpayer shall be allowed a credit against the
8    tax imposed by subsections (a) and (b) of this Section for
9    investment in qualified property which is placed in service
10    in an Enterprise Zone created pursuant to the Illinois
11    Enterprise Zone Act or, for property placed in service on
12    or after July 1, 2006, a River Edge Redevelopment Zone
13    established pursuant to the River Edge Redevelopment Zone
14    Act. For partners, shareholders of Subchapter S
15    corporations, and owners of limited liability companies,
16    if the liability company is treated as a partnership for
17    purposes of federal and State income taxation, there shall
18    be allowed a credit under this subsection (f) to be
19    determined in accordance with the determination of income
20    and distributive share of income under Sections 702 and 704
21    and Subchapter S of the Internal Revenue Code. The credit
22    shall be .5% of the basis for such property. The credit
23