97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
SB3600

 

Introduced 2/10/2012, by Sen. Mike Jacobs

 

SYNOPSIS AS INTRODUCED:
 
35 ILCS 5/201  from Ch. 120, par. 2-201

    Amends the Illinois Income Tax Act. Provides that, for taxable years beginning on or after January 1, 2013, the credit allowed for increasing research activities in the State shall be in an amount equal to 10% (now, 6 1/2%) of qualifying expenditures. Deletes language providing that the credit shall be allowed only for taxable years ending prior to January 1, 2016. Provides that, if the amount of the credit exceeds the income tax liability for the applicable tax year, then the excess credit shall be refunded to the taxpayer. Provides that, in place of the credit for increasing research activities, a taxpayer may elect to claim a credit in an amount equal to 20% of the amount of the federal research credit allowed to the taxpayer for the taxable year multiplied by the State's apportioned share of the qualifying expenditures for increasing research activities for the taxable year. Effective immediately.


LRB097 18437 HLH 63664 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

SB3600LRB097 18437 HLH 63664 b

1    AN ACT concerning revenue.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Illinois Income Tax Act is amended by
5changing Section 201 as follows:
 
6    (35 ILCS 5/201)  (from Ch. 120, par. 2-201)
7    (Text of Section before amendment by P.A. 97-636)
8    Sec. 201. Tax Imposed.
9    (a) In general. A tax measured by net income is hereby
10imposed on every individual, corporation, trust and estate for
11each taxable year ending after July 31, 1969 on the privilege
12of earning or receiving income in or as a resident of this
13State. Such tax shall be in addition to all other occupation or
14privilege taxes imposed by this State or by any municipal
15corporation or political subdivision thereof.
16    (b) Rates. The tax imposed by subsection (a) of this
17Section shall be determined as follows, except as adjusted by
18subsection (d-1):
19        (1) In the case of an individual, trust or estate, for
20    taxable years ending prior to July 1, 1989, an amount equal
21    to 2 1/2% of the taxpayer's net income for the taxable
22    year.
23        (2) In the case of an individual, trust or estate, for

 

 

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1    taxable years beginning prior to July 1, 1989 and ending
2    after June 30, 1989, an amount equal to the sum of (i) 2
3    1/2% of the taxpayer's net income for the period prior to
4    July 1, 1989, as calculated under Section 202.3, and (ii)
5    3% of the taxpayer's net income for the period after June
6    30, 1989, as calculated under Section 202.3.
7        (3) In the case of an individual, trust or estate, for
8    taxable years beginning after June 30, 1989, and ending
9    prior to January 1, 2011, an amount equal to 3% of the
10    taxpayer's net income for the taxable year.
11        (4) In the case of an individual, trust, or estate, for
12    taxable years beginning prior to January 1, 2011, and
13    ending after December 31, 2010, an amount equal to the sum
14    of (i) 3% of the taxpayer's net income for the period prior
15    to January 1, 2011, as calculated under Section 202.5, and
16    (ii) 5% of the taxpayer's net income for the period after
17    December 31, 2010, as calculated under Section 202.5.
18        (5) In the case of an individual, trust, or estate, for
19    taxable years beginning on or after January 1, 2011, and
20    ending prior to January 1, 2015, an amount equal to 5% of
21    the taxpayer's net income for the taxable year.
22        (5.1) In the case of an individual, trust, or estate,
23    for taxable years beginning prior to January 1, 2015, and
24    ending after December 31, 2014, an amount equal to the sum
25    of (i) 5% of the taxpayer's net income for the period prior
26    to January 1, 2015, as calculated under Section 202.5, and

 

 

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1    (ii) 3.75% of the taxpayer's net income for the period
2    after December 31, 2014, as calculated under Section 202.5.
3        (5.2) In the case of an individual, trust, or estate,
4    for taxable years beginning on or after January 1, 2015,
5    and ending prior to January 1, 2025, an amount equal to
6    3.75% of the taxpayer's net income for the taxable year.
7        (5.3) In the case of an individual, trust, or estate,
8    for taxable years beginning prior to January 1, 2025, and
9    ending after December 31, 2024, an amount equal to the sum
10    of (i) 3.75% of the taxpayer's net income for the period
11    prior to January 1, 2025, as calculated under Section
12    202.5, and (ii) 3.25% of the taxpayer's net income for the
13    period after December 31, 2024, as calculated under Section
14    202.5.
15        (5.4) In the case of an individual, trust, or estate,
16    for taxable years beginning on or after January 1, 2025, an
17    amount equal to 3.25% of the taxpayer's net income for the
18    taxable year.
19        (6) In the case of a corporation, for taxable years
20    ending prior to July 1, 1989, an amount equal to 4% of the
21    taxpayer's net income for the taxable year.
22        (7) In the case of a corporation, for taxable years
23    beginning prior to July 1, 1989 and ending after June 30,
24    1989, an amount equal to the sum of (i) 4% of the
25    taxpayer's net income for the period prior to July 1, 1989,
26    as calculated under Section 202.3, and (ii) 4.8% of the

 

 

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1    taxpayer's net income for the period after June 30, 1989,
2    as calculated under Section 202.3.
3        (8) In the case of a corporation, for taxable years
4    beginning after June 30, 1989, and ending prior to January
5    1, 2011, an amount equal to 4.8% of the taxpayer's net
6    income for the taxable year.
7        (9) In the case of a corporation, for taxable years
8    beginning prior to January 1, 2011, and ending after
9    December 31, 2010, an amount equal to the sum of (i) 4.8%
10    of the taxpayer's net income for the period prior to
11    January 1, 2011, as calculated under Section 202.5, and
12    (ii) 7% of the taxpayer's net income for the period after
13    December 31, 2010, as calculated under Section 202.5.
14        (10) In the case of a corporation, for taxable years
15    beginning on or after January 1, 2011, and ending prior to
16    January 1, 2015, an amount equal to 7% of the taxpayer's
17    net income for the taxable year.
18        (11) In the case of a corporation, for taxable years
19    beginning prior to January 1, 2015, and ending after
20    December 31, 2014, an amount equal to the sum of (i) 7% of
21    the taxpayer's net income for the period prior to January
22    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
23    of the taxpayer's net income for the period after December
24    31, 2014, as calculated under Section 202.5.
25        (12) In the case of a corporation, for taxable years
26    beginning on or after January 1, 2015, and ending prior to

 

 

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1    January 1, 2025, an amount equal to 5.25% of the taxpayer's
2    net income for the taxable year.
3        (13) In the case of a corporation, for taxable years
4    beginning prior to January 1, 2025, and ending after
5    December 31, 2024, an amount equal to the sum of (i) 5.25%
6    of the taxpayer's net income for the period prior to
7    January 1, 2025, as calculated under Section 202.5, and
8    (ii) 4.8% of the taxpayer's net income for the period after
9    December 31, 2024, as calculated under Section 202.5.
10        (14) In the case of a corporation, for taxable years
11    beginning on or after January 1, 2025, an amount equal to
12    4.8% of the taxpayer's net income for the taxable year.
13    The rates under this subsection (b) are subject to the
14provisions of Section 201.5.
15    (c) Personal Property Tax Replacement Income Tax.
16Beginning on July 1, 1979 and thereafter, in addition to such
17income tax, there is also hereby imposed the Personal Property
18Tax Replacement Income Tax measured by net income on every
19corporation (including Subchapter S corporations), partnership
20and trust, for each taxable year ending after June 30, 1979.
21Such taxes are imposed on the privilege of earning or receiving
22income in or as a resident of this State. The Personal Property
23Tax Replacement Income Tax shall be in addition to the income
24tax imposed by subsections (a) and (b) of this Section and in
25addition to all other occupation or privilege taxes imposed by
26this State or by any municipal corporation or political

 

 

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1subdivision thereof.
2    (d) Additional Personal Property Tax Replacement Income
3Tax Rates. The personal property tax replacement income tax
4imposed by this subsection and subsection (c) of this Section
5in the case of a corporation, other than a Subchapter S
6corporation and except as adjusted by subsection (d-1), shall
7be an additional amount equal to 2.85% of such taxpayer's net
8income for the taxable year, except that beginning on January
91, 1981, and thereafter, the rate of 2.85% specified in this
10subsection shall be reduced to 2.5%, and in the case of a
11partnership, trust or a Subchapter S corporation shall be an
12additional amount equal to 1.5% of such taxpayer's net income
13for the taxable year.
14    (d-1) Rate reduction for certain foreign insurers. In the
15case of a foreign insurer, as defined by Section 35A-5 of the
16Illinois Insurance Code, whose state or country of domicile
17imposes on insurers domiciled in Illinois a retaliatory tax
18(excluding any insurer whose premiums from reinsurance assumed
19are 50% or more of its total insurance premiums as determined
20under paragraph (2) of subsection (b) of Section 304, except
21that for purposes of this determination premiums from
22reinsurance do not include premiums from inter-affiliate
23reinsurance arrangements), beginning with taxable years ending
24on or after December 31, 1999, the sum of the rates of tax
25imposed by subsections (b) and (d) shall be reduced (but not
26increased) to the rate at which the total amount of tax imposed

 

 

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1under this Act, net of all credits allowed under this Act,
2shall equal (i) the total amount of tax that would be imposed
3on the foreign insurer's net income allocable to Illinois for
4the taxable year by such foreign insurer's state or country of
5domicile if that net income were subject to all income taxes
6and taxes measured by net income imposed by such foreign
7insurer's state or country of domicile, net of all credits
8allowed or (ii) a rate of zero if no such tax is imposed on such
9income by the foreign insurer's state of domicile. For the
10purposes of this subsection (d-1), an inter-affiliate includes
11a mutual insurer under common management.
12        (1) For the purposes of subsection (d-1), in no event
13    shall the sum of the rates of tax imposed by subsections
14    (b) and (d) be reduced below the rate at which the sum of:
15            (A) the total amount of tax imposed on such foreign
16        insurer under this Act for a taxable year, net of all
17        credits allowed under this Act, plus
18            (B) the privilege tax imposed by Section 409 of the
19        Illinois Insurance Code, the fire insurance company
20        tax imposed by Section 12 of the Fire Investigation
21        Act, and the fire department taxes imposed under
22        Section 11-10-1 of the Illinois Municipal Code,
23    equals 1.25% for taxable years ending prior to December 31,
24    2003, or 1.75% for taxable years ending on or after
25    December 31, 2003, of the net taxable premiums written for
26    the taxable year, as described by subsection (1) of Section

 

 

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1    409 of the Illinois Insurance Code. This paragraph will in
2    no event increase the rates imposed under subsections (b)
3    and (d).
4        (2) Any reduction in the rates of tax imposed by this
5    subsection shall be applied first against the rates imposed
6    by subsection (b) and only after the tax imposed by
7    subsection (a) net of all credits allowed under this
8    Section other than the credit allowed under subsection (i)
9    has been reduced to zero, against the rates imposed by
10    subsection (d).
11    This subsection (d-1) is exempt from the provisions of
12Section 250.
13    (e) Investment credit. A taxpayer shall be allowed a credit
14against the Personal Property Tax Replacement Income Tax for
15investment in qualified property.
16        (1) A taxpayer shall be allowed a credit equal to .5%
17    of the basis of qualified property placed in service during
18    the taxable year, provided such property is placed in
19    service on or after July 1, 1984. There shall be allowed an
20    additional credit equal to .5% of the basis of qualified
21    property placed in service during the taxable year,
22    provided such property is placed in service on or after
23    July 1, 1986, and the taxpayer's base employment within
24    Illinois has increased by 1% or more over the preceding
25    year as determined by the taxpayer's employment records
26    filed with the Illinois Department of Employment Security.

