093_SB1634ham001











                                     LRB093 02897 RCE 17004 a

 1                    AMENDMENT TO SENATE BILL 1634

 2        AMENDMENT NO.     .  Amend Senate Bill 1634 by  replacing
 3    the title with the following:
 4        "AN ACT concerning taxes."; and

 5    by  replacing  everything  after the enacting clause with the
 6    following:

 7        "Section 5.  The Illinois Income Tax Act  is  amended  by
 8    changing Sections 201, 204, and 207 as follows:

 9        (35 ILCS 5/201) (from Ch. 120, par. 2-201)
10        Sec. 201.  Tax Imposed.
11        (a)  In  general.  A tax measured by net income is hereby
12    imposed on every individual, corporation,  trust  and  estate
13    for  each  taxable  year  ending  after  July 31, 1969 on the
14    privilege of earning or receiving income in or as a  resident
15    of  this  State.  Such  tax shall be in addition to all other
16    occupation or privilege taxes imposed by this State or by any
17    municipal corporation or political subdivision thereof.
18        (b)  Rates.  The tax imposed by subsection  (a)  of  this
19    Section shall be determined as follows, except as adjusted by
20    subsection (d-1):
21             (1)  In  the case of an individual, trust or estate,
 
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 1        for taxable years ending prior to July 1, 1989, an amount
 2        equal to 2 1/2% of the  taxpayer's  net  income  for  the
 3        taxable year.
 4             (2)  In  the case of an individual, trust or estate,
 5        for taxable years beginning prior to  July  1,  1989  and
 6        ending after June 30, 1989, an amount equal to the sum of
 7        (i)  2  1/2%  of the taxpayer's net income for the period
 8        prior to July 1, 1989, as calculated under Section 202.3,
 9        and (ii) 3% of the taxpayer's net income for  the  period
10        after June 30, 1989, as calculated under Section 202.3.
11             (3)  In  the case of an individual, trust or estate,
12        for taxable years  beginning  after  June  30,  1989,  an
13        amount  equal  to 3% of the taxpayer's net income for the
14        taxable year.
15             (4)  (Blank).
16             (5)  (Blank).
17             (6)  In the case of a corporation, for taxable years
18        ending prior to July 1, 1989, an amount equal  to  4%  of
19        the taxpayer's net income for the taxable year.
20             (7)  In the case of a corporation, for taxable years
21        beginning prior to July 1, 1989 and ending after June 30,
22        1989,  an  amount  equal  to  the  sum  of  (i) 4% of the
23        taxpayer's net income for the period  prior  to  July  1,
24        1989, as calculated under Section 202.3, and (ii) 4.8% of
25        the  taxpayer's  net income for the period after June 30,
26        1989, as calculated under Section 202.3.
27             (8)  In the case of a corporation, for taxable years
28        beginning after June 30, 1989, an amount equal to 4.8% of
29        the taxpayer's net income for the taxable year.
30        (c)  Personal  Property  Tax  Replacement   Income   Tax.
31    Beginning on July 1, 1979 and thereafter, in addition to such
32    income  tax,  there  is  also  hereby  imposed  the  Personal
33    Property Tax Replacement Income Tax measured by net income on
34    every  corporation  (including  Subchapter  S  corporations),
 
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 1    partnership  and  trust,  for  each taxable year ending after
 2    June 30, 1979.  Such taxes are imposed on  the  privilege  of
 3    earning  or  receiving  income  in  or  as a resident of this
 4    State.  The Personal  Property  Tax  Replacement  Income  Tax
 5    shall be in addition to the income tax imposed by subsections
 6    (a)  and  (b)  of  this  Section and in addition to all other
 7    occupation or privilege taxes imposed by this State or by any
 8    municipal corporation or political subdivision thereof.
 9        (d)  Additional Personal Property Tax Replacement  Income
10    Tax  Rates.  The personal property tax replacement income tax
11    imposed by this subsection and subsection (c) of this Section
12    in the case of a  corporation,  other  than  a  Subchapter  S
13    corporation and except as adjusted by subsection (d-1), shall
14    be an additional amount equal to 2.85% of such taxpayer's net
15    income for the taxable year, except that beginning on January
16    1,  1981, and thereafter, the rate of 2.85% specified in this
17    subsection shall be reduced to 2.5%, and in  the  case  of  a
18    partnership,  trust or a Subchapter S corporation shall be an
19    additional amount equal to 1.5% of such taxpayer's net income
20    for the taxable year.
21        (d-1)  Rate reduction for certain foreign  insurers.   In
22    the case of a foreign insurer, as defined by Section 35A-5 of
23    the  Illinois  Insurance  Code,  whose  state  or  country of
24    domicile  imposes  on  insurers  domiciled  in   Illinois   a
25    retaliatory  tax  (excluding  any insurer whose premiums from
26    reinsurance assumed are 50% or more of  its  total  insurance
27    premiums  as determined under paragraph (2) of subsection (b)
28    of  Section  304,  except   that   for   purposes   of   this
29    determination   premiums  from  reinsurance  do  not  include
30    premiums  from  inter-affiliate  reinsurance   arrangements),
31    beginning  with taxable years ending on or after December 31,
32    1999, the sum of the rates of tax imposed by subsections  (b)
33    and  (d)  shall be reduced (but not increased) to the rate at
34    which the total amount of tax imposed under this Act, net  of
 
                            -4-      LRB093 02897 RCE 17004 a
 1    all credits allowed under this Act, shall equal (i) the total
 2    amount  of tax that would be imposed on the foreign insurer's
 3    net income allocable to Illinois for the taxable year by such
 4    foreign insurer's state or country of domicile  if  that  net
 5    income were subject to all income taxes and taxes measured by
 6    net income imposed by such foreign insurer's state or country
 7    of  domicile,  net  of  all credits allowed or (ii) a rate of
 8    zero if no such tax is imposed on such income by the  foreign
 9    insurer's  state  of  domicile.  For  the  purposes  of  this
10    subsection   (d-1),  an  inter-affiliate  includes  a  mutual
11    insurer under common management.
12             (1)  For the purposes of  subsection  (d-1),  in  no
13        event  shall  the  sum  of  the  rates  of tax imposed by
14        subsections (b) and (d) be  reduced  below  the  rate  at
15        which the sum of:
16                  (A)  the  total  amount  of tax imposed on such
17             foreign insurer under this Act for a  taxable  year,
18             net of all credits allowed under this Act, plus
19                  (B)  the  privilege  tax imposed by Section 409
20             of the Illinois Insurance Code, the  fire  insurance
21             company  tax  imposed  by  Section  12  of  the Fire
22             Investigation Act, and  the  fire  department  taxes
23             imposed   under  Section  11-10-1  of  the  Illinois
24             Municipal Code,
25        equals 1.25% of the net taxable premiums written for  the
26        taxable  year,  as described by subsection (1) of Section
27        409 of the Illinois Insurance Code. This  paragraph  will
28        in  no event increase the rates imposed under subsections
29        (b) and (d).
30             (2)  Any reduction in the rates of  tax  imposed  by
31        this  subsection shall be applied first against the rates
32        imposed by subsection (b) and only after the tax  imposed
33        by  subsection  (a) net of all credits allowed under this
34        Section other than the credit  allowed  under  subsection
 
