98TH GENERAL ASSEMBLY
State of Illinois
2013 and 2014
HB4718

 

Introduced , by Rep. Dwight Kay

 

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

    Amends the Illinois Income Tax Act. Reduces the corporate income tax rate to (i) 6% for taxable years beginning on or after January 1, 2014 and ending prior to January 1, 2015 and (ii) 4.8% for taxable years beginning on or after January 1, 2015. Requires the Department of Revenue to monitor each month the seasonally-adjusted unemployment rate reported by the United States Department of Labor, Bureau of Labor Statistics, for the previous calendar month. Provides that, if the Department finds that (i) the average unemployment rate for the previous calendar month exceeds the average unemployment rate for any of the 3 calendar months immediately preceding the previous calendar month by more than 0.3% and (ii) the unemployment rate during the previous calendar month was 5.05% or higher, then the Department shall, by rule, decrease the rate of tax imposed on corporations by 0.25% for each 0.3% increase in the unemployment rate. Effective immediately.


LRB098 17115 HLH 52202 b

FISCAL NOTE ACT MAY APPLY

 

 

A BILL FOR

 

HB4718LRB098 17115 HLH 52202 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    Sec. 201. Tax Imposed.
8    (a) In general. A tax measured by net income is hereby
9imposed on every individual, corporation, trust and estate for
10each taxable year ending after July 31, 1969 on the privilege
11of earning or receiving income in or as a resident of this
12State. Such tax shall be in addition to all other occupation or
13privilege taxes imposed by this State or by any municipal
14corporation or political subdivision thereof.
15    (b) Rates. The tax imposed by subsection (a) of this
16Section shall be determined as follows, except as adjusted by
17subsection (d-1):
18        (1) In the case of an individual, trust or estate, for
19    taxable years ending prior to July 1, 1989, an amount equal
20    to 2 1/2% of the taxpayer's net income for the taxable
21    year.
22        (2) In the case of an individual, trust or estate, for
23    taxable years beginning prior to July 1, 1989 and ending

 

 

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1    after June 30, 1989, an amount equal to the sum of (i) 2
2    1/2% of the taxpayer's net income for the period prior to
3    July 1, 1989, as calculated under Section 202.3, and (ii)
4    3% of the taxpayer's net income for the period after June
5    30, 1989, as calculated under Section 202.3.
6        (3) In the case of an individual, trust or estate, for
7    taxable years beginning after June 30, 1989, and ending
8    prior to January 1, 2011, an amount equal to 3% of the
9    taxpayer's net income for the taxable year.
10        (4) In the case of an individual, trust, or estate, for
11    taxable years beginning prior to January 1, 2011, and
12    ending after December 31, 2010, an amount equal to the sum
13    of (i) 3% of the taxpayer's net income for the period prior
14    to January 1, 2011, as calculated under Section 202.5, and
15    (ii) 5% of the taxpayer's net income for the period after
16    December 31, 2010, as calculated under Section 202.5.
17        (5) In the case of an individual, trust, or estate, for
18    taxable years beginning on or after January 1, 2011, and
19    ending prior to January 1, 2015, an amount equal to 5% of
20    the taxpayer's net income for the taxable year.
21        (5.1) In the case of an individual, trust, or estate,
22    for taxable years beginning prior to January 1, 2015, and
23    ending after December 31, 2014, an amount equal to the sum
24    of (i) 5% of the taxpayer's net income for the period prior
25    to January 1, 2015, as calculated under Section 202.5, and
26    (ii) 3.75% of the taxpayer's net income for the period

 

 

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

 

 

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1    as calculated under Section 202.3.
2        (8) In the case of a corporation, for taxable years
3    beginning after June 30, 1989, and ending prior to January
4    1, 2011, an amount equal to 4.8% of the taxpayer's net
5    income for the taxable year.
6        (9) In the case of a corporation, for taxable years
7    beginning prior to January 1, 2011, and ending after
8    December 31, 2010, an amount equal to the sum of (i) 4.8%
9    of the taxpayer's net income for the period prior to
10    January 1, 2011, as calculated under Section 202.5, and
11    (ii) 7% of the taxpayer's net income for the period after
12    December 31, 2010, as calculated under Section 202.5.
13        (10) In the case of a corporation, for taxable years
14    beginning on or after January 1, 2011, and ending prior to
15    January 1, 2014 January 1, 2015, an amount equal to 7% of
16    the taxpayer's net income for the taxable year.
17        (11) In the case of a corporation, for taxable years
18    beginning prior to January 1, 2014 January 1, 2015, and
19    ending after December 31, 2013 December 31, 2014, an amount
20    equal to the sum of (i) 7% of the taxpayer's net income for
21    the period prior to January 1, 2014 January 1, 2015, as
22    calculated under Section 202.5, and (ii) 5.25% of the
23    taxpayer's net income for the period after December 31,
24    2013 December 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, 2014 January 1, 2015, and

 

 