 

 

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1    Taxpayers who are new to Illinois shall be deemed to have
2    met the 1% growth in base employment for the first year in
3    which they file employment records with the Illinois
4    Department of Employment Security. The provisions added to
5    this Section by Public Act 85-1200 (and restored by Public
6    Act 87-895) shall be construed as declaratory of existing
7    law and not as a new enactment. If, in any year, the
8    increase in base employment within Illinois over the
9    preceding year is less than 1%, the additional credit shall
10    be limited to that percentage times a fraction, the
11    numerator of which is .5% and the denominator of which is
12    1%, but shall not exceed .5%. The investment credit shall
13    not be allowed to the extent that it would reduce a
14    taxpayer's liability in any tax year below zero, nor may
15    any credit for qualified property be allowed for any year
16    other than the year in which the property was placed in
17    service in Illinois. For tax years ending on or after
18    December 31, 1987, and on or before December 31, 1988, the
19    credit shall be allowed for the tax year in which the
20    property is placed in service, or, if the amount of the
21    credit exceeds the tax liability for that year, whether it
22    exceeds the original liability or the liability as later
23    amended, such excess may be carried forward and applied to
24    the tax liability of the 5 taxable years following the
25    excess credit years if the taxpayer (i) makes investments
26    which cause the creation of a minimum of 2,000 full-time

 

 

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1    equivalent jobs in Illinois, (ii) is located in an
2    enterprise zone established pursuant to the Illinois
3    Enterprise Zone Act and (iii) is certified by the
4    Department of Commerce and Community Affairs (now
5    Department of Commerce and Economic Opportunity) as
6    complying with the requirements specified in clause (i) and
7    (ii) by July 1, 1986. The Department of Commerce and
8    Community Affairs (now Department of Commerce and Economic
9    Opportunity) shall notify the Department of Revenue of all
10    such certifications immediately. For tax years ending
11    after December 31, 1988, the credit shall be allowed for
12    the tax year in which the property is placed in service,
13    or, if the amount of the credit exceeds the tax liability
14    for that year, whether it exceeds the original liability or
15    the liability as later amended, such excess may be carried
16    forward and applied to the tax liability of the 5 taxable
17    years following the excess credit years. The credit shall
18    be applied to the earliest year for which there is a
19    liability. If there is credit from more than one tax year
20    that is available to offset a liability, earlier credit
21    shall be applied first.
22        (2) The term "qualified property" means property
23    which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings and
26        signs that are real property, but not including land or

 

 

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1        improvements to real property that are not a structural
2        component of a building such as landscaping, sewer
3        lines, local access roads, fencing, parking lots, and
4        other appurtenances;
5            (B) is depreciable pursuant to Section 167 of the
6        Internal Revenue Code, except that "3-year property"
7        as defined in Section 168(c)(2)(A) of that Code is not
8        eligible for the credit provided by this subsection
9        (e);
10            (C) is acquired by purchase as defined in Section
11        179(d) of the Internal Revenue Code;
12            (D) is used in Illinois by a taxpayer who is
13        primarily engaged in manufacturing, or in mining coal
14        or fluorite, or in retailing, or was placed in service
15        on or after July 1, 2006 in a River Edge Redevelopment
16        Zone established pursuant to the River Edge
17        Redevelopment Zone Act; and
18            (E) has not previously been used in Illinois in
19        such a manner and by such a person as would qualify for
20        the credit provided by this subsection (e) or
21        subsection (f).
22        (3) For purposes of this subsection (e),
23    "manufacturing" means the material staging and production
24    of tangible personal property by procedures commonly
25    regarded as manufacturing, processing, fabrication, or
26    assembling which changes some existing material into new

 

 

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1    shapes, new qualities, or new combinations. For purposes of
2    this subsection (e) the term "mining" shall have the same
3    meaning as the term "mining" in Section 613(c) of the
4    Internal Revenue Code. For purposes of this subsection (e),
5    the term "retailing" means the sale of tangible personal
6    property for use or consumption and not for resale, or
7    services rendered in conjunction with the sale of tangible
8    personal property for use or consumption and not for
9    resale. For purposes of this subsection (e), "tangible
10    personal property" has the same meaning as when that term
11    is used in the Retailers' Occupation Tax Act, and, for
12    taxable years ending after December 31, 2008, does not
13    include the generation, transmission, or distribution of
14    electricity.
15        (4) The basis of qualified property shall be the basis
16    used to compute the depreciation deduction for federal
17    income tax purposes.
18        (5) If the basis of the property for federal income tax
19    depreciation purposes is increased after it has been placed
20    in service in Illinois by the taxpayer, the amount of such
21    increase shall be deemed property placed in service on the
22    date of such increase in basis.
23        (6) The term "placed in service" shall have the same
24    meaning as under Section 46 of the Internal Revenue Code.
25        (7) If during any taxable year, any property ceases to
26    be qualified property in the hands of the taxpayer within

 

 

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1    48 months after being placed in service, or the situs of
2    any qualified property is moved outside Illinois within 48
3    months after being placed in service, the Personal Property
4    Tax Replacement Income Tax for such taxable year shall be
5    increased. Such increase shall be determined by (i)
6    recomputing the investment credit which would have been
7    allowed for the year in which credit for such property was
8    originally allowed by eliminating such property from such
9    computation and, (ii) subtracting such recomputed credit
10    from the amount of credit previously allowed. For the
11    purposes of this paragraph (7), a reduction of the basis of
12    qualified property resulting from a redetermination of the
13    purchase price shall be deemed a disposition of qualified
14    property to the extent of such reduction.
15        (8) Unless the investment credit is extended by law,
16    the basis of qualified property shall not include costs
17    incurred after December 31, 2013, except for costs incurred
18    pursuant to a binding contract entered into on or before
19    December 31, 2013.
20        (9) Each taxable year ending before December 31, 2000,
21    a partnership may elect to pass through to its partners the
22    credits to which the partnership is entitled under this
23    subsection (e) for the taxable year. A partner may use the
24    credit allocated to him or her under this paragraph only
25    against the tax imposed in subsections (c) and (d) of this
26    Section. If the partnership makes that election, those

 

 

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1    credits shall be allocated among the partners in the
2    partnership in accordance with the rules set forth in
3    Section 704(b) of the Internal Revenue Code, and the rules
4    promulgated under that Section, and the allocated amount of
5    the credits shall be allowed to the partners for that
6    taxable year. The partnership shall make this election on
7    its Personal Property Tax Replacement Income Tax return for
8    that taxable year. The election to pass through the credits
9    shall be irrevocable.
10        For taxable years ending on or after December 31, 2000,
11    a partner that qualifies its partnership for a subtraction
12    under subparagraph (I) of paragraph (2) of subsection (d)
13    of Section 203 or a shareholder that qualifies a Subchapter
14    S corporation for a subtraction under subparagraph (S) of
15    paragraph (2) of subsection (b) of Section 203 shall be
16    allowed a credit under this subsection (e) equal to its
17    share of the credit earned under this subsection (e) during
18    the taxable year by the partnership or Subchapter S
19    corporation, determined in accordance with the
20    determination of income and distributive share of income
21    under Sections 702 and 704 and Subchapter S of the Internal
22    Revenue Code. This paragraph is exempt from the provisions
23    of Section 250.
24    (f) Investment credit; Enterprise Zone; River Edge
25Redevelopment Zone.
26        (1) A taxpayer shall be allowed a credit against the

 

 

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1    tax imposed by subsections (a) and (b) of this Section for
2    investment in qualified property which is placed in service
3    in an Enterprise Zone created pursuant to the Illinois
4    Enterprise Zone Act or, for property placed in service on
5    or after July 1, 2006, a River Edge Redevelopment Zone
6    established pursuant to the River Edge Redevelopment Zone
7    Act. For partners, shareholders of Subchapter S
8    corporations, and owners of limited liability companies,
9    if the liability company is treated as a partnership for
10    purposes of federal and State income taxation, there shall
11    be allowed a credit under this subsection (f) to be
12    determined in accordance with the determination of income
13    and distributive share of income under Sections 702 and 704
14    and Subchapter S of the Internal Revenue Code. The credit
15    shall be .5% of the basis for such property. The credit
16    shall be available only in the taxable year in which the
17    property is placed in service in the Enterprise Zone or
18    River Edge Redevelopment Zone and shall not be allowed to
19    the extent that it would reduce a taxpayer's liability for
20    the tax imposed by subsections (a) and (b) of this Section
21    to below zero. For tax years ending on or after December
22    31, 1985, the credit shall be allowed for the tax year in
23    which the property is placed in service, or, if the amount
24    of the credit exceeds the tax liability for that year,
25    whether it exceeds the original liability or the liability
26    as later amended, such excess may be carried forward and

 

 

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1    applied to the tax liability of the 5 taxable years
2    following the excess credit year. The credit shall be
3    applied to the earliest year for which there is a
4    liability. If there is credit from more than one tax year
5    that is available to offset a liability, the credit
6    accruing first in time shall be applied first.
7        (2) The term qualified property means property which:
8            (A) is tangible, whether new or used, including
9        buildings and structural components of buildings;
10            (B) is depreciable pursuant to Section 167 of the
11        Internal Revenue Code, except that "3-year property"
12        as defined in Section 168(c)(2)(A) of that Code is not
13        eligible for the credit provided by this subsection
14        (f);
15            (C) is acquired by purchase as defined in Section
16        179(d) of the Internal Revenue Code;
17            (D) is used in the Enterprise Zone or River Edge
18        Redevelopment Zone by the taxpayer; and
19            (E) has not been previously used in Illinois in
20        such a manner and by such a person as would qualify for
21        the credit provided by this subsection (f) or
22        subsection (e).
23        (3) The basis of qualified property shall be the basis
24    used to compute the depreciation deduction for federal
25    income tax purposes.
26        (4) If the basis of the property for federal income tax

 

 