                            -5-      LRB093 02897 RCE 17004 a
 1        (i)  has  been reduced to zero, against the rates imposed
 2        by subsection (d).
 3        This subsection (d-1) is exempt from  the  provisions  of
 4    Section 250.
 5        (e)  Investment  credit.   A  taxpayer shall be allowed a
 6    credit against the Personal Property Tax  Replacement  Income
 7    Tax for investment in qualified property.
 8             (1)  A  taxpayer  shall be allowed a credit equal to
 9        .5% of the basis of qualified property placed in  service
10        during the taxable year, provided such property is placed
11        in  service  on  or  after  July 1, 1984.  There shall be
12        allowed an additional credit equal to .5% of the basis of
13        qualified property placed in service during  the  taxable
14        year,  provided  such property is placed in service on or
15        after July 1, 1986, and the  taxpayer's  base  employment
16        within  Illinois  has  increased  by  1% or more over the
17        preceding year as determined by the taxpayer's employment
18        records filed with the Illinois Department of  Employment
19        Security.   Taxpayers  who  are  new to Illinois shall be
20        deemed to have met the 1% growth in base  employment  for
21        the first year in which they file employment records with
22        the  Illinois  Department  of  Employment  Security.  The
23        provisions added to this Section by  Public  Act  85-1200
24        (and restored by Public Act 87-895) shall be construed as
25        declaratory  of  existing law and not as a new enactment.
26        If, in any year, the increase in base  employment  within
27        Illinois  over  the  preceding  year is less than 1%, the
28        additional credit shall be  limited  to  that  percentage
29        times  a  fraction, the numerator of which is .5% and the
30        denominator of which is 1%, but  shall  not  exceed  .5%.
31        The  investment credit shall not be allowed to the extent
32        that it would reduce a taxpayer's liability  in  any  tax
33        year  below  zero,  nor  may  any  credit  for  qualified
34        property  be  allowed for any year other than the year in
 
                            -6-      LRB093 02897 RCE 17004 a
 1        which the property was placed in service in Illinois. For
 2        tax years ending on or after December 31, 1987, and on or
 3        before December 31, 1988, the credit shall be allowed for
 4        the tax year in which the property is placed in  service,
 5        or, if the amount of the credit exceeds the tax liability
 6        for  that year, whether it exceeds the original liability
 7        or the liability as later amended,  such  excess  may  be
 8        carried forward and applied to the tax liability of the 5
 9        taxable  years  following  the excess credit years if the
10        taxpayer (i) makes investments which cause  the  creation
11        of  a  minimum  of  2,000  full-time  equivalent  jobs in
12        Illinois,  (ii)  is  located  in   an   enterprise   zone
13        established  pursuant to the Illinois Enterprise Zone Act
14        and (iii) is certified by the Department of Commerce  and
15        Community  Affairs  as  complying  with  the requirements
16        specified in clause (i) and (ii) by July  1,  1986.   The
17        Department of Commerce and Community Affairs shall notify
18        the  Department  of  Revenue  of  all such certifications
19        immediately. For tax  years  ending  after  December  31,
20        1988,  the  credit  shall  be allowed for the tax year in
21        which the property is  placed  in  service,  or,  if  the
22        amount  of  the credit exceeds the tax liability for that
23        year, whether it exceeds the original  liability  or  the
24        liability  as  later  amended, such excess may be carried
25        forward and applied to the tax liability of the 5 taxable
26        years following the excess credit years. The credit shall
27        be applied to the earliest year  for  which  there  is  a
28        liability. If there is credit from more than one tax year
29        that  is  available to offset a liability, earlier credit
30        shall be applied first.
31             (2)  The term "qualified  property"  means  property
32        which:
33                  (A)  is   tangible,   whether   new   or  used,
34             including buildings  and  structural  components  of
 
                            -7-      LRB093 02897 RCE 17004 a
 1             buildings  and signs that are real property, but not
 2             including land or improvements to real property that
 3             are not a structural component of a building such as
 4             landscaping,  sewer  lines,  local   access   roads,
 5             fencing, parking lots, and other appurtenances;
 6                  (B)  is  depreciable pursuant to Section 167 of
 7             the  Internal  Revenue  Code,  except  that  "3-year
 8             property" as defined in Section 168(c)(2)(A) of that
 9             Code is not eligible for the credit provided by this
10             subsection (e);
11                  (C)  is acquired  by  purchase  as  defined  in
12             Section 179(d) of the Internal Revenue Code;
13                  (D)  is  used  in Illinois by a taxpayer who is
14             primarily engaged in  manufacturing,  or  in  mining
15             coal or fluorite, or in retailing; and
16                  (E)  has  not  previously been used in Illinois
17             in such a manner and  by  such  a  person  as  would
18             qualify  for  the credit provided by this subsection
19             (e) or subsection (f).
20             (3)  For   purposes   of   this   subsection    (e),
21        "manufacturing" means the material staging and production
22        of  tangible  personal  property  by  procedures commonly
23        regarded as manufacturing,  processing,  fabrication,  or
24        assembling  which changes some existing material into new
25        shapes, new qualities, or new combinations.  For purposes
26        of this subsection (e) the term "mining" shall  have  the
27        same  meaning  as  the term "mining" in Section 613(c) of
28        the  Internal  Revenue  Code.   For  purposes   of   this
29        subsection  (e),  the  term "retailing" means the sale of
30        tangible  personal  property  or  services  rendered   in
31        conjunction  with  the sale of tangible consumer goods or
32        commodities.
33             (4)  The basis of qualified property  shall  be  the
34        basis  used  to  compute  the  depreciation deduction for
 