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1    ending prior to January 1, 2015 January 1, 2025, an amount
2    equal to 6% 5.25% of the taxpayer's net income for the
3    taxable year.
4        (13) In the case of a corporation, for taxable years
5    beginning prior to January 1, 2015 January 1, 2025, and
6    ending after December 31, 2014 December 31, 2024, an amount
7    equal to the sum of (i) 6% 5.25% of the taxpayer's net
8    income for the period prior to January 1, 2015 January 1,
9    2025, as calculated under Section 202.5, and (ii) 4.8% of
10    the taxpayer's net income for the period after December 31,
11    2014 December 31, 2024, as calculated under Section 202.5.
12        (14) In the case of a corporation, for taxable years
13    beginning on or after January 1, 2015 January 1, 2025, an
14    amount equal to 4.8% of the taxpayer's net income for the
15    taxable year.
16    The rates under this subsection (b) are subject to the
17provisions of Section 201.5 and subsection (b-5) of this
18Section.
19    (b-5) In each month beginning with the month in which this
20amendatory Act of the 98th General Assembly takes effect and
21through December 2014, the Department shall monitor the
22seasonally-adjusted unemployment rate reported by the United
23States Department of Labor, Bureau of Labor Statistics, for the
24previous calendar month. Notwithstanding subsection (b) of
25this Section, if the Department finds that (i) the average
26unemployment rate for the previous calendar month exceeds the

 

 

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1average unemployment rate for any of the 3 calendar months
2immediately preceding the previous calendar month by more than
30.3% and (ii) the unemployment rate during the previous
4calendar month was 5.05% or higher, then, beginning on the
5first day of the first month to occur not less than 30 days
6after the Department makes the finding, the Department shall,
7by rule, decrease the rate of tax imposed on corporations under
8subsection (b) of this Section by 0.25% for each 0.3% increase
9in the unemployment rate. The reduced rate of tax under this
10subsection (b-5) shall remain in effect until January 1 of the
11next calendar year or until an additional reduction is required
12under this subsection, whichever occurs sooner. If a rate
13reduction occurs under this subsection (b-5) during calendar
14year 2013 as a result of an increase in the unemployment rate,
15then, (i) beginning on January 1, 2014 and ending on December
1631, 2014, the rate of tax imposed on corporations shall be the
17rate of tax in effect on December 31, 2013, reduced by 1%. For
18taxable years beginning on or after January 1, 2015, the rate
19of tax imposed on corporations shall be 4.8%. Notwithstanding
20any other provision of this subsection to the contrary, the
21rate of tax on corporations may not be reduced to less than
224.8% at any time.
23    The taxpayer may elect to determine net income on a
24specific accounting basis, according to the procedures
25established under Section 202.5, so as to attribute income and
26deduction items to a specific portion of the taxable year. The

 

 

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1rates under this subsection (b-5) are subject to the provisions
2of Section 201.5. The Department may adopt rules to implement
3this subsection.
4    (c) Personal Property Tax Replacement Income Tax.
5Beginning on July 1, 1979 and thereafter, in addition to such
6income tax, there is also hereby imposed the Personal Property
7Tax Replacement Income Tax measured by net income on every
8corporation (including Subchapter S corporations), partnership
9and trust, for each taxable year ending after June 30, 1979.
10Such taxes are imposed on the privilege of earning or receiving
11income in or as a resident of this State. The Personal Property
12Tax Replacement Income Tax shall be in addition to the income
13tax imposed by subsections (a) and (b) of this Section and in
14addition to all other occupation or privilege taxes imposed by
15this State or by any municipal corporation or political
16subdivision thereof.
17    (d) Additional Personal Property Tax Replacement Income
18Tax Rates. The personal property tax replacement income tax
19imposed by this subsection and subsection (c) of this Section
20in the case of a corporation, other than a Subchapter S
21corporation and except as adjusted by subsection (d-1), shall
22be an additional amount equal to 2.85% of such taxpayer's net
23income for the taxable year, except that beginning on January
241, 1981, and thereafter, the rate of 2.85% specified in this
25subsection shall be reduced to 2.5%, and in the case of a
26partnership, trust or a Subchapter S corporation shall be an

 

 

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1additional amount equal to 1.5% of such taxpayer's net income
2for the taxable year.
3    (d-1) Rate reduction for certain foreign insurers. In the
4case of a foreign insurer, as defined by Section 35A-5 of the
5Illinois Insurance Code, whose state or country of domicile
6imposes on insurers domiciled in Illinois a retaliatory tax
7(excluding any insurer whose premiums from reinsurance assumed
8are 50% or more of its total insurance premiums as determined
9under paragraph (2) of subsection (b) of Section 304, except
10that for purposes of this determination premiums from
11reinsurance do not include premiums from inter-affiliate
12reinsurance arrangements), beginning with taxable years ending
13on or after December 31, 1999, the sum of the rates of tax
14imposed by subsections (b) and (d) shall be reduced (but not
15increased) to the rate at which the total amount of tax imposed
16under this Act, net of all credits allowed under this Act,
17shall equal (i) the total amount of tax that would be imposed
18on the foreign insurer's net income allocable to Illinois for
19the taxable year by such foreign insurer's state or country of
20domicile if that net income were subject to all income taxes
21and taxes measured by net income imposed by such foreign
22insurer's state or country of domicile, net of all credits
23allowed or (ii) a rate of zero if no such tax is imposed on such
24income by the foreign insurer's state of domicile. For the
25purposes of this subsection (d-1), an inter-affiliate includes
26a mutual insurer under common management.