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1    depreciation purposes is increased after it has been placed
2    in service in the Enterprise Zone or River Edge
3    Redevelopment Zone by the taxpayer, the amount of such
4    increase shall be deemed property placed in service on the
5    date of such increase in basis.
6        (5) The term "placed in service" shall have the same
7    meaning as under Section 46 of the Internal Revenue Code.
8        (6) If during any taxable year, any property ceases to
9    be qualified property in the hands of the taxpayer within
10    48 months after being placed in service, or the situs of
11    any qualified property is moved outside the Enterprise Zone
12    or River Edge Redevelopment Zone within 48 months after
13    being placed in service, the tax imposed under subsections
14    (a) and (b) of this Section for such taxable year shall be
15    increased. Such increase shall be determined by (i)
16    recomputing the investment credit which would have been
17    allowed for the year in which credit for such property was
18    originally allowed by eliminating such property from such
19    computation, and (ii) subtracting such recomputed credit
20    from the amount of credit previously allowed. For the
21    purposes of this paragraph (6), a reduction of the basis of
22    qualified property resulting from a redetermination of the
23    purchase price shall be deemed a disposition of qualified
24    property to the extent of such reduction.
25        (7) There shall be allowed an additional credit equal
26    to 0.5% of the basis of qualified property placed in

 

 

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1    service during the taxable year in a River Edge
2    Redevelopment Zone, provided such property is placed in
3    service on or after July 1, 2006, and the taxpayer's base
4    employment within Illinois has increased by 1% or more over
5    the preceding year as determined by the taxpayer's
6    employment records filed with the Illinois Department of
7    Employment Security. Taxpayers who are new to Illinois
8    shall be deemed to have met the 1% growth in base
9    employment for the first year in which they file employment
10    records with the Illinois Department of Employment
11    Security. If, in any year, the increase in base employment
12    within Illinois over the preceding year is less than 1%,
13    the additional credit shall be limited to that percentage
14    times a fraction, the numerator of which is 0.5% and the
15    denominator of which is 1%, but shall not exceed 0.5%.
16    (g) Jobs Tax Credit; Enterprise Zone, River Edge
17Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
18        (1) A taxpayer conducting a trade or business in an
19    enterprise zone or a High Impact Business designated by the
20    Department of Commerce and Economic Opportunity or for
21    taxable years ending on or after December 31, 2006, in a
22    River Edge Redevelopment Zone conducting a trade or
23    business in a federally designated Foreign Trade Zone or
24    Sub-Zone shall be allowed a credit against the tax imposed
25    by subsections (a) and (b) of this Section in the amount of
26    $500 per eligible employee hired to work in the zone during

 

 

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1    the taxable year.
2        (2) To qualify for the credit:
3            (A) the taxpayer must hire 5 or more eligible
4        employees to work in an enterprise zone, River Edge
5        Redevelopment Zone, or federally designated Foreign
6        Trade Zone or Sub-Zone during the taxable year;
7            (B) the taxpayer's total employment within the
8        enterprise zone, River Edge Redevelopment Zone, or
9        federally designated Foreign Trade Zone or Sub-Zone
10        must increase by 5 or more full-time employees beyond
11        the total employed in that zone at the end of the
12        previous tax year for which a jobs tax credit under
13        this Section was taken, or beyond the total employed by
14        the taxpayer as of December 31, 1985, whichever is
15        later; and
16            (C) the eligible employees must be employed 180
17        consecutive days in order to be deemed hired for
18        purposes of this subsection.
19        (3) An "eligible employee" means an employee who is:
20            (A) Certified by the Department of Commerce and
21        Economic Opportunity as "eligible for services"
22        pursuant to regulations promulgated in accordance with
23        Title II of the Job Training Partnership Act, Training
24        Services for the Disadvantaged or Title III of the Job
25        Training Partnership Act, Employment and Training
26        Assistance for Dislocated Workers Program.

 

 

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1            (B) Hired after the enterprise zone, River Edge
2        Redevelopment Zone, or federally designated Foreign
3        Trade Zone or Sub-Zone was designated or the trade or
4        business was located in that zone, whichever is later.
5            (C) Employed in the enterprise zone, River Edge
6        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
7        An employee is employed in an enterprise zone or
8        federally designated Foreign Trade Zone or Sub-Zone if
9        his services are rendered there or it is the base of
10        operations for the services performed.
11            (D) A full-time employee working 30 or more hours
12        per week.
13        (4) For tax years ending on or after December 31, 1985
14    and prior to December 31, 1988, the credit shall be allowed
15    for the tax year in which the eligible employees are hired.
16    For tax years ending on or after December 31, 1988, the
17    credit shall be allowed for the tax year immediately
18    following the tax year in which the eligible employees are
19    hired. If the amount of the credit exceeds the tax
20    liability for that year, whether it exceeds the original
21    liability or the liability as later amended, such excess
22    may be carried forward and applied to the tax liability of
23    the 5 taxable years following the excess credit year. The
24    credit shall be applied to the earliest year for which
25    there is a liability. If there is credit from more than one
26    tax year that is available to offset a liability, earlier

 

 

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1    credit shall be applied first.
2        (5) The Department of Revenue shall promulgate such
3    rules and regulations as may be deemed necessary to carry
4    out the purposes of this subsection (g).
5        (6) The credit shall be available for eligible
6    employees hired on or after January 1, 1986.
7    (h) Investment credit; High Impact Business.
8        (1) Subject to subsections (b) and (b-5) of Section 5.5
9    of the Illinois Enterprise Zone Act, a taxpayer shall be
10    allowed a credit against the tax imposed by subsections (a)
11    and (b) of this Section for investment in qualified
12    property which is placed in service by a Department of
13    Commerce and Economic Opportunity designated High Impact
14    Business. The credit shall be .5% of the basis for such
15    property. The credit shall not be available (i) until the
16    minimum investments in qualified property set forth in
17    subdivision (a)(3)(A) of Section 5.5 of the Illinois
18    Enterprise Zone Act have been satisfied or (ii) until the
19    time authorized in subsection (b-5) of the Illinois
20    Enterprise Zone Act for entities designated as High Impact
21    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
22    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
23    Act, and shall not be allowed to the extent that it would
24    reduce a taxpayer's liability for the tax imposed by
25    subsections (a) and (b) of this Section to below zero. The
26    credit applicable to such investments shall be taken in the

 

 

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1    taxable year in which such investments have been completed.
2    The credit for additional investments beyond the minimum
3    investment by a designated high impact business authorized
4    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
5    Enterprise Zone Act shall be available only in the taxable
6    year in which the property is placed in service and shall
7    not be allowed to the extent that it would reduce a
8    taxpayer's liability for the tax imposed by subsections (a)
9    and (b) of this Section to below zero. For tax years ending
10    on or after December 31, 1987, the credit shall be allowed
11    for the tax year in which the property is placed in
12    service, or, if the amount of the credit exceeds the tax
13    liability for that year, whether it exceeds the original
14    liability or the liability as later amended, such excess
15    may be carried forward and applied to the tax liability of
16    the 5 taxable years following the excess credit year. The
17    credit shall be applied to the earliest year for which
18    there is a liability. If there is credit from more than one
19    tax year that is available to offset a liability, the
20    credit accruing first in time shall be applied first.
21        Changes made in this subdivision (h)(1) by Public Act
22    88-670 restore changes made by Public Act 85-1182 and
23    reflect existing law.
24        (2) The term qualified property means property which:
25            (A) is tangible, whether new or used, including
26        buildings and structural components of buildings;

 

 

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1            (B) is depreciable pursuant to Section 167 of the
2        Internal Revenue Code, except that "3-year property"
3        as defined in Section 168(c)(2)(A) of that Code is not
4        eligible for the credit provided by this subsection
5        (h);
6            (C) is acquired by purchase as defined in Section
7        179(d) of the Internal Revenue Code; and
8            (D) is not eligible for the Enterprise Zone
9        Investment Credit provided by subsection (f) of this
10        Section.
11        (3) The basis of qualified property shall be the basis
12    used to compute the depreciation deduction for federal
13    income tax purposes.
14        (4) If the basis of the property for federal income tax
15    depreciation purposes is increased after it has been placed
16    in service in a federally designated Foreign Trade Zone or
17    Sub-Zone located in Illinois by the taxpayer, the amount of
18    such increase shall be deemed property placed in service on
19    the date of such increase in basis.
20        (5) The term "placed in service" shall have the same
21    meaning as under Section 46 of the Internal Revenue Code.
22        (6) If during any taxable year ending on or before
23    December 31, 1996, any property ceases to be qualified
24    property in the hands of the taxpayer within 48 months
25    after being placed in service, or the situs of any
26    qualified property is moved outside Illinois within 48

 

 

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1    months after being placed in service, the tax imposed under
2    subsections (a) and (b) of this Section for such taxable
3    year shall be increased. Such increase shall be determined
4    by (i) recomputing the investment credit which would have
5    been allowed for the year in which credit for such property
6    was originally allowed by eliminating such property from
7    such computation, and (ii) subtracting such recomputed
8    credit from the amount of credit previously allowed. For
9    the purposes of this paragraph (6), a reduction of the
10    basis of qualified property resulting from a
11    redetermination of the purchase price shall be deemed a
12    disposition of qualified property to the extent of such
13    reduction.
14        (7) Beginning with tax years ending after December 31,
15    1996, if a taxpayer qualifies for the credit under this
16    subsection (h) and thereby is granted a tax abatement and
17    the taxpayer relocates its entire facility in violation of
18    the explicit terms and length of the contract under Section
19    18-183 of the Property Tax Code, the tax imposed under
20    subsections (a) and (b) of this Section shall be increased
21    for the taxable year in which the taxpayer relocated its
22    facility by an amount equal to the amount of credit
23    received by the taxpayer under this subsection (h).
24    (i) Credit for Personal Property Tax Replacement Income
25Tax. For tax years ending prior to December 31, 2003, a credit
26shall be allowed against the tax imposed by subsections (a) and

 

 

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1(b) of this Section for the tax imposed by subsections (c) and
2(d) of this Section. This credit shall be computed by
3multiplying the tax imposed by subsections (c) and (d) of this
4Section by a fraction, the numerator of which is base income
5allocable to Illinois and the denominator of which is Illinois
6base income, and further multiplying the product by the tax
7rate imposed by subsections (a) and (b) of this Section.
8    Any credit earned on or after December 31, 1986 under this
9subsection which is unused in the year the credit is computed
10because it exceeds the tax liability imposed by subsections (a)
11and (b) for that year (whether it exceeds the original
12liability or the liability as later amended) may be carried
13forward and applied to the tax liability imposed by subsections
14(a) and (b) of the 5 taxable years following the excess credit
15year, provided that no credit may be carried forward to any
16year ending on or after December 31, 2003. This credit shall be
17applied first to the earliest year for which there is a
18liability. If there is a credit under this subsection from more
19than one tax year that is available to offset a liability the
20earliest credit arising under this subsection shall be applied
21first.
22    If, during any taxable year ending on or after December 31,
231986, the tax imposed by subsections (c) and (d) of this
24Section for which a taxpayer has claimed a credit under this
25subsection (i) is reduced, the amount of credit for such tax
26shall also be reduced. Such reduction shall be determined by

 

 