                            -8-      LRB093 02897 RCE 17004 a
 1        federal income tax purposes.
 2             (5)  If the basis of the property for federal income
 3        tax depreciation purposes is increased after it has  been
 4        placed in service in Illinois by the taxpayer, the amount
 5        of  such  increase  shall  be  deemed  property placed in
 6        service on the date of such increase in basis.
 7             (6)  The term "placed in  service"  shall  have  the
 8        same  meaning as under Section 46 of the Internal Revenue
 9        Code.
10             (7)  If during any taxable year, any property ceases
11        to be qualified property in the  hands  of  the  taxpayer
12        within  48  months  after being placed in service, or the
13        situs of any qualified property is moved outside Illinois
14        within 48 months  after  being  placed  in  service,  the
15        Personal  Property  Tax  Replacement  Income Tax for such
16        taxable year shall be increased.  Such increase shall  be
17        determined by (i) recomputing the investment credit which
18        would  have been allowed for the year in which credit for
19        such property was originally allowed by eliminating  such
20        property from such computation and, (ii) subtracting such
21        recomputed  credit  from  the amount of credit previously
22        allowed. For  the  purposes  of  this  paragraph  (7),  a
23        reduction  of  the  basis of qualified property resulting
24        from a redetermination of the  purchase  price  shall  be
25        deemed  a disposition of qualified property to the extent
26        of such reduction.
27             (8)  Unless the investment  credit  is  extended  by
28        law,  the  basis  of qualified property shall not include
29        costs incurred after December 31, 2003, except for  costs
30        incurred  pursuant  to a binding contract entered into on
31        or before December 31, 2003.
32             (9)  Each taxable year ending  before  December  31,
33        2000,  a  partnership  may  elect  to pass through to its
34        partners the credits to which the partnership is entitled
 
                            -9-      LRB093 02897 RCE 17004 a
 1        under this  subsection  (e)  for  the  taxable  year.   A
 2        partner  may use the credit allocated to him or her under
 3        this  paragraph  only  against   the   tax   imposed   in
 4        subsections   (c)  and  (d)  of  this  Section.   If  the
 5        partnership makes that election, those credits  shall  be
 6        allocated  among  the  partners  in  the  partnership  in
 7        accordance  with the rules set forth in Section 704(b) of
 8        the Internal Revenue  Code,  and  the  rules  promulgated
 9        under  that  Section,  and  the  allocated  amount of the
10        credits shall be allowed to the partners for that taxable
11        year.  The partnership shall make this  election  on  its
12        Personal  Property  Tax Replacement Income Tax return for
13        that taxable year.  The  election  to  pass  through  the
14        credits shall be irrevocable.
15             For  taxable  years  ending on or after December 31,
16        2000, a partner that  qualifies  its  partnership  for  a
17        subtraction  under  subparagraph  (I) of paragraph (2) of
18        subsection (d) of  Section  203  or  a  shareholder  that
19        qualifies  a  Subchapter  S corporation for a subtraction
20        under subparagraph (S) of paragraph (2) of subsection (b)
21        of Section 203 shall  be  allowed  a  credit  under  this
22        subsection  (e)  equal  to its share of the credit earned
23        under this subsection (e) during the taxable year by  the
24        partnership  or  Subchapter  S corporation, determined in
25        accordance  with  the   determination   of   income   and
26        distributive  share  of income under Sections 702 and 704
27        and Subchapter S of  the  Internal  Revenue  Code.   This
28        paragraph is exempt from the provisions of Section 250.
29          (f)  Investment credit; Enterprise Zone.
30             (1)  A  taxpayer  shall  be allowed a credit against
31        the tax imposed  by  subsections  (a)  and  (b)  of  this
32        Section  for  investment  in  qualified property which is
33        placed in service in an Enterprise Zone created  pursuant
34        to  the  Illinois  Enterprise  Zone  Act.   For partners,
 
                            -10-     LRB093 02897 RCE 17004 a
 1        shareholders of Subchapter S corporations, and owners  of
 2        limited  liability companies, if the liability company is
 3        treated as a partnership  for  purposes  of  federal  and
 4        State  income  taxation,  there shall be allowed a credit
 5        under this subsection (f) to be determined in  accordance
 6        with  the  determination of income and distributive share
 7        of income under Sections 702 and 704 and Subchapter S  of
 8        the  Internal  Revenue  Code.  The credit shall be .5% of
 9        the  basis  for  such  property.   The  credit  shall  be
10        available only in the taxable year in which the  property
11        is placed in service in the Enterprise Zone and shall not
12        be   allowed  to  the  extent  that  it  would  reduce  a
13        taxpayer's liability for the tax imposed  by  subsections
14        (a) and (b) of this Section to below zero.  For tax years
15        ending on or after December 31, 1985, the credit shall be
16        allowed  for the tax year in which the property is placed
17        in service, or, if the amount of the credit  exceeds  the
18        tax  liability  for  that  year,  whether  it exceeds the
19        original liability or the  liability  as  later  amended,
20        such excess may be carried forward and applied to the tax
21        liability  of  the  5  taxable years following the excess
22        credit year.  The credit shall be applied to the earliest
23        year for which there is a liability.  If there is  credit
24        from more than one tax year that is available to offset a
25        liability,  the  credit  accruing  first in time shall be
26        applied first.
27             (2)  The  term  qualified  property  means  property
28        which:
29                  (A)  is  tangible,   whether   new   or   used,
30             including  buildings  and  structural  components of
31             buildings;
32                  (B)  is depreciable pursuant to Section 167  of
33             the  Internal  Revenue  Code,  except  that  "3-year
34             property" as defined in Section 168(c)(2)(A) of that
 
                            -11-     LRB093 02897 RCE 17004 a
 1             Code is not eligible for the credit provided by this
 2             subsection (f);
 3                  (C)  is  acquired  by  purchase  as  defined in
 4             Section 179(d) of the Internal Revenue Code;
 5                  (D)  is used in  the  Enterprise  Zone  by  the
 6             taxpayer; and
 7                  (E)  has  not  been previously used in Illinois
 8             in such a manner and  by  such  a  person  as  would
 9             qualify  for  the credit provided by this subsection
10             (f) or subsection (e).
11             (3)  The basis of qualified property  shall  be  the
12        basis  used  to  compute  the  depreciation deduction for
13        federal income tax purposes.
14             (4)  If the basis of the property for federal income
15        tax depreciation purposes is increased after it has  been
16        placed in service in the Enterprise Zone by the taxpayer,
17        the  amount  of  such  increase  shall be deemed property
18        placed in service on the date of such increase in basis.
19             (5)  The term "placed in  service"  shall  have  the
20        same  meaning as under Section 46 of the Internal Revenue
21        Code.
22             (6)  If during any taxable year, any property ceases
23        to be qualified property in the  hands  of  the  taxpayer
24        within  48  months  after being placed in service, or the
25        situs of any qualified  property  is  moved  outside  the
26        Enterprise  Zone  within  48 months after being placed in
27        service, the tax imposed under subsections (a) and (b) of
28        this Section for such taxable year  shall  be  increased.
29        Such  increase shall be determined by (i) recomputing the
30        investment credit which would have been allowed  for  the
31        year  in  which  credit  for such property was originally
32        allowed  by   eliminating   such   property   from   such
33        computation,  and (ii) subtracting such recomputed credit
34        from the amount of credit previously  allowed.   For  the
 