 

 

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1        (1) For the purposes of subsection (d-1), in no event
2    shall the sum of the rates of tax imposed by subsections
3    (b) and (d) be reduced below the rate at which the sum of:
4            (A) the total amount of tax imposed on such foreign
5        insurer under this Act for a taxable year, net of all
6        credits allowed under this Act, plus
7            (B) the privilege tax imposed by Section 409 of the
8        Illinois Insurance Code, the fire insurance company
9        tax imposed by Section 12 of the Fire Investigation
10        Act, and the fire department taxes imposed under
11        Section 11-10-1 of the Illinois Municipal Code,
12    equals 1.25% for taxable years ending prior to December 31,
13    2003, or 1.75% for taxable years ending on or after
14    December 31, 2003, of the net taxable premiums written for
15    the taxable year, as described by subsection (1) of Section
16    409 of the Illinois Insurance Code. This paragraph will in
17    no event increase the rates imposed under subsections (b)
18    and (d).
19        (2) Any reduction in the rates of tax imposed by this
20    subsection shall be applied first against the rates imposed
21    by subsection (b) and only after the tax imposed by
22    subsection (a) net of all credits allowed under this
23    Section other than the credit allowed under subsection (i)
24    has been reduced to zero, against the rates imposed by
25    subsection (d).
26    This subsection (d-1) is exempt from the provisions of

 

 

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1Section 250.
2    (e) Investment credit. A taxpayer shall be allowed a credit
3against the Personal Property Tax Replacement Income Tax for
4investment in qualified property.
5        (1) A taxpayer shall be allowed a credit equal to .5%
6    of the basis of qualified property placed in service during
7    the taxable year, provided such property is placed in
8    service on or after July 1, 1984. There shall be allowed an
9    additional credit equal to .5% of the basis of qualified
10    property placed in service during the taxable year,
11    provided such property is placed in service on or after
12    July 1, 1986, and the taxpayer's base employment within
13    Illinois has increased by 1% or more over the preceding
14    year as determined by the taxpayer's employment records
15    filed with the Illinois Department of Employment Security.
16    Taxpayers who are new to Illinois shall be deemed to have
17    met the 1% growth in base employment for the first year in
18    which they file employment records with the Illinois
19    Department of Employment Security. The provisions added to
20    this Section by Public Act 85-1200 (and restored by Public
21    Act 87-895) shall be construed as declaratory of existing
22    law and not as a new enactment. If, in any year, the
23    increase in base employment within Illinois over the
24    preceding year is less than 1%, the additional credit shall
25    be limited to that percentage times a fraction, the
26    numerator of which is .5% and the denominator of which is

 

 

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1    1%, but shall not exceed .5%. The investment credit shall
2    not be allowed to the extent that it would reduce a
3    taxpayer's liability in any tax year below zero, nor may
4    any credit for qualified property be allowed for any year
5    other than the year in which the property was placed in
6    service in Illinois. For tax years ending on or after
7    December 31, 1987, and on or before December 31, 1988, the
8    credit shall be allowed for the tax year in which the
9    property is placed in service, or, if the amount of the
10    credit exceeds the tax liability for that year, whether it
11    exceeds the original liability or the liability as later
12    amended, such excess may be carried forward and applied to
13    the tax liability of the 5 taxable years following the
14    excess credit years if the taxpayer (i) makes investments
15    which cause the creation of a minimum of 2,000 full-time
16    equivalent jobs in Illinois, (ii) is located in an
17    enterprise zone established pursuant to the Illinois
18    Enterprise Zone Act and (iii) is certified by the
19    Department of Commerce and Community Affairs (now
20    Department of Commerce and Economic Opportunity) as
21    complying with the requirements specified in clause (i) and
22    (ii) by July 1, 1986. The Department of Commerce and
23    Community Affairs (now Department of Commerce and Economic
24    Opportunity) shall notify the Department of Revenue of all
25    such certifications immediately. For tax years ending
26    after December 31, 1988, the credit shall be allowed for

 

 

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1    the tax year in which the property is placed in service,
2    or, if the amount of the credit exceeds the tax liability
3    for that year, whether it exceeds the original liability or
4    the liability as later amended, such excess may be carried
5    forward and applied to the tax liability of the 5 taxable
6    years following the excess credit years. The credit shall
7    be applied to the earliest year for which there is a
8    liability. If there is credit from more than one tax year
9    that is available to offset a liability, earlier credit
10    shall be applied first.
11        (2) The term "qualified property" means property
12    which:
13            (A) is tangible, whether new or used, including
14        buildings and structural components of buildings and
15        signs that are real property, but not including land or
16        improvements to real property that are not a structural
17        component of a building such as landscaping, sewer
18        lines, local access roads, fencing, parking lots, and
19        other appurtenances;
20            (B) is depreciable pursuant to Section 167 of the
21        Internal Revenue Code, except that "3-year property"
22        as defined in Section 168(c)(2)(A) of that Code is not
23        eligible for the credit provided by this subsection
24        (e);
25            (C) is acquired by purchase as defined in Section
26        179(d) of the Internal Revenue Code;