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1recomputing the credit to take into account the reduced tax
2imposed by subsections (c) and (d). If any portion of the
3reduced amount of credit has been carried to a different
4taxable year, an amended return shall be filed for such taxable
5year to reduce the amount of credit claimed.
6    (j) Training expense credit. Beginning with tax years
7ending on or after December 31, 1986 and prior to December 31,
82003, a taxpayer shall be allowed a credit against the tax
9imposed by subsections (a) and (b) under this Section for all
10amounts paid or accrued, on behalf of all persons employed by
11the taxpayer in Illinois or Illinois residents employed outside
12of Illinois by a taxpayer, for educational or vocational
13training in semi-technical or technical fields or semi-skilled
14or skilled fields, which were deducted from gross income in the
15computation of taxable income. The credit against the tax
16imposed by subsections (a) and (b) shall be 1.6% of such
17training expenses. For partners, shareholders of subchapter S
18corporations, and owners of limited liability companies, if the
19liability company is treated as a partnership for purposes of
20federal and State income taxation, there shall be allowed a
21credit under this subsection (j) to be determined in accordance
22with the determination of income and distributive share of
23income under Sections 702 and 704 and subchapter S of the
24Internal Revenue Code.
25    Any credit allowed under this subsection which is unused in
26the year the credit is earned may be carried forward to each of

 

 

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1the 5 taxable years following the year for which the credit is
2first computed until it is used. This credit shall be applied
3first to the earliest year for which there is a liability. If
4there is a credit under this subsection from more than one tax
5year that is available to offset a liability the earliest
6credit arising under this subsection shall be applied first. No
7carryforward credit may be claimed in any tax year ending on or
8after December 31, 2003.
9    (k) Research and development credit.
10    For tax years ending after July 1, 1990 and prior to
11December 31, 2003, and beginning again for tax years ending on
12or after December 31, 2004, and ending prior to January 1,
132011, a taxpayer shall be allowed a credit against the tax
14imposed by subsections (a) and (b) of this Section for
15increasing research activities in this State. For taxable years
16ending prior to January 1, 2013, the The credit allowed against
17the tax imposed by subsections (a) and (b) shall be equal to 6
181/2% of the qualifying expenditures for increasing research
19activities in this State. For taxable years beginning on or
20after January 1, 2013, the credit allowed against the tax
21imposed by subsections (a) and (b) shall be equal to 10% of the
22qualifying expenditures for increasing research activities in
23this State. For partners, shareholders of subchapter S
24corporations, and owners of limited liability companies, if the
25liability company is treated as a partnership for purposes of
26federal and State income taxation, there shall be allowed a

 

 

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1credit under this subsection to be determined in accordance
2with the determination of income and distributive share of
3income under Sections 702 and 704 and subchapter S of the
4Internal Revenue Code.
5    For purposes of this subsection, "qualifying expenditures"
6means the qualifying expenditures as defined for the federal
7credit for increasing research activities which would be
8allowable under Section 41 of the Internal Revenue Code and
9which are conducted in this State, "qualifying expenditures for
10increasing research activities in this State" means the excess
11of qualifying expenditures for the taxable year in which
12incurred over qualifying expenditures for the base period,
13"qualifying expenditures for the base period" means the average
14of the qualifying expenditures for each year in the base
15period, and "base period" means the 3 taxable years immediately
16preceding the taxable year for which the determination is being
17made.
18    If the amount of the credit exceeds the income tax
19liability for the applicable tax year, then the excess credit
20shall be refunded to the taxpayer. The amount of a refund shall
21not be included in the taxpayer's income or resources for the
22purposes of determining eligibility or benefit level in any
23means-tested benefit program administered by a governmental
24entity unless required by federal law.
25    In lieu of a refund, any Any credit in excess of the tax
26liability for the taxable year may be carried forward. A

 

 

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1taxpayer may elect to have the unused credit shown on its final
2completed return carried over as a credit against the tax
3liability for the following 5 taxable years or until it has
4been fully used, whichever occurs first; provided that no
5credit earned in a tax year ending prior to December 31, 2003
6may be carried forward to any year ending on or after December
731, 2003, and no credit may be carried forward to any taxable
8year ending on or after January 1, 2011.
9    If an unused credit is carried forward to a given year from
102 or more earlier years, that credit arising in the earliest
11year will be applied first against the tax liability for the
12given year. If a tax liability for the given year still
13remains, the credit from the next earliest year will then be
14applied, and so on, until all credits have been used or no tax
15liability for the given year remains. Any remaining unused
16credit or credits then will be carried forward to the next
17following year in which a tax liability is incurred, except
18that no credit can be carried forward to a year which is more
19than 5 years after the year in which the expense for which the
20credit is given was incurred.
21    No inference shall be drawn from this amendatory Act of the
2291st General Assembly in construing this Section for taxable
23years beginning before January 1, 1999.
24    This subsection is exempt from the provisions of Section
25250 of this Act.
26    (k-5) For taxable years beginning on or after January 1,

 

 

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12013, in lieu of the credit allowed under subsection (k), the
2taxpayer may elect to claim a credit against the tax imposed by
3subsections (a) and (b) of this Section in an amount equal to
420% of the amount of the federal research credit allowed to the
5taxpayer for the taxable year under Section 41 of the Internal
6Revenue Code multiplied by the State's apportioned share of the
7qualifying expenditures for increasing research activities for
8the taxable year. For partners, shareholders of subchapter S
9corporations, and owners of limited liability companies, if the
10liability company is treated as a partnership for purposes of
11federal and State income taxation, there shall be allowed a
12credit under this subsection to be determined in accordance
13with the determination of income and distributive share of
14income under Sections 702 and 704 and subchapter S of the
15Internal Revenue Code.
16    For purposes of this subsection, "the State's apportioned
17share of the qualifying expenditures for increasing research
18activities" is a percent equal to the ratio of qualified
19research expenses in this State to total qualified research
20expenses, and "qualified research expenses" has the same
21meaning as provided in Section 41 of the Internal Revenue Code.
22    If the amount of the credit exceeds the income tax
23liability for the applicable tax year, then the excess credit
24shall be refunded to the taxpayer. The amount of a refund shall
25not be included in the taxpayer's income or resources for the
26purposes of determining eligibility or benefit level in any

 

 

SB3600- 31 -LRB097 18437 HLH 63664 b

1means-tested benefit program administered by a governmental
2entity unless required by federal law.
3    In lieu of a refund, any credit in excess of the tax
4liability for the taxable year may be carried forward. A
5taxpayer may elect to have the unused credit shown on its final
6completed return carried over as a credit against the tax
7liability for the following 5 taxable years or until it has
8been fully used, whichever occurs first.
9    If an unused credit is carried forward to a given year from
102 or more earlier years, that credit arising in the earliest
11year will be applied first against the tax liability for the
12given year. If a tax liability for the given year still
13remains, the credit from the next earliest year will then be
14applied, and so on, until all credits have been used or no tax
15liability for the given year remains. Any remaining unused
16credit or credits then will be carried forward to the next
17following year in which a tax liability is incurred, except
18that no credit can be carried forward to a year which is more
19than 5 years after the year in which the expense for which the
20credit is given was incurred.
21    This subsection is exempt from the provisions of Section
22250 of this Act.
23    (l) Environmental Remediation Tax Credit.
24        (i) For tax years ending after December 31, 1997 and on
25    or before December 31, 2001, a taxpayer shall be allowed a
26    credit against the tax imposed by subsections (a) and (b)

 

 

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1    of this Section for certain amounts paid for unreimbursed
2    eligible remediation costs, as specified in this
3    subsection. For purposes of this Section, "unreimbursed
4    eligible remediation costs" means costs approved by the
5    Illinois Environmental Protection Agency ("Agency") under
6    Section 58.14 of the Environmental Protection Act that were
7    paid in performing environmental remediation at a site for
8    which a No Further Remediation Letter was issued by the
9    Agency and recorded under Section 58.10 of the
10    Environmental Protection Act. The credit must be claimed
11    for the taxable year in which Agency approval of the
12    eligible remediation costs is granted. The credit is not
13    available to any taxpayer if the taxpayer or any related
14    party caused or contributed to, in any material respect, a
15    release of regulated substances on, in, or under the site
16    that was identified and addressed by the remedial action
17    pursuant to the Site Remediation Program of the
18    Environmental Protection Act. After the Pollution Control
19    Board rules are adopted pursuant to the Illinois
20    Administrative Procedure Act for the administration and
21    enforcement of Section 58.9 of the Environmental
22    Protection Act, determinations as to credit availability
23    for purposes of this Section shall be made consistent with
24    those rules. For purposes of this Section, "taxpayer"
25    includes a person whose tax attributes the taxpayer has
26    succeeded to under Section 381 of the Internal Revenue Code

 

 

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1    and "related party" includes the persons disallowed a
2    deduction for losses by paragraphs (b), (c), and (f)(1) of
3    Section 267 of the Internal Revenue Code by virtue of being
4    a related taxpayer, as well as any of its partners. The
5    credit allowed against the tax imposed by subsections (a)
6    and (b) shall be equal to 25% of the unreimbursed eligible
7    remediation costs in excess of $100,000 per site, except
8    that the $100,000 threshold shall not apply to any site
9    contained in an enterprise zone as determined by the
10    Department of Commerce and Community Affairs (now
11    Department of Commerce and Economic Opportunity). The
12    total credit allowed shall not exceed $40,000 per year with
13    a maximum total of $150,000 per site. For partners and
14    shareholders of subchapter S corporations, there shall be
15    allowed a credit under this subsection to be determined in
16    accordance with the determination of income and
17    distributive share of income under Sections 702 and 704 and
18    subchapter S of the Internal Revenue Code.
19        (ii) A credit allowed under this subsection that is
20    unused in the year the credit is earned may be carried
21    forward to each of the 5 taxable years following the year
22    for which the credit is first earned until it is used. The
23    term "unused credit" does not include any amounts of
24    unreimbursed eligible remediation costs in excess of the
25    maximum credit per site authorized under paragraph (i).
26    This credit shall be applied first to the earliest year for

 

 

SB3600- 34 -LRB097 18437 HLH 63664 b

1    which there is a liability. If there is a credit under this
2    subsection from more than one tax year that is available to
3    offset a liability, the earliest credit arising under this
4    subsection shall be applied first. A credit allowed under
5    this subsection may be sold to a buyer as part of a sale of
6    all or part of the remediation site for which the credit
7    was granted. The purchaser of a remediation site and the
8    tax credit shall succeed to the unused credit and remaining
9    carry-forward period of the seller. To perfect the
10    transfer, the assignor shall record the transfer in the
11    chain of title for the site and provide written notice to
12    the Director of the Illinois Department of Revenue of the
13    assignor's intent to sell the remediation site and the
14    amount of the tax credit to be transferred as a portion of
15    the sale. In no event may a credit be transferred to any
16    taxpayer if the taxpayer or a related party would not be
17    eligible under the provisions of subsection (i).
18        (iii) For purposes of this Section, the term "site"
19    shall have the same meaning as under Section 58.2 of the
20    Environmental Protection Act.
21    (m) Education expense credit. Beginning with tax years
22ending after December 31, 1999, a taxpayer who is the custodian
23of one or more qualifying pupils shall be allowed a credit
24against the tax imposed by subsections (a) and (b) of this
25Section for qualified education expenses incurred on behalf of
26the qualifying pupils. The credit shall be equal to 25% of