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 1        purposes  of this paragraph (6), a reduction of the basis
 2        of qualified property resulting from a redetermination of
 3        the purchase price  shall  be  deemed  a  disposition  of
 4        qualified property to the extent of such reduction.
 5          (g)  Jobs Tax Credit; Enterprise Zone and Foreign Trade
 6    Zone or Sub-Zone.
 7             (1)  A taxpayer conducting a trade or business in an
 8        enterprise  zone  or a High Impact Business designated by
 9        the  Department  of  Commerce   and   Community   Affairs
10        conducting  a trade or business in a federally designated
11        Foreign Trade Zone or Sub-Zone shall be allowed a  credit
12        against  the  tax  imposed  by subsections (a) and (b) of
13        this Section in the amount of $500 per eligible  employee
14        hired to work in the zone during the taxable year.
15             (2)  To qualify for the credit:
16                  (A)  the  taxpayer must hire 5 or more eligible
17             employees to work in an enterprise zone or federally
18             designated Foreign Trade Zone or Sub-Zone during the
19             taxable year;
20                  (B)  the taxpayer's total employment within the
21             enterprise  zone  or  federally  designated  Foreign
22             Trade Zone or Sub-Zone must increase by  5  or  more
23             full-time  employees  beyond  the  total employed in
24             that zone at the end of the previous  tax  year  for
25             which  a  jobs  tax  credit  under  this Section was
26             taken, or beyond the total employed by the  taxpayer
27             as of December 31, 1985, whichever is later; and
28                  (C)  the  eligible  employees  must be employed
29             180 consecutive days in order to be deemed hired for
30             purposes of this subsection.
31             (3)  An "eligible employee" means  an  employee  who
32        is:
33                  (A)  Certified  by  the  Department of Commerce
34             and Community Affairs  as  "eligible  for  services"
 
                            -13-     LRB093 02897 RCE 17004 a
 1             pursuant  to  regulations  promulgated in accordance
 2             with Title II of the Job Training  Partnership  Act,
 3             Training Services for the Disadvantaged or Title III
 4             of  the Job Training Partnership Act, Employment and
 5             Training Assistance for Dislocated Workers Program.
 6                  (B)  Hired  after  the   enterprise   zone   or
 7             federally  designated Foreign Trade Zone or Sub-Zone
 8             was designated or the trade or business was  located
 9             in that zone, whichever is later.
10                  (C)  Employed in the enterprise zone or Foreign
11             Trade  Zone  or Sub-Zone. An employee is employed in
12             an enterprise zone or federally  designated  Foreign
13             Trade  Zone or Sub-Zone if his services are rendered
14             there or it  is  the  base  of  operations  for  the
15             services performed.
16                  (D)  A  full-time  employee  working 30 or more
17             hours per week.
18             (4)  For tax years ending on or after  December  31,
19        1985  and prior to December 31, 1988, the credit shall be
20        allowed for the tax year in which the eligible  employees
21        are hired.  For tax years ending on or after December 31,
22        1988,  the  credit  shall  be  allowed  for  the tax year
23        immediately following the tax year in which the  eligible
24        employees are hired.  If the amount of the credit exceeds
25        the  tax  liability for that year, whether it exceeds the
26        original liability or the  liability  as  later  amended,
27        such excess may be carried forward and applied to the tax
28        liability  of  the  5  taxable years following the excess
29        credit year.  The credit shall be applied to the earliest
30        year for which there is a liability. If there  is  credit
31        from more than one tax year that is available to offset a
32        liability, earlier credit shall be applied first.
33             (5)  The Department of Revenue shall promulgate such
34        rules and regulations as may be deemed necessary to carry
 
                            -14-     LRB093 02897 RCE 17004 a
 1        out the purposes of this subsection (g).
 2             (6)  The  credit  shall  be  available  for eligible
 3        employees hired on or after January 1, 1986.
 4        (h)  Investment credit; High Impact Business.
 5             (1)  Subject to subsections (b) and (b-5) of Section
 6        5.5 of the Illinois Enterprise Zone Act, a taxpayer shall
 7        be  allowed  a  credit  against  the   tax   imposed   by
 8        subsections (a) and (b) of this Section for investment in
 9        qualified  property  which  is  placed  in  service  by a
10        Department of Commerce and Community  Affairs  designated
11        High  Impact  Business.   The  credit shall be .5% of the
12        basis  for  such  property.   The  credit  shall  not  be
13        available (i) until the minimum investments in  qualified
14        property  set  forth  in subdivision (a)(3)(A) of Section
15        5.5  of  the  Illinois  Enterprise  Zone  Act  have  been
16        satisfied or (ii) until the time authorized in subsection
17        (b-5) of the Illinois Enterprise Zone  Act  for  entities
18        designated  as  High Impact Businesses under subdivisions
19        (a)(3)(B), (a)(3)(C), and (a)(3)(D) of Section 5.5 of the
20        Illinois Enterprise Zone Act, and shall not be allowed to
21        the extent that it would reduce  a  taxpayer's  liability
22        for  the  tax  imposed by subsections (a) and (b) of this
23        Section to below zero.  The  credit  applicable  to  such
24        investments  shall  be taken in the taxable year in which
25        such investments have been  completed.   The  credit  for
26        additional investments beyond the minimum investment by a
27        designated   high   impact   business   authorized  under
28        subdivision (a)(3)(A) of  Section  5.5  of  the  Illinois
29        Enterprise  Zone  Act  shall  be  available  only  in the
30        taxable year in which the property is placed  in  service
31        and  shall  not  be  allowed  to the extent that it would
32        reduce a taxpayer's liability  for  the  tax  imposed  by
33        subsections  (a)  and  (b) of this Section to below zero.
34        For tax years ending on or after December 31,  1987,  the
 