 

 

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1            (D) is used in Illinois by a taxpayer who is
2        primarily engaged in manufacturing, or in mining coal
3        or fluorite, or in retailing, or was placed in service
4        on or after July 1, 2006 in a River Edge Redevelopment
5        Zone established pursuant to the River Edge
6        Redevelopment Zone Act; and
7            (E) has not previously been used in Illinois in
8        such a manner and by such a person as would qualify for
9        the credit provided by this subsection (e) or
10        subsection (f).
11        (3) For purposes of this subsection (e),
12    "manufacturing" means the material staging and production
13    of tangible personal property by procedures commonly
14    regarded as manufacturing, processing, fabrication, or
15    assembling which changes some existing material into new
16    shapes, new qualities, or new combinations. For purposes of
17    this subsection (e) the term "mining" shall have the same
18    meaning as the term "mining" in Section 613(c) of the
19    Internal Revenue Code. For purposes of this subsection (e),
20    the term "retailing" means the sale of tangible personal
21    property for use or consumption and not for resale, or
22    services rendered in conjunction with the sale of tangible
23    personal property for use or consumption and not for
24    resale. For purposes of this subsection (e), "tangible
25    personal property" has the same meaning as when that term
26    is used in the Retailers' Occupation Tax Act, and, for

 

 

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1    taxable years ending after December 31, 2008, does not
2    include the generation, transmission, or distribution of
3    electricity.
4        (4) The basis of qualified property shall be the basis
5    used to compute the depreciation deduction for federal
6    income tax purposes.
7        (5) If the basis of the property for federal income tax
8    depreciation purposes is increased after it has been placed
9    in service in Illinois by the taxpayer, the amount of such
10    increase shall be deemed property placed in service on the
11    date of such increase in basis.
12        (6) The term "placed in service" shall have the same
13    meaning as under Section 46 of the Internal Revenue Code.
14        (7) If during any taxable year, any property ceases to
15    be qualified property in the hands of the taxpayer within
16    48 months after being placed in service, or the situs of
17    any qualified property is moved outside Illinois within 48
18    months after being placed in service, the Personal Property
19    Tax Replacement Income Tax for such taxable year shall be
20    increased. Such increase shall be determined by (i)
21    recomputing the investment credit which would have been
22    allowed for the year in which credit for such property was
23    originally allowed by eliminating such property from such
24    computation and, (ii) subtracting such recomputed credit
25    from the amount of credit previously allowed. For the
26    purposes of this paragraph (7), a reduction of the basis of

 

 

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1    qualified property resulting from a redetermination of the
2    purchase price shall be deemed a disposition of qualified
3    property to the extent of such reduction.
4        (8) Unless the investment credit is extended by law,
5    the basis of qualified property shall not include costs
6    incurred after December 31, 2018, except for costs incurred
7    pursuant to a binding contract entered into on or before
8    December 31, 2018.
9        (9) Each taxable year ending before December 31, 2000,
10    a partnership may elect to pass through to its partners the
11    credits to which the partnership is entitled under this
12    subsection (e) for the taxable year. A partner may use the
13    credit allocated to him or her under this paragraph only
14    against the tax imposed in subsections (c) and (d) of this
15    Section. If the partnership makes that election, those
16    credits shall be allocated among the partners in the
17    partnership in accordance with the rules set forth in
18    Section 704(b) of the Internal Revenue Code, and the rules
19    promulgated under that Section, and the allocated amount of
20    the credits shall be allowed to the partners for that
21    taxable year. The partnership shall make this election on
22    its Personal Property Tax Replacement Income Tax return for
23    that taxable year. The election to pass through the credits
24    shall be irrevocable.
25        For taxable years ending on or after December 31, 2000,
26    a partner that qualifies its partnership for a subtraction

 

 

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1    under subparagraph (I) of paragraph (2) of subsection (d)
2    of Section 203 or a shareholder that qualifies a Subchapter
3    S corporation for a subtraction under subparagraph (S) of
4    paragraph (2) of subsection (b) of Section 203 shall be
5    allowed a credit under this subsection (e) equal to its
6    share of the credit earned under this subsection (e) during
7    the taxable year by the partnership or Subchapter S
8    corporation, determined in accordance with the
9    determination of income and distributive share of income
10    under Sections 702 and 704 and Subchapter S of the Internal
11    Revenue Code. This paragraph is exempt from the provisions
12    of Section 250.
13    (f) Investment credit; Enterprise Zone; River Edge
14Redevelopment Zone.
15        (1) A taxpayer shall be allowed a credit against the
16    tax imposed by subsections (a) and (b) of this Section for
17    investment in qualified property which is placed in service
18    in an Enterprise Zone created pursuant to the Illinois
19    Enterprise Zone Act or, for property placed in service on
20    or after July 1, 2006, a River Edge Redevelopment Zone
21    established pursuant to the River Edge Redevelopment Zone
22    Act. For partners, shareholders of Subchapter S
23    corporations, and owners of limited liability companies,
24    if the liability company is treated as a partnership for
25    purposes of federal and State income taxation, there shall
26    be allowed a credit under this subsection (f) to be

 

 