 

 

SB3600- 35 -LRB097 18437 HLH 63664 b

1qualified education expenses, but in no event may the total
2credit under this subsection claimed by a family that is the
3custodian of qualifying pupils exceed $500. In no event shall a
4credit under this subsection reduce the taxpayer's liability
5under this Act to less than zero. This subsection is exempt
6from the provisions of Section 250 of this Act.
7    For purposes of this subsection:
8    "Qualifying pupils" means individuals who (i) are
9residents of the State of Illinois, (ii) are under the age of
1021 at the close of the school year for which a credit is
11sought, and (iii) during the school year for which a credit is
12sought were full-time pupils enrolled in a kindergarten through
13twelfth grade education program at any school, as defined in
14this subsection.
15    "Qualified education expense" means the amount incurred on
16behalf of a qualifying pupil in excess of $250 for tuition,
17book fees, and lab fees at the school in which the pupil is
18enrolled during the regular school year.
19    "School" means any public or nonpublic elementary or
20secondary school in Illinois that is in compliance with Title
21VI of the Civil Rights Act of 1964 and attendance at which
22satisfies the requirements of Section 26-1 of the School Code,
23except that nothing shall be construed to require a child to
24attend any particular public or nonpublic school to qualify for
25the credit under this Section.
26    "Custodian" means, with respect to qualifying pupils, an

 

 

SB3600- 36 -LRB097 18437 HLH 63664 b

1Illinois resident who is a parent, the parents, a legal
2guardian, or the legal guardians of the qualifying pupils.
3    (n) River Edge Redevelopment Zone site remediation tax
4credit.
5        (i) For tax years ending on or after December 31, 2006,
6    a taxpayer shall be allowed a credit against the tax
7    imposed by subsections (a) and (b) of this Section for
8    certain amounts paid for unreimbursed eligible remediation
9    costs, as specified in this subsection. For purposes of
10    this Section, "unreimbursed eligible remediation costs"
11    means costs approved by the Illinois Environmental
12    Protection Agency ("Agency") under Section 58.14a of the
13    Environmental Protection Act that were paid in performing
14    environmental remediation at a site within a River Edge
15    Redevelopment Zone for which a No Further Remediation
16    Letter was issued by the Agency and recorded under Section
17    58.10 of the Environmental Protection Act. The credit must
18    be claimed for the taxable year in which Agency approval of
19    the eligible remediation costs is granted. The credit is
20    not available to any taxpayer if the taxpayer or any
21    related party caused or contributed to, in any material
22    respect, a release of regulated substances on, in, or under
23    the site that was identified and addressed by the remedial
24    action pursuant to the Site Remediation Program of the
25    Environmental Protection Act. Determinations as to credit
26    availability for purposes of this Section shall be made

 

 

SB3600- 37 -LRB097 18437 HLH 63664 b

1    consistent with rules adopted by the Pollution Control
2    Board pursuant to the Illinois Administrative Procedure
3    Act for the administration and enforcement of Section 58.9
4    of the Environmental Protection Act. For purposes of this
5    Section, "taxpayer" includes a person whose tax attributes
6    the taxpayer has succeeded to under Section 381 of the
7    Internal Revenue Code and "related party" includes the
8    persons disallowed a deduction for losses by paragraphs
9    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
10    Code by virtue of being a related taxpayer, as well as any
11    of its partners. The credit allowed against the tax imposed
12    by subsections (a) and (b) shall be equal to 25% of the
13    unreimbursed eligible remediation costs in excess of
14    $100,000 per site.
15        (ii) A credit allowed under this subsection that is
16    unused in the year the credit is earned may be carried
17    forward to each of the 5 taxable years following the year
18    for which the credit is first earned until it is used. This
19    credit shall be applied first to the earliest year for
20    which there is a liability. If there is a credit under this
21    subsection from more than one tax year that is available to
22    offset a liability, the earliest credit arising under this
23    subsection shall be applied first. A credit allowed under
24    this subsection may be sold to a buyer as part of a sale of
25    all or part of the remediation site for which the credit
26    was granted. The purchaser of a remediation site and the

 

 

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1    tax credit shall succeed to the unused credit and remaining
2    carry-forward period of the seller. To perfect the
3    transfer, the assignor shall record the transfer in the
4    chain of title for the site and provide written notice to
5    the Director of the Illinois Department of Revenue of the
6    assignor's intent to sell the remediation site and the
7    amount of the tax credit to be transferred as a portion of
8    the sale. In no event may a credit be transferred to any
9    taxpayer if the taxpayer or a related party would not be
10    eligible under the provisions of subsection (i).
11        (iii) For purposes of this Section, the term "site"
12    shall have the same meaning as under Section 58.2 of the
13    Environmental Protection Act.
14(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
1596-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
161-13-11; 97-2, eff. 5-6-11.)
 
17    (Text of Section after amendment by P.A. 97-636)
18    Sec. 201. Tax Imposed.
19    (a) In general. A tax measured by net income is hereby
20imposed on every individual, corporation, trust and estate for
21each taxable year ending after July 31, 1969 on the privilege
22of earning or receiving income in or as a resident of this
23State. Such tax shall be in addition to all other occupation or
24privilege taxes imposed by this State or by any municipal
25corporation 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 January 1, 2025, an amount equal to
14    3.75% 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 January 1, 2025, and
17    ending after December 31, 2024, an amount equal to the sum
18    of (i) 3.75% of the taxpayer's net income for the period
19    prior to January 1, 2025, as calculated under Section
20    202.5, and (ii) 3.25% of the taxpayer's net income for the
21    period after December 31, 2024, as calculated under Section
22    202.5.
23        (5.4) In the case of an individual, trust, or estate,
24    for taxable years beginning on or after January 1, 2025, an
25    amount equal to 3.25% of the taxpayer's net income for the
26    taxable year.

 

 

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

 

 

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1    beginning prior to January 1, 2015, and ending after
2    December 31, 2014, an amount equal to the sum of (i) 7% of
3    the taxpayer's net income for the period prior to January
4    1, 2015, as calculated under Section 202.5, and (ii) 5.25%
5    of the taxpayer's net income for the period after December
6    31, 2014, as calculated under Section 202.5.
7        (12) In the case of a corporation, for taxable years
8    beginning on or after January 1, 2015, and ending prior to
9    January 1, 2025, an amount equal to 5.25% of the taxpayer's
10    net income for the taxable year.
11        (13) In the case of a corporation, for taxable years
12    beginning prior to January 1, 2025, and ending after
13    December 31, 2024, an amount equal to the sum of (i) 5.25%
14    of the taxpayer's net income for the period prior to
15    January 1, 2025, as calculated under Section 202.5, and
16    (ii) 4.8% of the taxpayer's net income for the period after
17    December 31, 2024, as calculated under Section 202.5.
18        (14) In the case of a corporation, for taxable years
19    beginning on or after January 1, 2025, an amount equal to
20    4.8% of the taxpayer's net income for the taxable year.
21    The rates under this subsection (b) are subject to the
22provisions of Section 201.5.
23    (c) Personal Property Tax Replacement Income Tax.
24Beginning on July 1, 1979 and thereafter, in addition to such
25income tax, there is also hereby imposed the Personal Property
26Tax Replacement Income Tax measured by net income on every

 

 

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1corporation (including Subchapter S corporations), partnership
2and trust, for each taxable year ending after June 30, 1979.
3Such taxes are imposed on the privilege of earning or receiving
4income in or as a resident of this State. The Personal Property
5Tax Replacement Income Tax shall be in addition to the income
6tax imposed by subsections (a) and (b) of this Section and in
7addition to all other occupation or privilege taxes imposed by
8this State or by any municipal corporation or political
9subdivision thereof.
10    (d) Additional Personal Property Tax Replacement Income
11Tax Rates. The personal property tax replacement income tax
12imposed by this subsection and subsection (c) of this Section
13in the case of a corporation, other than a Subchapter S
14corporation and except as adjusted by subsection (d-1), shall
15be an additional amount equal to 2.85% of such taxpayer's net
16income for the taxable year, except that beginning on January
171, 1981, and thereafter, the rate of 2.85% specified in this
18subsection shall be reduced to 2.5%, and in the case of a
19partnership, trust or a Subchapter S corporation shall be an
20additional amount equal to 1.5% of such taxpayer's net income
21for the taxable year.
22    (d-1) Rate reduction for certain foreign insurers. In the
23case of a foreign insurer, as defined by Section 35A-5 of the
24Illinois Insurance Code, whose state or country of domicile
25imposes on insurers domiciled in Illinois a retaliatory tax
26(excluding any insurer whose premiums from reinsurance assumed

 

 

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1are 50% or more of its total insurance premiums as determined
2under paragraph (2) of subsection (b) of Section 304, except
3that for purposes of this determination premiums from
4reinsurance do not include premiums from inter-affiliate
5reinsurance arrangements), beginning with taxable years ending
6on or after December 31, 1999, the sum of the rates of tax
7imposed by subsections (b) and (d) shall be reduced (but not
8increased) to the rate at which the total amount of tax imposed
9under this Act, net of all credits allowed under this Act,
10shall equal (i) the total amount of tax that would be imposed
11on the foreign insurer's net income allocable to Illinois for
12the taxable year by such foreign insurer's state or country of
13domicile if that net income were subject to all income taxes
14and taxes measured by net income imposed by such foreign
15insurer's state or country of domicile, net of all credits
16allowed or (ii) a rate of zero if no such tax is imposed on such
17income by the foreign insurer's state of domicile. For the
18purposes of this subsection (d-1), an inter-affiliate includes
19a mutual insurer under common management.
20        (1) For the purposes of subsection (d-1), in no event
21    shall the sum of the rates of tax imposed by subsections
22    (b) and (d) be reduced below the rate at which the sum of:
23            (A) the total amount of tax imposed on such foreign
24        insurer under this Act for a taxable year, net of all
25        credits allowed under this Act, plus
26            (B) the privilege tax imposed by Section 409 of the

 

 

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

 

 

SB3600- 46 -LRB097 18437 HLH 63664 b

1    service on or after July 1, 1984. There shall be allowed an
2    additional credit equal to .5% of the basis of qualified
3    property placed in service during the taxable year,
4    provided such property is placed in service on or after
5    July 1, 1986, and the taxpayer's base employment within
6    Illinois has increased by 1% or more over the preceding
7    year as determined by the taxpayer's employment records
8    filed with the Illinois Department of Employment Security.
9    Taxpayers who are new to Illinois shall be deemed to have
10    met the 1% growth in base employment for the first year in
11    which they file employment records with the Illinois
12    Department of Employment Security. The provisions added to
13    this Section by Public Act 85-1200 (and restored by Public
14    Act 87-895) shall be construed as declaratory of existing
15    law and not as a new enactment. If, in any year, the
16    increase in base employment within Illinois over the
17    preceding year is less than 1%, the additional credit shall
18    be limited to that percentage times a fraction, the
19    numerator of which is .5% and the denominator of which is
20    1%, but shall not exceed .5%. The investment credit shall
21    not be allowed to the extent that it would reduce a
22    taxpayer's liability in any tax year below zero, nor may
23    any credit for qualified property be allowed for any year
24    other than the year in which the property was placed in
25    service in Illinois. For tax years ending on or after
26    December 31, 1987, and on or before December 31, 1988, the