                            -15-     LRB093 02897 RCE 17004 a
 1        credit  shall  be  allowed  for the tax year in which the
 2        property is placed in service, or, if the amount  of  the
 3        credit  exceeds  the tax liability for that year, whether
 4        it exceeds the original liability  or  the  liability  as
 5        later  amended,  such  excess  may be carried forward and
 6        applied to the tax  liability  of  the  5  taxable  years
 7        following  the  excess  credit year.  The credit shall be
 8        applied to  the  earliest  year  for  which  there  is  a
 9        liability.   If  there  is  credit from more than one tax
10        year that is available to offset a liability, the  credit
11        accruing first in time shall be applied first.
12             Changes  made  in  this subdivision (h)(1) by Public
13        Act 88-670 restore changes made by Public Act 85-1182 and
14        reflect existing law.
15             (2)  The  term  qualified  property  means  property
16        which:
17                  (A)  is  tangible,   whether   new   or   used,
18             including  buildings  and  structural  components of
19             buildings;
20                  (B)  is depreciable pursuant to Section 167  of
21             the  Internal  Revenue  Code,  except  that  "3-year
22             property" as defined in Section 168(c)(2)(A) of that
23             Code is not eligible for the credit provided by this
24             subsection (h);
25                  (C)  is  acquired  by  purchase  as  defined in
26             Section 179(d) of the Internal Revenue Code; and
27                  (D)  is not eligible for  the  Enterprise  Zone
28             Investment Credit provided by subsection (f) of this
29             Section.
30             (3)  The  basis  of  qualified property shall be the
31        basis used to  compute  the  depreciation  deduction  for
32        federal income tax purposes.
33             (4)  If the basis of the property for federal income
34        tax  depreciation purposes is increased after it has been
 
                            -16-     LRB093 02897 RCE 17004 a
 1        placed in service in a federally designated Foreign Trade
 2        Zone or Sub-Zone located in Illinois by the taxpayer, the
 3        amount of such increase shall be deemed  property  placed
 4        in service on the date of such increase in basis.
 5             (5)  The  term  "placed  in  service" shall have the
 6        same meaning as under Section 46 of the Internal  Revenue
 7        Code.
 8             (6)  If  during any taxable year ending on or before
 9        December 31, 1996, any property ceases  to  be  qualified
10        property  in  the  hands of the taxpayer within 48 months
11        after being placed  in  service,  or  the  situs  of  any
12        qualified  property  is  moved outside Illinois within 48
13        months after being placed in  service,  the  tax  imposed
14        under  subsections  (a)  and (b) of this Section for such
15        taxable year shall be increased.  Such increase shall  be
16        determined by (i) recomputing the investment credit which
17        would  have been allowed for the year in which credit for
18        such property was originally allowed by eliminating  such
19        property from such computation, and (ii) subtracting such
20        recomputed  credit  from  the amount of credit previously
21        allowed.  For the  purposes  of  this  paragraph  (6),  a
22        reduction  of  the  basis of qualified property resulting
23        from a redetermination of the  purchase  price  shall  be
24        deemed  a disposition of qualified property to the extent
25        of such reduction.
26             (7)  Beginning with tax years ending after  December
27        31,  1996,  if  a taxpayer qualifies for the credit under
28        this  subsection  (h)  and  thereby  is  granted  a   tax
29        abatement  and the taxpayer relocates its entire facility
30        in violation of the explicit  terms  and  length  of  the
31        contract  under  Section 18-183 of the Property Tax Code,
32        the tax imposed under subsections (a)  and  (b)  of  this
33        Section  shall be increased for the taxable year in which
34        the taxpayer relocated its facility by an amount equal to
 
                            -17-     LRB093 02897 RCE 17004 a
 1        the amount of credit received by the taxpayer under  this
 2        subsection (h).
 3        (i)  Credit  for Personal Property Tax Replacement Income
 4    Tax.  For tax years ending prior  to  December  31,  2003,  a
 5    credit   shall   be   allowed  against  the  tax  imposed  by
 6    subsections (a) and (b) of this Section for the  tax  imposed
 7    by  subsections  (c)  and  (d)  of this Section.  This credit
 8    shall  be  computed  by  multiplying  the  tax   imposed   by
 9    subsections  (c)  and  (d) of this Section by a fraction, the
10    numerator of which is base income allocable to  Illinois  and
11    the denominator of which is Illinois base income, and further
12    multiplying   the   product   by  the  tax  rate  imposed  by
13    subsections (a) and (b) of this Section.
14        Any credit earned on or after  December  31,  1986  under
15    this  subsection  which  is  unused in the year the credit is
16    computed because it exceeds  the  tax  liability  imposed  by
17    subsections (a) and (b) for that year (whether it exceeds the
18    original  liability or the liability as later amended) may be
19    carried forward and applied to the tax liability  imposed  by
20    subsections  (a) and (b) of the 5 taxable years following the
21    excess credit year, provided that no credit  may  be  carried
22    forward  to  any  year  ending on or after December 31, 2003.
23    This credit shall be applied first to the earliest  year  for
24    which  there is a liability.  If there is a credit under this
25    subsection from more than one tax year that is  available  to
26    offset  a  liability  the  earliest credit arising under this
27    subsection shall be applied first.
28        If, during any taxable year ending on or  after  December
29    31,  1986, the tax imposed by subsections (c) and (d) of this
30    Section for which a taxpayer has claimed a credit under  this
31    subsection  (i) is reduced, the amount of credit for such tax
32    shall also be reduced.  Such reduction shall be determined by
33    recomputing the credit to take into account the  reduced  tax
34    imposed  by  subsections  (c) and (d).  If any portion of the
 
                            -18-     LRB093 02897 RCE 17004 a
 1    reduced amount of credit has  been  carried  to  a  different
 2    taxable  year,  an  amended  return  shall  be filed for such
 3    taxable year to reduce the amount of credit claimed.
 4        (j)  Training expense credit.  Beginning with  tax  years
 5    ending  on  or  after December 31, 1986 and prior to December
 6    31, 2003, a taxpayer shall be allowed a  credit  against  the
 7    tax imposed by subsections (a) and (b) under this Section for
 8    all  amounts  paid  or  accrued,  on  behalf  of  all persons
 9    employed by the taxpayer in Illinois  or  Illinois  residents
10    employed  outside  of Illinois by a taxpayer, for educational
11    or vocational training in semi-technical or technical  fields
12    or  semi-skilled  or skilled fields, which were deducted from
13    gross income in  the  computation  of  taxable  income.   The
14    credit  against  the  tax  imposed by subsections (a) and (b)
15    shall be 1.6%  of  such  training  expenses.   For  partners,
16    shareholders  of  subchapter  S  corporations,  and owners of
17    limited liability companies,  if  the  liability  company  is
18    treated  as  a  partnership for purposes of federal and State
19    income taxation, there shall be allowed a credit  under  this
20    subsection  (j)  to  be  determined  in  accordance  with the
21    determination of income  and  distributive  share  of  income
22    under  Sections  702 and 704 and subchapter S of the Internal
23    Revenue Code.
24        Any credit allowed under this subsection which is  unused
25    in  the  year  the credit is earned may be carried forward to
26    each of the 5 taxable years following the year for which  the
27    credit is first computed until it is used.  This credit shall
28    be  applied  first  to the earliest year for which there is a
29    liability.  If there is a credit under this  subsection  from
30    more  than  one  tax  year  that  is  available  to  offset a
31    liability the earliest credit arising under  this  subsection
32    shall  be  applied  first.   No  carryforward  credit  may be
33    claimed in any tax year ending on or after December 31, 2003.
34        (k)  Research and development credit.
 