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1    determined in accordance with the determination of income
2    and distributive share of income under Sections 702 and 704
3    and Subchapter S of the Internal Revenue Code. The credit
4    shall be .5% of the basis for such property. The credit
5    shall be available only in the taxable year in which the
6    property is placed in service in the Enterprise Zone or
7    River Edge Redevelopment Zone and shall not be allowed to
8    the extent that it would reduce a taxpayer's liability for
9    the tax imposed by subsections (a) and (b) of this Section
10    to below zero. For tax years ending on or after December
11    31, 1985, the credit shall be allowed for the tax year in
12    which the property is placed in service, or, if the amount
13    of the credit exceeds the tax liability for that year,
14    whether it exceeds the original liability or the liability
15    as later amended, such excess may be carried forward and
16    applied to the tax liability of the 5 taxable years
17    following the excess credit year. The credit shall be
18    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, the credit
21    accruing first in time shall be applied first.
22        (2) The term qualified property means property which:
23            (A) is tangible, whether new or used, including
24        buildings and structural components of buildings;
25            (B) is depreciable pursuant to Section 167 of the
26        Internal Revenue Code, except that "3-year property"

 

 

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1        as defined in Section 168(c)(2)(A) of that Code is not
2        eligible for the credit provided by this subsection
3        (f);
4            (C) is acquired by purchase as defined in Section
5        179(d) of the Internal Revenue Code;
6            (D) is used in the Enterprise Zone or River Edge
7        Redevelopment Zone by the taxpayer; and
8            (E) has not been previously used in Illinois in
9        such a manner and by such a person as would qualify for
10        the credit provided by this subsection (f) or
11        subsection (e).
12        (3) The basis of qualified property shall be the basis
13    used to compute the depreciation deduction for federal
14    income tax purposes.
15        (4) If the basis of the property for federal income tax
16    depreciation purposes is increased after it has been placed
17    in service in the Enterprise Zone or River Edge
18    Redevelopment Zone by the taxpayer, the amount of such
19    increase shall be deemed property placed in service on the
20    date of such increase in basis.
21        (5) The term "placed in service" shall have the same
22    meaning as under Section 46 of the Internal Revenue Code.
23        (6) If during any taxable year, any property ceases to
24    be qualified property in the hands of the taxpayer within
25    48 months after being placed in service, or the situs of
26    any qualified property is moved outside the Enterprise Zone

 

 

HB4718- 19 -LRB098 17115 HLH 52202 b

1    or River Edge Redevelopment Zone within 48 months after
2    being placed in service, the tax imposed under subsections
3    (a) and (b) of this Section for such taxable year shall be
4    increased. Such increase shall be determined by (i)
5    recomputing the investment credit which would have been
6    allowed for the year in which credit for such property was
7    originally allowed by eliminating such property from such
8    computation, and (ii) subtracting such recomputed credit
9    from the amount of credit previously allowed. For the
10    purposes of this paragraph (6), a reduction of the basis of
11    qualified property resulting from a redetermination of the
12    purchase price shall be deemed a disposition of qualified
13    property to the extent of such reduction.
14        (7) There shall be allowed an additional credit equal
15    to 0.5% of the basis of qualified property placed in
16    service during the taxable year in a River Edge
17    Redevelopment Zone, provided such property is placed in
18    service on or after July 1, 2006, and the taxpayer's base
19    employment within Illinois has increased by 1% or more over
20    the preceding year as determined by the taxpayer's
21    employment records filed with the Illinois Department of
22    Employment Security. Taxpayers who are new to Illinois
23    shall be deemed to have met the 1% growth in base
24    employment for the first year in which they file employment
25    records with the Illinois Department of Employment
26    Security. If, in any year, the increase in base employment

 

 

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1    within Illinois over the preceding year is less than 1%,
2    the additional credit shall be limited to that percentage
3    times a fraction, the numerator of which is 0.5% and the
4    denominator of which is 1%, but shall not exceed 0.5%.
5    (g) (Blank).
6    (h) Investment credit; High Impact Business.
7        (1) Subject to subsections (b) and (b-5) of Section 5.5
8    of the Illinois Enterprise Zone Act, a taxpayer shall be
9    allowed a credit against the tax imposed by subsections (a)
10    and (b) of this Section for investment in qualified
11    property which is placed in service by a Department of
12    Commerce and Economic Opportunity designated High Impact
13    Business. The credit shall be .5% of the basis for such
14    property. The credit shall not be available (i) until the
15    minimum investments in qualified property set forth in
16    subdivision (a)(3)(A) of Section 5.5 of the Illinois
17    Enterprise Zone Act have been satisfied or (ii) until the
18    time authorized in subsection (b-5) of the Illinois
19    Enterprise Zone Act for entities designated as High Impact
20    Businesses under subdivisions (a)(3)(B), (a)(3)(C), and
21    (a)(3)(D) of Section 5.5 of the Illinois Enterprise Zone
22    Act, and shall not be allowed to the extent that it would
23    reduce a taxpayer's liability for the tax imposed by
24    subsections (a) and (b) of this Section to below zero. The
25    credit applicable to such investments shall be taken in the
26    taxable year in which such investments have been completed.