 

 

SB3600- 47 -LRB097 18437 HLH 63664 b

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

 

 

SB3600- 48 -LRB097 18437 HLH 63664 b

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

 

 

SB3600- 49 -LRB097 18437 HLH 63664 b

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

 

 

SB3600- 50 -LRB097 18437 HLH 63664 b

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

 

 

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1    December 31, 2018.
2        (9) Each taxable year ending before December 31, 2000,
3    a partnership may elect to pass through to its partners the
4    credits to which the partnership is entitled under this
5    subsection (e) for the taxable year. A partner may use the
6    credit allocated to him or her under this paragraph only
7    against the tax imposed in subsections (c) and (d) of this
8    Section. If the partnership makes that election, those
9    credits shall be allocated among the partners in the
10    partnership in accordance with the rules set forth in
11    Section 704(b) of the Internal Revenue Code, and the rules
12    promulgated under that Section, and the allocated amount of
13    the credits shall be allowed to the partners for that
14    taxable year. The partnership shall make this election on
15    its Personal Property Tax Replacement Income Tax return for
16    that taxable year. The election to pass through the credits
17    shall be irrevocable.
18        For taxable years ending on or after December 31, 2000,
19    a partner that qualifies its partnership for a subtraction
20    under subparagraph (I) of paragraph (2) of subsection (d)
21    of Section 203 or a shareholder that qualifies a Subchapter
22    S corporation for a subtraction under subparagraph (S) of
23    paragraph (2) of subsection (b) of Section 203 shall be
24    allowed a credit under this subsection (e) equal to its
25    share of the credit earned under this subsection (e) during
26    the taxable year by the partnership or Subchapter S

 

 

SB3600- 52 -LRB097 18437 HLH 63664 b

1    corporation, determined in accordance with the
2    determination of income and distributive share of income
3    under Sections 702 and 704 and Subchapter S of the Internal
4    Revenue Code. This paragraph is exempt from the provisions
5    of Section 250.
6    (f) Investment credit; Enterprise Zone; River Edge
7Redevelopment Zone.
8        (1) A taxpayer shall be allowed a credit against the
9    tax imposed by subsections (a) and (b) of this Section for
10    investment in qualified property which is placed in service
11    in an Enterprise Zone created pursuant to the Illinois
12    Enterprise Zone Act or, for property placed in service on
13    or after July 1, 2006, a River Edge Redevelopment Zone
14    established pursuant to the River Edge Redevelopment Zone
15    Act. For partners, shareholders of Subchapter S
16    corporations, and owners of limited liability companies,
17    if the liability company is treated as a partnership for
18    purposes of federal and State income taxation, there shall
19    be allowed a credit under this subsection (f) to be
20    determined in accordance with the determination of income
21    and distributive share of income under Sections 702 and 704
22    and Subchapter S of the Internal Revenue Code. The credit
23    shall be .5% of the basis for such property. The credit
24    shall be available only in the taxable year in which the
25    property is placed in service in the Enterprise Zone or
26    River Edge Redevelopment Zone and shall not be allowed to

 

 

SB3600- 53 -LRB097 18437 HLH 63664 b

1    the extent that it would reduce a taxpayer's liability for
2    the tax imposed by subsections (a) and (b) of this Section
3    to below zero. For tax years ending on or after December
4    31, 1985, the credit shall be allowed for the tax year in
5    which the property is placed in service, or, if the amount
6    of the credit exceeds the tax liability for that year,
7    whether it exceeds the original liability or the liability
8    as later amended, such excess may be carried forward and
9    applied to the tax liability of the 5 taxable years
10    following the excess credit year. The credit shall be
11    applied to the earliest year for which there is a
12    liability. If there is credit from more than one tax year
13    that is available to offset a liability, the credit
14    accruing first in time shall be applied first.
15        (2) The term qualified property means property which:
16            (A) is tangible, whether new or used, including
17        buildings and structural components of buildings;
18            (B) is depreciable pursuant to Section 167 of the
19        Internal Revenue Code, except that "3-year property"
20        as defined in Section 168(c)(2)(A) of that Code is not
21        eligible for the credit provided by this subsection
22        (f);
23            (C) is acquired by purchase as defined in Section
24        179(d) of the Internal Revenue Code;
25            (D) is used in the Enterprise Zone or River Edge
26        Redevelopment Zone by the taxpayer; and

 

 

SB3600- 54 -LRB097 18437 HLH 63664 b

1            (E) has not been previously used in Illinois in
2        such a manner and by such a person as would qualify for
3        the credit provided by this subsection (f) or
4        subsection (e).
5        (3) The basis of qualified property shall be the basis
6    used to compute the depreciation deduction for federal
7    income tax purposes.
8        (4) If the basis of the property for federal income tax
9    depreciation purposes is increased after it has been placed
10    in service in the Enterprise Zone or River Edge
11    Redevelopment Zone by the taxpayer, the amount of such
12    increase shall be deemed property placed in service on the
13    date of such increase in basis.
14        (5) The term "placed in service" shall have the same
15    meaning as under Section 46 of the Internal Revenue Code.
16        (6) If during any taxable year, any property ceases to
17    be qualified property in the hands of the taxpayer within
18    48 months after being placed in service, or the situs of
19    any qualified property is moved outside the Enterprise Zone
20    or River Edge Redevelopment Zone within 48 months after
21    being placed in service, the tax imposed under subsections
22    (a) and (b) of this Section for such taxable year shall be
23    increased. Such increase shall be determined by (i)
24    recomputing the investment credit which would have been
25    allowed for the year in which credit for such property was
26    originally allowed by eliminating such property from such

 

 

SB3600- 55 -LRB097 18437 HLH 63664 b

1    computation, and (ii) subtracting such recomputed credit
2    from the amount of credit previously allowed. For the
3    purposes of this paragraph (6), a reduction of the basis of
4    qualified property resulting from a redetermination of the
5    purchase price shall be deemed a disposition of qualified
6    property to the extent of such reduction.
7        (7) There shall be allowed an additional credit equal
8    to 0.5% of the basis of qualified property placed in
9    service during the taxable year in a River Edge
10    Redevelopment Zone, provided such property is placed in
11    service on or after July 1, 2006, and the taxpayer's base
12    employment within Illinois has increased by 1% or more over
13    the preceding year as determined by the taxpayer's
14    employment records filed with the Illinois Department of
15    Employment Security. Taxpayers who are new to Illinois
16    shall be deemed to have met the 1% growth in base
17    employment for the first year in which they file employment
18    records with the Illinois Department of Employment
19    Security. If, in any year, the increase in base employment
20    within Illinois over the preceding year is less than 1%,
21    the additional credit shall be limited to that percentage
22    times a fraction, the numerator of which is 0.5% and the
23    denominator of which is 1%, but shall not exceed 0.5%.
24    (g) Jobs Tax Credit; Enterprise Zone, River Edge
25Redevelopment Zone, and Foreign Trade Zone or Sub-Zone.
26        (1) A taxpayer conducting a trade or business in an

 

 

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1    enterprise zone or a High Impact Business designated by the
2    Department of Commerce and Economic Opportunity or for
3    taxable years ending on or after December 31, 2006, in a
4    River Edge Redevelopment Zone conducting a trade or
5    business in a federally designated Foreign Trade Zone or
6    Sub-Zone shall be allowed a credit against the tax imposed
7    by subsections (a) and (b) of this Section in the amount of
8    $500 per eligible employee hired to work in the zone during
9    the taxable year.
10        (2) To qualify for the credit:
11            (A) the taxpayer must hire 5 or more eligible
12        employees to work in an enterprise zone, River Edge
13        Redevelopment Zone, or federally designated Foreign
14        Trade Zone or Sub-Zone during the taxable year;
15            (B) the taxpayer's total employment within the
16        enterprise zone, River Edge Redevelopment Zone, or
17        federally designated Foreign Trade Zone or Sub-Zone
18        must increase by 5 or more full-time employees beyond
19        the total employed in that zone at the end of the
20        previous tax year for which a jobs tax credit under
21        this Section was taken, or beyond the total employed by
22        the taxpayer as of December 31, 1985, whichever is
23        later; and
24            (C) the eligible employees must be employed 180
25        consecutive days in order to be deemed hired for
26        purposes of this subsection.

 

 

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1        (3) An "eligible employee" means an employee who is:
2            (A) Certified by the Department of Commerce and
3        Economic Opportunity as "eligible for services"
4        pursuant to regulations promulgated in accordance with
5        Title II of the Job Training Partnership Act, Training
6        Services for the Disadvantaged or Title III of the Job
7        Training Partnership Act, Employment and Training
8        Assistance for Dislocated Workers Program.
9            (B) Hired after the enterprise zone, River Edge
10        Redevelopment Zone, or federally designated Foreign
11        Trade Zone or Sub-Zone was designated or the trade or
12        business was located in that zone, whichever is later.
13            (C) Employed in the enterprise zone, River Edge
14        Redevelopment Zone, or Foreign Trade Zone or Sub-Zone.
15        An employee is employed in an enterprise zone or
16        federally designated Foreign Trade Zone or Sub-Zone if
17        his services are rendered there or it is the base of
18        operations for the services performed.
19            (D) A full-time employee working 30 or more hours
20        per week.
21        (4) For tax years ending on or after December 31, 1985
22    and prior to December 31, 1988, the credit shall be allowed
23    for the tax year in which the eligible employees are hired.
24    For tax years ending on or after December 31, 1988, the
25    credit shall be allowed for the tax year immediately
26    following the tax year in which the eligible employees are

 

 

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1    hired. If the amount of the credit exceeds the tax
2    liability for that year, whether it exceeds the original
3    liability or the liability as later amended, such excess
4    may be carried forward and applied to the tax liability of
5    the 5 taxable years following the excess credit year. The
6    credit shall be applied to the earliest year for which
7    there is a liability. If there is credit from more than one
8    tax year that is available to offset a liability, earlier
9    credit shall be applied first.
10        (5) The Department of Revenue shall promulgate such
11    rules and regulations as may be deemed necessary to carry
12    out the purposes of this subsection (g).
13        (6) The credit shall be available for eligible
14    employees hired on or after January 1, 1986.
15    (h) Investment credit; High Impact Business.
16        (1) Subject to subsections (b) and (b-5) of Section 5.5
17    of the Illinois Enterprise Zone Act, a taxpayer shall be
18    allowed a credit against the tax imposed by subsections (a)
19    and (b) of this Section for investment in qualified
20    property which is placed in service by a Department of
21    Commerce and Economic Opportunity designated High Impact
22    Business. The credit shall be .5% of the basis for such
23    property. The credit shall not be available (i) until the
24    minimum investments in qualified property set forth in
25    subdivision (a)(3)(A) of Section 5.5 of the Illinois
26    Enterprise Zone Act have been satisfied or (ii) until the