                            -19-     LRB093 02897 RCE 17004 a
 1        For Beginning with tax years ending after  July  1,  1990
 2    and prior to December 31, 2003, a taxpayer shall be allowed a
 3    credit  against the tax imposed by subsections (a) and (b) of
 4    this Section  for  increasing  research  activities  in  this
 5    State.   The  credit  allowed  against  the  tax  imposed  by
 6    subsections  (a)  and  (b)  shall  be  equal to 6 1/2% of the
 7    qualifying expenditures for increasing research activities in
 8    this State.   For  partners,  shareholders  of  subchapter  S
 9    corporations,  and  owners of limited liability companies, if
10    the  liability  company  is  treated  as  a  partnership  for
11    purposes of federal and State income taxation, there shall be
12    allowed a credit under this subsection to  be  determined  in
13    accordance  with the determination of income and distributive
14    share of income under Sections 702 and 704 and  subchapter  S
15    of the Internal Revenue Code.
16        For    purposes    of    this   subsection,   "qualifying
17    expenditures" means the qualifying  expenditures  as  defined
18    for  the  federal  credit  for increasing research activities
19    which would be allowable under Section  41  of  the  Internal
20    Revenue   Code   and  which  are  conducted  in  this  State,
21    "qualifying expenditures for increasing  research  activities
22    in  this  State"  means the excess of qualifying expenditures
23    for the  taxable  year  in  which  incurred  over  qualifying
24    expenditures  for  the  base period, "qualifying expenditures
25    for the base period" means  the  average  of  the  qualifying
26    expenditures  for  each  year  in  the base period, and "base
27    period" means the 3 taxable years immediately  preceding  the
28    taxable year for which the determination is being made.
29        Any credit in excess of the tax liability for the taxable
30    year may be carried forward. A taxpayer may elect to have the
31    unused  credit  shown  on  its final completed return carried
32    over as a credit against the tax liability for the  following
33    5  taxable  years  or until it has been fully used, whichever
34    occurs first; provided that no credit may be carried  forward
 
                            -20-     LRB093 02897 RCE 17004 a
 1    to any year ending on or after December 31, 2003.
 2        If  an  unused  credit is carried forward to a given year
 3    from 2 or more earlier years,  that  credit  arising  in  the
 4    earliest year will be applied first against the tax liability
 5    for  the  given  year.  If a tax liability for the given year
 6    still remains, the credit from the next  earliest  year  will
 7    then  be applied, and so on, until all credits have been used
 8    or  no  tax  liability  for  the  given  year  remains.   Any
 9    remaining unused credit  or  credits  then  will  be  carried
10    forward  to  the next following year in which a tax liability
11    is incurred, except that no credit can be carried forward  to
12    a year which is more than 5 years after the year in which the
13    expense for which the credit is given was incurred.
14        Unless  extended  by  law,  the  credit shall not include
15    costs incurred after December  31,  2004,  except  for  costs
16    incurred  pursuant  to  a binding contract entered into on or
17    before December 31, 2004.
18        No inference shall be drawn from this amendatory  Act  of
19    the  91st  General  Assembly  in  construing this Section for
20    taxable years beginning before January 1, 1999.
21        (l)  Environmental Remediation Tax Credit.
22             (i)  For tax  years ending after December  31,  1997
23        and  on  or before December 31, 2001, a taxpayer shall be
24        allowed a credit against the tax imposed  by  subsections
25        (a)  and (b) of this Section for certain amounts paid for
26        unreimbursed eligible remediation costs, as specified  in
27        this   subsection.      For  purposes  of  this  Section,
28        "unreimbursed eligible  remediation  costs"  means  costs
29        approved  by the Illinois Environmental Protection Agency
30        ("Agency")  under  Section  58.14  of  the  Environmental
31        Protection Act that were paid in performing environmental
32        remediation at a site for which a No Further  Remediation
33        Letter  was  issued  by  the  Agency  and  recorded under
34        Section 58.10 of the Environmental Protection  Act.   The
 
                            -21-     LRB093 02897 RCE 17004 a
 1        credit  must  be  claimed  for  the taxable year in which
 2        Agency approval of  the  eligible  remediation  costs  is
 3        granted.   The credit is not available to any taxpayer if
 4        the taxpayer or any related party caused  or  contributed
 5        to,  in  any  material  respect,  a  release of regulated
 6        substances on, in, or under the site that was  identified
 7        and addressed by the remedial action pursuant to the Site
 8        Remediation  Program of the Environmental Protection Act.
 9        After the  Pollution  Control  Board  rules  are  adopted
10        pursuant to the Illinois Administrative Procedure Act for
11        the administration and enforcement of Section 58.9 of the
12        Environmental Protection Act, determinations as to credit
13        availability  for  purposes of this Section shall be made
14        consistent  with  those  rules.   For  purposes  of  this
15        Section,  "taxpayer"  includes   a   person   whose   tax
16        attributes  the  taxpayer  has succeeded to under Section
17        381 of the Internal  Revenue  Code  and  "related  party"
18        includes the persons disallowed a deduction for losses by
19        paragraphs  (b),  (c),  and  (f)(1) of Section 267 of the
20        Internal Revenue  Code  by  virtue  of  being  a  related
21        taxpayer,  as  well  as  any of its partners.  The credit
22        allowed against the tax imposed by  subsections  (a)  and
23        (b)  shall  be  equal to 25% of the unreimbursed eligible
24        remediation costs in excess of $100,000 per site,  except
25        that  the  $100,000 threshold shall not apply to any site
26        contained in an enterprise  zone  as  determined  by  the
27        Department  of Commerce and Community Affairs.  The total
28        credit allowed shall not exceed $40,000 per year  with  a
29        maximum  total  of  $150,000  per site.  For partners and
30        shareholders of subchapter S corporations, there shall be
31        allowed a credit under this subsection to  be  determined
32        in  accordance  with  the  determination  of  income  and
33        distributive  share  of income under Sections 702 and 704
34        and subchapter S of the Internal Revenue Code.
 