 

 

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1    The credit for additional investments beyond the minimum
2    investment by a designated high impact business authorized
3    under subdivision (a)(3)(A) of Section 5.5 of the Illinois
4    Enterprise Zone Act shall be available only in the taxable
5    year in which the property is placed in service and shall
6    not be allowed to the extent that it would reduce a
7    taxpayer's liability for the tax imposed by subsections (a)
8    and (b) of this Section to below zero. For tax years ending
9    on or after December 31, 1987, the credit shall be allowed
10    for the tax year in which the property is placed in
11    service, or, if the amount of the credit exceeds the tax
12    liability for that year, whether it exceeds the original
13    liability or the liability as later amended, such excess
14    may be carried forward and applied to the tax liability of
15    the 5 taxable years following the excess credit year. The
16    credit shall be applied to the earliest year for which
17    there is a liability. If there is credit from more than one
18    tax year that is available to offset a liability, the
19    credit accruing first in time shall be applied first.
20        Changes made in this subdivision (h)(1) by Public Act
21    88-670 restore changes made by Public Act 85-1182 and
22    reflect existing law.
23        (2) The term qualified property means property which:
24            (A) is tangible, whether new or used, including
25        buildings and structural components of buildings;
26            (B) is depreciable pursuant to Section 167 of the

 

 

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

 

 

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

 

 

HB4718- 24 -LRB098 17115 HLH 52202 b

1(d) of this Section. This credit shall be computed by
2multiplying the tax imposed by subsections (c) and (d) of this
3Section by a fraction, the numerator of which is base income
4allocable to Illinois and the denominator of which is Illinois
5base income, and further multiplying the product by the tax
6rate imposed by subsections (a) and (b) of this Section.
7    Any credit earned on or after December 31, 1986 under this
8subsection which is unused in the year the credit is computed
9because it exceeds the tax liability imposed by subsections (a)
10and (b) for that year (whether it exceeds the original
11liability or the liability as later amended) may be carried
12forward and applied to the tax liability imposed by subsections
13(a) and (b) of the 5 taxable years following the excess credit
14year, provided that no credit may be carried forward to any
15year ending on or after December 31, 2003. This credit shall be
16applied first to the earliest year for which there is a
17liability. If there is a credit under this subsection from more
18than one tax year that is available to offset a liability the
19earliest credit arising under this subsection shall be applied
20first.
21    If, during any taxable year ending on or after December 31,
221986, the tax imposed by subsections (c) and (d) of this
23Section for which a taxpayer has claimed a credit under this
24subsection (i) is reduced, the amount of credit for such tax
25shall also be reduced. Such reduction shall be determined by
26recomputing the credit to take into account the reduced tax

 

 

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1imposed by subsections (c) and (d). If any portion of the
2reduced amount of credit has been carried to a different
3taxable year, an amended return shall be filed for such taxable
4year to reduce the amount of credit claimed.
5    (j) Training expense credit. Beginning with tax years
6ending on or after December 31, 1986 and prior to December 31,
72003, a taxpayer shall be allowed a credit against the tax
8imposed by subsections (a) and (b) under this Section for all
9amounts paid or accrued, on behalf of all persons employed by
10the taxpayer in Illinois or Illinois residents employed outside
11of Illinois by a taxpayer, for educational or vocational
12training in semi-technical or technical fields or semi-skilled
13or skilled fields, which were deducted from gross income in the
14computation of taxable income. The credit against the tax
15imposed by subsections (a) and (b) shall be 1.6% of such
16training expenses. For partners, shareholders of subchapter S
17corporations, and owners of limited liability companies, if the
18liability company is treated as a partnership for purposes of
19federal and State income taxation, there shall be allowed a
20credit under this subsection (j) to be determined in accordance
21with the determination of income and distributive share of
22income under Sections 702 and 704 and subchapter S of the
23Internal Revenue Code.
24    Any credit allowed under this subsection which is unused in
25the year the credit is earned may be carried forward to each of
26the 5 taxable years following the year for which the credit is

 

 

HB4718- 26 -LRB098 17115 HLH 52202 b

1first computed until it is used. This credit shall be applied
2first to the earliest year for which there is a liability. If
3there is a credit under this subsection from more than one tax
4year that is available to offset a liability the earliest
5credit arising under this subsection shall be applied first. No
6carryforward credit may be claimed in any tax year ending on or
7after December 31, 2003.
8    (k) Research and development credit. For tax years ending
9after July 1, 1990 and prior to December 31, 2003, and
10beginning again for tax years ending on or after December 31,
112004, and ending prior to January 1, 2016, a taxpayer shall be
12allowed a credit against the tax imposed by subsections (a) and
13(b) of this Section for increasing research activities in this
14State. The credit allowed against the tax imposed by
15subsections (a) and (b) shall be equal to 6 1/2% of the
16qualifying expenditures for increasing research activities in
17this State. 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 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    For purposes of this subsection, "qualifying expenditures"
26means the qualifying expenditures as defined for the federal

 

 