 

 

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1    time authorized in subsection (b-5) of the Illinois
2    Enterprise Zone Act for entities designated as High Impact
3    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
4    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
5    Act, and shall not be allowed to the extent that it would
6    reduce a taxpayer's liability for the tax imposed by
7    subsections (a) and (b) of this Section to below zero. The
8    credit applicable to such investments shall be taken in the
9    taxable year in which such investments have been completed.
10    The credit for additional investments beyond the minimum
11    investment by a designated high impact business authorized
12    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
13    Enterprise Zone Act shall be available only in the taxable
14    year in which the property is placed in service and shall
15    not be allowed to the extent that it would reduce a
16    taxpayer's liability for the tax imposed by subsections (a)
17    and (b) of this Section to below zero. For tax years ending
18    on or after December 31, 1987, the credit shall be allowed
19    for the tax year in which the property is placed in
20    service, or, if the amount of the credit exceeds the tax
21    liability for that year, whether it exceeds the original
22    liability or the liability as later amended, such excess
23    may be carried forward and applied to the tax liability of
24    the 5 taxable years following the excess credit year. The
25    credit shall be applied to the earliest year for which
26    there is a liability. If there is credit from more than one

 

 

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1    tax year that is available to offset a liability, the
2    credit accruing first in time shall be applied first.
3        Changes made in this subdivision (h)(1) by Public Act
4    88-670 restore changes made by Public Act 85-1182 and
5    reflect existing law.
6        (2) The term qualified property means property which:
7            (A) is tangible, whether new or used, including
8        buildings and structural components of buildings;
9            (B) is depreciable pursuant to Section 167 of the
10        Internal Revenue Code, except that "3-year property"
11        as defined in Section 168(c)(2)(A) of that Code is not
12        eligible for the credit provided by this subsection
13        (h);
14            (C) is acquired by purchase as defined in Section
15        179(d) of the Internal Revenue Code; and
16            (D) is not eligible for the Enterprise Zone
17        Investment Credit provided by subsection (f) of this
18        Section.
19        (3) The basis of qualified property shall be the basis
20    used to compute the depreciation deduction for federal
21    income tax purposes.
22        (4) If the basis of the property for federal income tax
23    depreciation purposes is increased after it has been placed
24    in service in a federally designated Foreign Trade Zone or
25    Sub-Zone located in Illinois by the taxpayer, the amount of
26    such increase shall be deemed property placed in service on

 

 

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1    the date of such increase in basis.
2        (5) The term "placed in service" shall have the same
3    meaning as under Section 46 of the Internal Revenue Code.
4        (6) If during any taxable year ending on or before
5    December 31, 1996, any property ceases to be qualified
6    property in the hands of the taxpayer within 48 months
7    after being placed in service, or the situs of any
8    qualified property is moved outside Illinois within 48
9    months after being placed in service, the tax imposed under
10    subsections (a) and (b) of this Section for such taxable
11    year shall be increased. Such increase shall be determined
12    by (i) recomputing the investment credit which would have
13    been allowed for the year in which credit for such property
14    was originally allowed by eliminating such property from
15    such computation, and (ii) subtracting such recomputed
16    credit from the amount of credit previously allowed. For
17    the purposes of this paragraph (6), a reduction of the
18    basis of qualified property resulting from a
19    redetermination of the purchase price shall be deemed a
20    disposition of qualified property to the extent of such
21    reduction.
22        (7) Beginning with tax years ending after December 31,
23    1996, if a taxpayer qualifies for the credit under this
24    subsection (h) and thereby is granted a tax abatement and
25    the taxpayer relocates its entire facility in violation of
26    the explicit terms and length of the contract under Section

 

 

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1    18-183 of the Property Tax Code, the tax imposed under
2    subsections (a) and (b) of this Section shall be increased
3    for the taxable year in which the taxpayer relocated its
4    facility by an amount equal to the amount of credit
5    received by the taxpayer under this subsection (h).
6    (i) Credit for Personal Property Tax Replacement Income
7Tax. For tax years ending prior to December 31, 2003, a credit
8shall be allowed against the tax imposed by subsections (a) and
9(b) of this Section for the tax imposed by subsections (c) and
10(d) of this Section. This credit shall be computed by
11multiplying the tax imposed by subsections (c) and (d) of this
12Section by a fraction, the numerator of which is base income
13allocable to Illinois and the denominator of which is Illinois
14base income, and further multiplying the product by the tax
15rate imposed by subsections (a) and (b) of this Section.
16    Any credit earned on or after December 31, 1986 under this
17subsection which is unused in the year the credit is computed
18because it exceeds the tax liability imposed by subsections (a)
19and (b) for that year (whether it exceeds the original
20liability or the liability as later amended) may be carried
21forward and applied to the tax liability imposed by subsections
22(a) and (b) of the 5 taxable years following the excess credit
23year, provided that no credit may be carried forward to any
24year ending on or after December 31, 2003. This credit shall be
25applied first to the earliest year for which there is a
26liability. If there is a credit under this subsection from more

 

 

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1than one tax year that is available to offset a liability the
2earliest credit arising under this subsection shall be applied
3first.
4    If, during any taxable year ending on or after December 31,
51986, the tax imposed by subsections (c) and (d) of this
6Section for which a taxpayer has claimed a credit under this
7subsection (i) is reduced, the amount of credit for such tax
8shall also be reduced. Such reduction shall be determined by
9recomputing the credit to take into account the reduced tax
10imposed by subsections (c) and (d). If any portion of the
11reduced amount of credit has been carried to a different
12taxable year, an amended return shall be filed for such taxable
13year to reduce the amount of credit claimed.
14    (j) Training expense credit. Beginning with tax years
15ending on or after December 31, 1986 and prior to December 31,
162003, a taxpayer shall be allowed a credit against the tax
17imposed by subsections (a) and (b) under this Section for all
18amounts paid or accrued, on behalf of all persons employed by
19the taxpayer in Illinois or Illinois residents employed outside
20of Illinois by a taxpayer, for educational or vocational
21training in semi-technical or technical fields or semi-skilled
22or skilled fields, which were deducted from gross income in the
23computation of taxable income. The credit against the tax
24imposed by subsections (a) and (b) shall be 1.6% of such
25training expenses. For partners, shareholders of subchapter S
26corporations, and owners of limited liability companies, if the

 

 

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1liability company is treated as a partnership for purposes of
2federal and State income taxation, there shall be allowed a
3credit under this subsection (j) to be determined in accordance
4with the determination of income and distributive share of
5income under Sections 702 and 704 and subchapter S of the
6Internal Revenue Code.
7    Any credit allowed under this subsection which is unused in
8the year the credit is earned may be carried forward to each of
9the 5 taxable years following the year for which the credit is
10first computed until it is used. This credit shall be applied
11first to the earliest year for which there is a liability. If
12there is a credit under this subsection from more than one tax
13year that is available to offset a liability the earliest
14credit arising under this subsection shall be applied first. No
15carryforward credit may be claimed in any tax year ending on or
16after December 31, 2003.
17    (k) Research and development credit.
18    For tax years ending after July 1, 1990 and prior to
19December 31, 2003, and beginning again for tax years ending on
20or after December 31, 2004, and ending prior to January 1,
212016, a taxpayer shall be allowed a credit against the tax
22imposed by subsections (a) and (b) of this Section for
23increasing research activities in this State. For taxable years
24ending prior to January 1, 2013, the The credit allowed against
25the tax imposed by subsections (a) and (b) shall be equal to 6
261/2% of the qualifying expenditures for increasing research

 

 

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1activities in this State. For taxable years beginning on or
2after January 1, 2013, the credit allowed against the tax
3imposed by subsections (a) and (b) shall be equal to 10% of the
4qualifying expenditures for increasing research activities in
5this State. For partners, shareholders of subchapter S
6corporations, and owners of limited liability companies, if the
7liability company is treated as a partnership for purposes of
8federal and State income taxation, there shall be allowed a
9credit under this subsection to be determined in accordance
10with the determination of income and distributive share of
11income under Sections 702 and 704 and subchapter S of the
12Internal Revenue Code.
13    For purposes of this subsection, "qualifying expenditures"
14means the qualifying expenditures as defined for the federal
15credit for increasing research activities which would be
16allowable under Section 41 of the Internal Revenue Code and
17which are conducted in this State, "qualifying expenditures for
18increasing research activities in this State" means the excess
19of qualifying expenditures for the taxable year in which
20incurred over qualifying expenditures for the base period,
21"qualifying expenditures for the base period" means the average
22of the qualifying expenditures for each year in the base
23period, and "base period" means the 3 taxable years immediately
24preceding the taxable year for which the determination is being
25made.
26    If the amount of the credit exceeds the income tax

 

 

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1liability for the applicable tax year, then the excess credit
2shall be refunded to the taxpayer. The amount of a refund shall
3not be included in the taxpayer's income or resources for the
4purposes of determining eligibility or benefit level in any
5means-tested benefit program administered by a governmental
6entity unless required by federal law.
7    In lieu of a refund, any Any credit in excess of the tax
8liability for the taxable year may be carried forward. A
9taxpayer may elect to have the unused credit shown on its final
10completed return carried over as a credit against the tax
11liability for the following 5 taxable years or until it has
12been fully used, whichever occurs first; provided that no
13credit earned in a tax year ending prior to December 31, 2003
14may be carried forward to any year ending on or after December
1531, 2003.
16    If an unused credit is carried forward to a given year from
172 or more earlier years, that credit arising in the earliest
18year will be applied first against the tax liability for the
19given year. If a tax liability for the given year still
20remains, the credit from the next earliest year will then be
21applied, and so on, until all credits have been used or no tax
22liability for the given year remains. Any remaining unused
23credit or credits then will be carried forward to the next
24following year in which a tax liability is incurred, except
25that no credit can be carried forward to a year which is more
26than 5 years after the year in which the expense for which the

 

 

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1credit is given was incurred.
2    No inference shall be drawn from this amendatory Act of the
391st General Assembly in construing this Section for taxable
4years beginning before January 1, 1999.
5    This subsection is exempt from the provisions of Section
6250 of this Act.
7    (k-5) For taxable years beginning on or after January 1,
82013, in lieu of the credit allowed under subsection (k), the
9taxpayer may elect to claim a credit against the tax imposed by
10subsections (a) and (b) of this Section in an amount equal to
1120% of the amount of the federal research credit allowed to the
12taxpayer for the taxable year under Section 41 of the Internal
13Revenue Code multiplied by the State's apportioned share of the
14qualifying expenditures for increasing research activities for
15the taxable year. For partners, shareholders of subchapter S
16corporations, and owners of limited liability companies, if the
17liability company is treated as a partnership for purposes of
18federal and State income taxation, there shall be allowed a
19credit under this subsection to be determined in accordance
20with the determination of income and distributive share of
21income under Sections 702 and 704 and subchapter S of the
22Internal Revenue Code.
23    For purposes of this subsection, "the State's apportioned
24share of the qualifying expenditures for increasing research
25activities" is a percent equal to the ratio of qualified
26research expenses in this State to total qualified research