                            -22-     LRB093 02897 RCE 17004 a
 1             (ii)  A credit allowed under this subsection that is
 2        unused in the year the credit is earned  may  be  carried
 3        forward to each of the 5 taxable years following the year
 4        for  which  the  credit is first earned until it is used.
 5        The term "unused credit" does not include any amounts  of
 6        unreimbursed  eligible remediation costs in excess of the
 7        maximum credit per site authorized under  paragraph  (i).
 8        This  credit  shall be applied first to the earliest year
 9        for which there is a liability.  If  there  is  a  credit
10        under this subsection from more than one tax year that is
11        available  to  offset  a  liability,  the earliest credit
12        arising under this subsection shall be applied first.   A
13        credit  allowed  under  this  subsection may be sold to a
14        buyer as part of a sale of all or part of the remediation
15        site for which the credit was granted.  The purchaser  of
16        a  remediation  site  and the tax credit shall succeed to
17        the unused credit and remaining carry-forward  period  of
18        the  seller.  To perfect the transfer, the assignor shall
19        record the transfer in the chain of title  for  the  site
20        and  provide  written  notice  to  the  Director  of  the
21        Illinois  Department  of Revenue of the assignor's intent
22        to sell the remediation site and the amount  of  the  tax
23        credit to be transferred as a portion of the sale.  In no
24        event  may a credit be transferred to any taxpayer if the
25        taxpayer or a related party would not be  eligible  under
26        the provisions of subsection (i).
27             (iii)  For purposes of this Section, the term "site"
28        shall  have the same meaning as under Section 58.2 of the
29        Environmental Protection Act.
30        (m)  Education expense credit.  Beginning with tax  years
31    ending  after  December  31,  1999,  a  taxpayer  who  is the
32    custodian of one or more qualifying pupils shall be allowed a
33    credit against the tax imposed by subsections (a) and (b)  of
34    this  Section  for  qualified  education expenses incurred on
 
                            -23-     LRB093 02897 RCE 17004 a
 1    behalf of the qualifying pupils.  The credit shall  be  equal
 2    to  25%  of qualified education expenses, but in no event may
 3    the total credit under this subsection claimed  by  a  family
 4    that  is  the custodian of qualifying pupils exceed $500.  In
 5    no event shall a credit  under  this  subsection  reduce  the
 6    taxpayer's  liability under this Act to less than zero.  This
 7    subsection is exempt from the provisions of  Section  250  of
 8    this Act.
 9        For purposes of this subsection:
10        "Qualifying   pupils"   means  individuals  who  (i)  are
11    residents of the State of Illinois, (ii) are under the age of
12    21 at the close of the school year  for  which  a  credit  is
13    sought,  and  (iii) during the school year for which a credit
14    is sought were full-time pupils enrolled  in  a  kindergarten
15    through  twelfth  grade  education  program at any school, as
16    defined in this subsection.
17        "Qualified education expense" means the  amount  incurred
18    on  behalf  of  a  qualifying  pupil  in  excess  of $250 for
19    tuition, book fees, and lab fees at the school in  which  the
20    pupil is enrolled during the regular school year.
21        "School"  means  any  public  or  nonpublic elementary or
22    secondary school in Illinois that is in compliance with Title
23    VI of the Civil Rights Act of 1964 and  attendance  at  which
24    satisfies  the  requirements  of  Section  26-1 of the School
25    Code, except that nothing shall be  construed  to  require  a
26    child  to attend any particular public or nonpublic school to
27    qualify for the credit under this Section.
28        "Custodian" means, with respect to qualifying pupils,  an
29    Illinois  resident  who  is  a  parent,  the parents, a legal
30    guardian, or the legal guardians of the qualifying pupils.
31    (Source:  P.A.  91-9,  eff.  1-1-00;  91-357,  eff.  7-29-99;
32    91-643, eff. 8-20-99;  91-644,  eff.  8-20-99;  91-860,  eff.
33    6-22-00; 91-913, eff. 1-1-01; 92-12, eff. 7-1-01; 92-16, eff.
34    6-28-01; 92-651, eff. 7-11-02; 92-846, eff. 8-23-02.)
 
                            -24-     LRB093 02897 RCE 17004 a
 1        (35 ILCS 5/204) (from Ch. 120, par. 2-204)
 2        Sec. 204.  Standard Exemption.
 3        (a)  Allowance  of  exemption.  In  computing  net income
 4    under this Act, there shall be allowed as  an  exemption  the
 5    sum  of the amounts determined under subsections (b), (c) and
 6    (d), multiplied by a fraction the numerator of which  is  the
 7    amount  of the taxpayer's base income allocable to this State
 8    for the taxable year and the  denominator  of  which  is  the
 9    taxpayer's total base income for the taxable year.
10        (b)  Basic  amount.  For the purpose of subsection (a) of
11    this Section, except as provided by subsection (a) of Section
12    205 and in this subsection, each taxpayer shall be allowed  a
13    basic amount of $1000, except that for corporations the basic
14    amount  shall  be  zero  for  tax  years  ending  on or after
15    December 31, 2003, and for individuals the basic amount shall
16    be:
17             (1)  for taxable years ending on or  after  December
18        31, 1998 and prior to December 31, 1999, $1,300;
19             (2)  for  taxable  years ending on or after December
20        31, 1999 and prior to December 31, 2000, $1,650;
21             (3)  for taxable years ending on or  after  December
22        31, 2000, $2,000.
23    For  taxable  years  ending  on or after December 31, 1992, a
24    taxpayer whose Illinois base income exceeds the basic  amount
25    and  who  is  claimed  as a dependent on another person's tax
26    return under the Internal Revenue Code of 1986 shall  not  be
27    allowed any basic amount under this subsection.
28        (c)  Additional amount for individuals. In the case of an
29    individual  taxpayer,  there shall be allowed for the purpose
30    of subsection (a), in addition to the basic  amount  provided
31    by subsection (b), an additional exemption equal to the basic
32    amount  for each exemption in excess of one allowable to such
33    individual taxpayer for the taxable year under Section 151 of
34    the Internal Revenue Code.
 
                            -25-     LRB093 02897 RCE 17004 a
 1        (d)  Additional exemptions for an individual taxpayer and
 2    his or her spouse.  In the case of an individual taxpayer and
 3    his or her spouse, he or she shall each be allowed additional
 4    exemptions as follows:
 5             (1)  Additional exemption for taxpayer or spouse  65
 6        years of age or older.
 7                  (A)  For  taxpayer.  An additional exemption of
 8             $1,000 for the taxpayer if he or  she  has  attained
 9             the age of 65 before the end of the taxable year.
10                  (B)  For  spouse  when  a  joint  return is not
11             filed.  An additional exemption of  $1,000  for  the
12             spouse of the taxpayer if a joint return is not made
13             by  the  taxpayer  and his spouse, and if the spouse
14             has attained the age of 65 before the  end  of  such
15             taxable  year,  and,  for the calendar year in which
16             the taxable year of  the  taxpayer  begins,  has  no
17             gross  income  and  is  not the dependent of another
18             taxpayer.
19             (2)  Additional exemption for blindness of  taxpayer
20        or spouse.
21                  (A)  For  taxpayer.  An additional exemption of
22             $1,000 for the taxpayer if he or she is blind at the
23             end of the taxable year.
24                  (B)  For spouse when  a  joint  return  is  not
25             filed.   An  additional  exemption of $1,000 for the
26             spouse of the taxpayer if a separate return is  made
27             by the taxpayer, and if the spouse is blind and, for
28             the  calendar  year in which the taxable year of the
29             taxpayer begins, has no gross income and is not  the
30             dependent  of another taxpayer. For purposes of this
31             paragraph, the determination of whether  the  spouse
32             is  blind shall be made as of the end of the taxable
33             year of the taxpayer; except that if the spouse dies
34             during such taxable year such determination shall be
 