HB4718- 27 -LRB098 17115 HLH 52202 b

1credit for increasing research activities which would be
2allowable under Section 41 of the Internal Revenue Code and
3which are conducted in this State, "qualifying expenditures for
4increasing research activities in this State" means the excess
5of qualifying expenditures for the taxable year in which
6incurred over qualifying expenditures for the base period,
7"qualifying expenditures for the base period" means the average
8of the qualifying expenditures for each year in the base
9period, and "base period" means the 3 taxable years immediately
10preceding the taxable year for which the determination is being
11made.
12    Any credit in excess of the tax liability for the taxable
13year may be carried forward. A taxpayer may elect to have the
14unused credit shown on its final completed return carried over
15as a credit against the tax liability for the following 5
16taxable years or until it has been fully used, whichever occurs
17first; provided that no credit earned in a tax year ending
18prior to December 31, 2003 may be carried forward to any year
19ending on or after December 31, 2003.
20    If an unused credit is carried forward to a given year from
212 or more earlier years, that credit arising in the earliest
22year will be applied first against the tax liability for the
23given year. If a tax liability for the given year still
24remains, the credit from the next earliest year will then be
25applied, and so on, until all credits have been used or no tax
26liability for the given year remains. Any remaining unused

 

 

HB4718- 28 -LRB098 17115 HLH 52202 b

1credit or credits then will be carried forward to the next
2following year in which a tax liability is incurred, except
3that no credit can be carried forward to a year which is more
4than 5 years after the year in which the expense for which the
5credit is given was incurred.
6    No inference shall be drawn from this amendatory Act of the
791st General Assembly in construing this Section for taxable
8years beginning before January 1, 1999.
9    (l) Environmental Remediation Tax Credit.
10        (i) For tax years ending after December 31, 1997 and on
11    or before December 31, 2001, a taxpayer shall be allowed a
12    credit against the tax imposed by subsections (a) and (b)
13    of this Section for certain amounts paid for unreimbursed
14    eligible remediation costs, as specified in this
15    subsection. For purposes of this Section, "unreimbursed
16    eligible remediation costs" means costs approved by the
17    Illinois Environmental Protection Agency ("Agency") under
18    Section 58.14 of the Environmental Protection Act that were
19    paid in performing environmental remediation at a site for
20    which a No Further Remediation Letter was issued by the
21    Agency and recorded under Section 58.10 of the
22    Environmental Protection Act. The credit must be claimed
23    for the taxable year in which Agency approval of the
24    eligible remediation costs is granted. The credit is not
25    available to any taxpayer if the taxpayer or any related
26    party caused or contributed to, in any material respect, a

 

 

HB4718- 29 -LRB098 17115 HLH 52202 b

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

 

 

HB4718- 30 -LRB098 17115 HLH 52202 b

1    allowed a credit under this subsection to be determined in
2    accordance with the determination of income and
3    distributive share of income under Sections 702 and 704 and
4    subchapter S of the Internal Revenue Code.
5        (ii) A credit allowed under this subsection that is
6    unused in the year the credit is earned may be carried
7    forward to each of the 5 taxable years following the year
8    for which the credit is first earned until it is used. The
9    term "unused credit" does not include any amounts of
10    unreimbursed eligible remediation costs in excess of the
11    maximum credit per site authorized under paragraph (i).
12    This credit shall be applied first to the earliest year for
13    which there is a liability. If there is a credit under this
14    subsection from more than one tax year that is available to
15    offset a liability, the earliest credit arising under this
16    subsection shall be applied first. A credit allowed under
17    this subsection may be sold to a buyer as part of a sale of
18    all or part of the remediation site for which the credit
19    was granted. The purchaser of a remediation site and the
20    tax credit shall succeed to the unused credit and remaining
21    carry-forward period of the seller. To perfect the
22    transfer, the assignor shall record the transfer in the
23    chain of title for the site and provide written notice to
24    the Director of the Illinois Department of Revenue of the
25    assignor's intent to sell the remediation site and the
26    amount of the tax credit to be transferred as a portion of

 

 

HB4718- 31 -LRB098 17115 HLH 52202 b

1    the sale. In no event may a credit be transferred to any
2    taxpayer if the taxpayer or a related party would not be
3    eligible under the provisions of subsection (i).
4        (iii) For purposes of this Section, the term "site"
5    shall have the same meaning as under Section 58.2 of the
6    Environmental Protection Act.
7    (m) Education expense credit. Beginning with tax years
8ending after December 31, 1999, a taxpayer who is the custodian
9of one or more qualifying pupils shall be allowed a credit
10against the tax imposed by subsections (a) and (b) of this
11Section for qualified education expenses incurred on behalf of
12the qualifying pupils. The credit shall be equal to 25% of
13qualified education expenses, but in no event may the total
14credit under this subsection claimed by a family that is the
15custodian of qualifying pupils exceed $500. In no event shall a
16credit under this subsection reduce the taxpayer's liability
17under this Act to less than zero. This subsection is exempt
18from the provisions of Section 250 of this Act.
19    For purposes of this subsection:
20    "Qualifying pupils" means individuals who (i) are
21residents of the State of Illinois, (ii) are under the age of
2221 at the close of the school year for which a credit is
23sought, and (iii) during the school year for which a credit is
24sought were full-time pupils enrolled in a kindergarten through
25twelfth grade education program at any school, as defined in
26this subsection.