 

 

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1expenses, and "qualified research expenses" has the same
2meaning as provided in Section 41 of the Internal Revenue Code.
3    If the amount of the credit exceeds the income tax
4liability for the applicable tax year, then the excess credit
5shall be refunded to the taxpayer. The amount of a refund shall
6not be included in the taxpayer's income or resources for the
7purposes of determining eligibility or benefit level in any
8means-tested benefit program administered by a governmental
9entity unless required by federal law.
10    In lieu of a refund, any credit in excess of the tax
11liability for the taxable year may be carried forward. A
12taxpayer may elect to have the unused credit shown on its final
13completed return carried over as a credit against the tax
14liability for the following 5 taxable years or until it has
15been fully used, whichever occurs first.
16    If an unused credit is carried forward to a given year from
172 or more earlier years, that credit arising in the earliest
18year will be applied first against the tax liability for the
19given year. If a tax liability for the given year still
20remains, the credit from the next earliest year will then be
21applied, and so on, until all credits have been used or no tax
22liability for the given year remains. Any remaining unused
23credit or credits then will be carried forward to the next
24following year in which a tax liability is incurred, except
25that no credit can be carried forward to a year which is more
26than 5 years after the year in which the expense for which the

 

 

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1credit is given was incurred.
2    This subsection is exempt from the provisions of Section
3250 of this Act.
4    (l) Environmental Remediation Tax Credit.
5        (i) For tax years ending after December 31, 1997 and on
6    or before December 31, 2001, a taxpayer shall be allowed a
7    credit against the tax imposed by subsections (a) and (b)
8    of this Section for certain amounts paid for unreimbursed
9    eligible remediation costs, as specified in this
10    subsection. For purposes of this Section, "unreimbursed
11    eligible remediation costs" means costs approved by the
12    Illinois Environmental Protection Agency ("Agency") under
13    Section 58.14 of the Environmental Protection Act that were
14    paid in performing environmental remediation at a site for
15    which a No Further Remediation Letter was issued by the
16    Agency and recorded under Section 58.10 of the
17    Environmental Protection Act. The credit must be claimed
18    for the taxable year in which Agency approval of the
19    eligible remediation costs is granted. The credit is not
20    available to any taxpayer if the taxpayer or any related
21    party caused or contributed to, in any material respect, a
22    release of regulated substances on, in, or under the site
23    that was identified and addressed by the remedial action
24    pursuant to the Site Remediation Program of the
25    Environmental Protection Act. After the Pollution Control
26    Board rules are adopted pursuant to the Illinois

 

 

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1    Administrative Procedure Act for the administration and
2    enforcement of Section 58.9 of the Environmental
3    Protection Act, determinations as to credit availability
4    for purposes of this Section shall be made consistent with
5    those rules. For purposes of this Section, "taxpayer"
6    includes a person whose tax attributes the taxpayer has
7    succeeded to under Section 381 of the Internal Revenue Code
8    and "related party" includes the persons disallowed a
9    deduction for losses by paragraphs (b), (c), and (f)(1) of
10    Section 267 of the Internal Revenue Code by virtue of being
11    a related taxpayer, as well as any of its partners. The
12    credit allowed against the tax imposed by subsections (a)
13    and (b) shall be equal to 25% of the unreimbursed eligible
14    remediation costs in excess of $100,000 per site, except
15    that the $100,000 threshold shall not apply to any site
16    contained in an enterprise zone as determined by the
17    Department of Commerce and Community Affairs (now
18    Department of Commerce and Economic Opportunity). The
19    total credit allowed shall not exceed $40,000 per year with
20    a maximum total of $150,000 per site. For partners and
21    shareholders of subchapter S corporations, there shall be
22    allowed a credit under this subsection to be determined in
23    accordance with the determination of income and
24    distributive share of income under Sections 702 and 704 and
25    subchapter S of the Internal Revenue Code.
26        (ii) A credit allowed under this subsection that is

 

 

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1    unused in the year the credit is earned may be carried
2    forward to each of the 5 taxable years following the year
3    for which the credit is first earned until it is used. The
4    term "unused credit" does not include any amounts of
5    unreimbursed eligible remediation costs in excess of the
6    maximum credit per site authorized under paragraph (i).
7    This credit shall be applied first to the earliest year for
8    which there is a liability. If there is a credit under this
9    subsection from more than one tax year that is available to
10    offset a liability, the earliest credit arising under this
11    subsection shall be applied first. A credit allowed under
12    this subsection may be sold to a buyer as part of a sale of
13    all or part of the remediation site for which the credit
14    was granted. The purchaser of a remediation site and the
15    tax credit shall succeed to the unused credit and remaining
16    carry-forward period of the seller. To perfect the
17    transfer, the assignor shall record the transfer in the
18    chain of title for the site and provide written notice to
19    the Director of the Illinois Department of Revenue of the
20    assignor's intent to sell the remediation site and the
21    amount of the tax credit to be transferred as a portion of
22    the sale. In no event may a credit be transferred to any
23    taxpayer if the taxpayer or a related party would not be
24    eligible under the provisions of subsection (i).
25        (iii) For purposes of this Section, the term "site"
26    shall have the same meaning as under Section 58.2 of the

 

 

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1    Environmental Protection Act.
2    (m) Education expense credit. Beginning with tax years
3ending after December 31, 1999, a taxpayer who is the custodian
4of one or more qualifying pupils shall be allowed a credit
5against the tax imposed by subsections (a) and (b) of this
6Section for qualified education expenses incurred on behalf of
7the qualifying pupils. The credit shall be equal to 25% of
8qualified education expenses, but in no event may the total
9credit under this subsection claimed by a family that is the
10custodian of qualifying pupils exceed $500. In no event shall a
11credit under this subsection reduce the taxpayer's liability
12under this Act to less than zero. This subsection is exempt
13from the provisions of Section 250 of this Act.
14    For purposes of this subsection:
15    "Qualifying pupils" means individuals who (i) are
16residents of the State of Illinois, (ii) are under the age of
1721 at the close of the school year for which a credit is
18sought, and (iii) during the school year for which a credit is
19sought were full-time pupils enrolled in a kindergarten through
20twelfth grade education program at any school, as defined in
21this subsection.
22    "Qualified education expense" means the amount incurred on
23behalf of a qualifying pupil in excess of $250 for tuition,
24book fees, and lab fees at the school in which the pupil is
25enrolled during the regular school year.
26    "School" means any public or nonpublic elementary or

 

 

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1secondary school in Illinois that is in compliance with Title
2VI of the Civil Rights Act of 1964 and attendance at which
3satisfies the requirements of Section 26-1 of the School Code,
4except that nothing shall be construed to require a child to
5attend any particular public or nonpublic school to qualify for
6the credit under this Section.
7    "Custodian" means, with respect to qualifying pupils, an
8Illinois resident who is a parent, the parents, a legal
9guardian, or the legal guardians of the qualifying pupils.
10    (n) River Edge Redevelopment Zone site remediation tax
11credit.
12        (i) For tax years ending on or after December 31, 2006,
13    a taxpayer shall be allowed a credit against the tax
14    imposed by subsections (a) and (b) of this Section for
15    certain amounts paid for unreimbursed eligible remediation
16    costs, as specified in this subsection. For purposes of
17    this Section, "unreimbursed eligible remediation costs"
18    means costs approved by the Illinois Environmental
19    Protection Agency ("Agency") under Section 58.14a of the
20    Environmental Protection Act that were paid in performing
21    environmental remediation at a site within a River Edge
22    Redevelopment Zone for which a No Further Remediation
23    Letter was issued by the Agency and recorded under Section
24    58.10 of the Environmental Protection Act. The credit must
25    be claimed for the taxable year in which Agency approval of
26    the eligible remediation costs is granted. The credit is

 

 

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1    not available to any taxpayer if the taxpayer or any
2    related party caused or contributed to, in any material
3    respect, a release of regulated substances on, in, or under
4    the site that was identified and addressed by the remedial
5    action pursuant to the Site Remediation Program of the
6    Environmental Protection Act. Determinations as to credit
7    availability for purposes of this Section shall be made
8    consistent with rules adopted by the Pollution Control
9    Board pursuant to the Illinois Administrative Procedure
10    Act for the administration and enforcement of Section 58.9
11    of the Environmental Protection Act. For purposes of this
12    Section, "taxpayer" includes a person whose tax attributes
13    the taxpayer has succeeded to under Section 381 of the
14    Internal Revenue Code and "related party" includes the
15    persons disallowed a deduction for losses by paragraphs
16    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
17    Code by virtue of being a related taxpayer, as well as any
18    of its partners. The credit allowed against the tax imposed
19    by subsections (a) and (b) shall be equal to 25% of the
20    unreimbursed eligible remediation costs in excess of
21    $100,000 per site.
22        (ii) A credit allowed under this subsection that is
23    unused in the year the credit is earned may be carried
24    forward to each of the 5 taxable years following the year
25    for which the credit is first earned until it is used. This
26    credit shall be applied first to the earliest year for

 

 

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1    which there is a liability. If there is a credit under this
2    subsection from more than one tax year that is available to
3    offset a liability, the earliest credit arising under this
4    subsection shall be applied first. A credit allowed under
5    this subsection may be sold to a buyer as part of a sale of
6    all or part of the remediation site for which the credit
7    was granted. The purchaser of a remediation site and the
8    tax credit shall succeed to the unused credit and remaining
9    carry-forward period of the seller. To perfect the
10    transfer, the assignor shall record the transfer in the
11    chain of title for the site and provide written notice to
12    the Director of the Illinois Department of Revenue of the
13    assignor's intent to sell the remediation site and the
14    amount of the tax credit to be transferred as a portion of
15    the sale. In no event may a credit be transferred to any
16    taxpayer if the taxpayer or a related party would not be
17    eligible under the provisions of subsection (i).
18        (iii) For purposes of this Section, the term "site"
19    shall have the same meaning as under Section 58.2 of the
20    Environmental Protection Act.
21(Source: P.A. 96-115, eff. 7-31-09; 96-116, eff. 7-31-09;
2296-937, eff. 6-23-10; 96-1000, eff. 7-2-10; 96-1496, eff.
231-13-11; 97-2, eff. 5-6-11; 97-636, eff. 6-1-12.)
 
24    Section 95. No acceleration or delay. Where this Act makes
25changes in a statute that is represented in this Act by text

 

 

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1that is not yet or no longer in effect (for example, a Section
2represented by multiple versions), the use of that text does
3not accelerate or delay the taking effect of (i) the changes
4made by this Act or (ii) provisions derived from any other
5Public Act.
 
6    Section 99. Effective date. This Act takes effect upon
7becoming law.