                            -26-     LRB093 02897 RCE 17004 a
 1             made as of the time of such death.
 2                  (C)  Blindness defined.  For purposes  of  this
 3             subsection,  an  individual  is blind only if his or
 4             her central visual acuity does not exceed 20/200  in
 5             the  better eye with correcting lenses, or if his or
 6             her visual acuity is  greater  than  20/200  but  is
 7             accompanied  by a limitation in the fields of vision
 8             such that the widest diameter of the  visual  fields
 9             subtends an angle no greater than 20 degrees.
10        (e)  Cross  reference.  See  Article  3 for the manner of
11    determining base income allocable to this State.
12        (f)  Application of Section 250.  Section  250  does  not
13    apply  to  the  amendments to this Section made by Public Act
14    90-613.
15    (Source: P.A. 90-613, eff. 7-9-98; 91-357, eff. 7-29-99.)

16        (35 ILCS 5/207) (from Ch. 120, par. 2-207)
17        Sec. 207.  Net Losses.
18        (a) If after applying all of the  modifications  provided
19    for  in  paragraph  (2)  of  Section 203(b), paragraph (2) of
20    Section 203(c) and paragraph (2) of Section  203(d)  and  the
21    allocation  and apportionment provisions of Article 3 of this
22    Act, the taxpayer's net income results in a loss;
23             (1)  for any taxable year ending prior  to  December
24        31,  1999,  such  loss shall be allowed as a carryover or
25        carryback deduction in the manner allowed  under  Section
26        172 of the Internal Revenue Code; and
27             (2)  for   any  taxable  year  ending  on  or  after
28        December 31, 1999 and prior to December  31,  2003,  such
29        loss  shall  be  allowed  as a carryback to each of the 2
30        taxable years preceding the taxable year of such loss and
31        shall be a net operating carryover  to  each  of  the  20
32        taxable  years  following  the taxable year of such loss;
33        and
 
                            -27-     LRB093 02897 RCE 17004 a
 1             (3)  for  any  taxable  year  ending  on  or   after
 2        December  31,  2003,  such loss shall be allowed as a net
 3        operating carryover  to  each  of  the  5  taxable  years
 4        following the taxable year of such loss.
 5        (a-5)  Election  to  relinquish  carryback  and  order of
 6    application of losses.
 7                  (A)  For losses incurred in  tax  years  ending
 8             prior  to  December 31, 2003, the taxpayer may elect
 9             to  relinquish  the  entire  carryback  period  with
10             respect to such loss.  Such election shall  be  made
11             in  the form and manner prescribed by the Department
12             and  shall  be  made  by  the  due  date  (including
13             extensions of time) for filing the taxpayer's return
14             for the taxable year in which such loss is incurred,
15             and such election, once made, shall be irrevocable.
16                  (B)  The entire amount of such  loss  shall  be
17             carried  to  the earliest taxable year to which such
18             loss may be carried.  The amount of such loss  which
19             shall  be carried to each of the other taxable years
20             shall be the excess, if any, of the amount  of  such
21             loss over the sum of the deductions for carryback or
22             carryover  of  such  loss  allowable for each of the
23             prior taxable  years  to  which  such  loss  may  be
24             carried.
25        (b)  Any  loss  determined  under  subsection (a) of this
26    Section must be carried back or carried forward in  the  same
27    manner for purposes of subsections (a) and (b) of Section 201
28    of  this  Act  as  for purposes of subsections (c) and (d) of
29    Section 201 of this Act.
30    (Source: P.A. 91-541, eff. 8-13-99.)

31        Section 10.  The Illinois Insurance Code  is  amended  by
32    changing Section 531.13 as follows:
 
                            -28-     LRB093 02897 RCE 17004 a
 1        (215 ILCS 5/531.13) (from Ch. 73, par. 1065.80-13)
 2        Sec.  531.13.  Tax  offset.  In  the  event the aggregate
 3    Class A, B and C assessments for all member insurers  do  not
 4    exceed $3,000,000 in any one calendar year, no member insurer
 5    shall  receive  a  tax offset.  However, for any one calendar
 6    year before 1998 in  which  the  total  of  such  assessments
 7    exceeds  $3,000,000, the amount in excess of $3,000,000 shall
 8    be subject to a tax offset to the extent of 20% of the amount
 9    of such assessment for each of the 5 calendar years following
10    the year in which such assessment was paid, and ending  prior
11    to  January  1,  2003, and each member insurer may offset the
12    proportionate amount of  such  excess  paid  by  the  insurer
13    against  its  liabilities  for the tax imposed by subsections
14    (a) and (b) of Section 201 of the Illinois  Income  Tax  Act.
15    The  provisions  of this Section shall expire and be given no
16    effect for any tax period commencing on and after January  1,
17    2003.
18    (Source: P.A. 90-583, eff. 5-29-98.)

19        Section  15.  The  Health Maintenance Organization Act is
20    amended by changing Section 6-13 as follows:

21        (215 ILCS 125/6-13) (from Ch. 111 1/2, par. 1418.13)
22        Sec. 6-13.  Tax offset. In the event the aggregate  Class
23    A  and  B  assessments  for  all  member organizations do not
24    exceed  $3,000,000  in  any  one  calendar  year,  no  member
25    organization shall receive a tax offset.  However, in any one
26    calendar year in which the total of such assessments  exceeds
27    $3,000,000,  the  amount  in  excess  of  $3,000,000 shall be
28    subject to a tax offset to the extent of 20% of the amount of
29    such assessment for each of the five calendar years following
30    the year in which such assessment was paid, and ending  prior
31    to  January  1, 2003, and each member organization may offset
32    the  proportionate  amount  of  such  excess  paid   by   the
 
                            -29-     LRB093 02897 RCE 17004 a
 1    organization  against  its liabilities for the tax imposed by
 2    subsections (a) and (b) of Section 201 of the Illinois Income
 3    Tax Act.  The provisions of this Section shall expire and  be
 4    given no effect on and after January 1, 2004.
 5    (Source: P.A. 85-20.)

 6        Section  99.  Effective date.  This Act takes effect upon
 7    becoming law.".