 

 

HB4718- 32 -LRB098 17115 HLH 52202 b

1    "Qualified education expense" means the amount incurred on
2behalf of a qualifying pupil in excess of $250 for tuition,
3book fees, and lab fees at the school in which the pupil is
4enrolled during the regular school year.
5    "School" means any public or nonpublic elementary or
6secondary school in Illinois that is in compliance with Title
7VI of the Civil Rights Act of 1964 and attendance at which
8satisfies the requirements of Section 26-1 of the School Code,
9except that nothing shall be construed to require a child to
10attend any particular public or nonpublic school to qualify for
11the credit under this Section.
12    "Custodian" means, with respect to qualifying pupils, an
13Illinois resident who is a parent, the parents, a legal
14guardian, or the legal guardians of the qualifying pupils.
15    (n) River Edge Redevelopment Zone site remediation tax
16credit.
17        (i) For tax years ending on or after December 31, 2006,
18    a taxpayer shall be allowed a credit against the tax
19    imposed by subsections (a) and (b) of this Section for
20    certain amounts paid for unreimbursed eligible remediation
21    costs, as specified in this subsection. For purposes of
22    this Section, "unreimbursed eligible remediation costs"
23    means costs approved by the Illinois Environmental
24    Protection Agency ("Agency") under Section 58.14a of the
25    Environmental Protection Act that were paid in performing
26    environmental remediation at a site within a River Edge

 

 

HB4718- 33 -LRB098 17115 HLH 52202 b

1    Redevelopment Zone for which a No Further Remediation
2    Letter was issued by the Agency and recorded under Section
3    58.10 of the Environmental Protection Act. The credit must
4    be claimed for the taxable year in which Agency approval of
5    the eligible remediation costs is granted. The credit is
6    not available to any taxpayer if the taxpayer or any
7    related party caused or contributed to, in any material
8    respect, a release of regulated substances on, in, or under
9    the site that was identified and addressed by the remedial
10    action pursuant to the Site Remediation Program of the
11    Environmental Protection Act. Determinations as to credit
12    availability for purposes of this Section shall be made
13    consistent with rules adopted by the Pollution Control
14    Board pursuant to the Illinois Administrative Procedure
15    Act for the administration and enforcement of Section 58.9
16    of the Environmental Protection Act. For purposes of this
17    Section, "taxpayer" includes a person whose tax attributes
18    the taxpayer has succeeded to under Section 381 of the
19    Internal Revenue Code and "related party" includes the
20    persons disallowed a deduction for losses by paragraphs
21    (b), (c), and (f)(1) of Section 267 of the Internal Revenue
22    Code by virtue of being a related taxpayer, as well as any
23    of its partners. The credit allowed against the tax imposed
24    by subsections (a) and (b) shall be equal to 25% of the
25    unreimbursed eligible remediation costs in excess of
26    $100,000 per site.

 

 

HB4718- 34 -LRB098 17115 HLH 52202 b

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

 

 

HB4718- 35 -LRB098 17115 HLH 52202 b

1of Medical Cannabis Pilot Program, a surcharge is imposed on
2all taxpayers on income arising from the sale or exchange of
3capital assets, depreciable business property, real property
4used in the trade or business, and Section 197 intangibles of
5an organization registrant under the Compassionate Use of
6Medical Cannabis Pilot Program Act. The amount of the surcharge
7is equal to the amount of federal income tax liability for the
8taxable year attributable to those sales and exchanges. The
9surcharge imposed does not apply if:
10        (1) the medical cannabis cultivation center
11    registration, medical cannabis dispensary registration, or
12    the property of a registration is transferred as a result
13    of any of the following:
14            (A) bankruptcy, a receivership, or a debt
15        adjustment initiated by or against the initial
16        registration or the substantial owners of the initial
17        registration;
18            (B) cancellation, revocation, or termination of
19        any registration by the Illinois Department of Public
20        Health;
21            (C) a determination by the Illinois Department of
22        Public Health that transfer of the registration is in
23        the best interests of Illinois qualifying patients as
24        defined by the Compassionate Use of Medical Cannabis
25        Pilot Program Act;
26            (D) the death of an owner of the equity interest in

 

 

HB4718- 36 -LRB098 17115 HLH 52202 b

1        a registrant;
2            (E) the acquisition of a controlling interest in
3        the stock or substantially all of the assets of a
4        publicly traded company;
5            (F) a transfer by a parent company to a wholly
6        owned subsidiary; or
7            (G) the transfer or sale to or by one person to
8        another person where both persons were initial owners
9        of the registration when the registration was issued;
10        or
11        (2) the cannabis cultivation center registration,
12    medical cannabis dispensary registration, or the
13    controlling interest in a registrant's property is
14    transferred in a transaction to lineal descendants in which
15    no gain or loss is recognized or as a result of a
16    transaction in accordance with Section 351 of the Internal
17    Revenue Code in which no gain or loss is recognized.
18(Source: P.A. 97-2, eff. 5-6-11; 97-636, eff. 6-1-12; 97-905,
19eff. 8-7-12; 98-109, eff. 7-25-13; 98-122, eff. 1-1-14; revised
208-9-13.)
 
21    Section 99. Effective date. This Act takes effect upon
22becoming law.