Public Act 093-0030
Public Act 93-0030 of the 93rd General Assembly
Public Act 93-0030
SB1725 Enrolled LRB093 02872 SJM 02888 b
AN ACT concerning taxation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Estate and Generation-Skipping
Transfer Tax Act is amended by changing Sections 2, 3, 5, 6,
7, 8, and 10 as follows:
(35 ILCS 405/2) (from Ch. 120, par. 405A-2)
Sec. 2. Definitions.
"Federal estate tax" means the tax due to the United
States with respect to a taxable transfer under Chapter 11 of
the Internal Revenue Code.
"Federal generation-skipping transfer tax" means the tax
due to the United States with respect to a taxable transfer
under Chapter 13 of the Internal Revenue Code.
"Federal return" means the federal estate tax return with
respect to the federal estate tax and means the federal
generation-skipping transfer tax return with respect to the
federal generation-skipping transfer tax.
"Federal transfer tax" means the federal estate tax or
the federal generation-skipping transfer tax.
"Illinois estate tax" means the tax due to this State
with respect to a taxable transfer that gives rise to a
federal estate tax.
"Illinois generation-skipping transfer tax" means the tax
due to this State with respect to a taxable transfer that
gives rise to a federal generation-skipping transfer tax.
"Illinois transfer tax" means the Illinois estate tax or
the Illinois generation-skipping transfer tax.
"Internal Revenue Code" means, unless otherwise provided,
the Internal Revenue Code of 1986, as amended from time to
time.
"Non-resident trust" means a trust that is not a resident
of this State for purposes of the Illinois Income Tax Act, as
amended from time to time.
"Person" means and includes any individual, trust,
estate, partnership, association, company or corporation.
"Qualified heir" means a qualified heir as defined in
Section 2032A(e)(1) of the Internal Revenue Code.
"Resident trust" means a trust that is a resident of this
State for purposes of the Illinois Income Tax Act, as amended
from time to time.
"State" means any state, territory or possession of the
United States and the District of Columbia.
"State tax credit" means:
(a) For persons dying on or after January 1, 2003 and
through December 31, 2005, an amount equal to the full credit
calculable under Section 2011 or Section 2604 of the Internal
Revenue Code as the credit would have been computed and
allowed under the Internal Revenue Code as in effect on
December 31, 2001, without the reduction in the State Death
Tax Credit as provided in Section 2011(b)(2) or the
termination of the State Death Tax Credit as provided in
Section 2011(f) as enacted by the Economic Growth and Tax
Relief Reconciliation Act of 2001, but recognizing the
increased applicable exclusion amount through December 31,
2005.
(b) For persons dying after December 31, 2005 and on or
before December 31, 2009, an amount equal to the full credit
calculable under Section 2011 or 2604 of the Internal Revenue
Code as the credit would have been computed and allowed under
the Internal Revenue Code as in effect on December 31, 2001,
without the reduction in the State Death Tax Credit as
provided in Section 2011(b)(2) or the termination of the
State Death Tax Credit as provided in Section 2011(f) as
enacted by the Economic Growth and Tax Relief Reconciliation
Act of 2001, but recognizing the exclusion amount of only
$2,000,000.
(c) For persons dying after December 31, 2009, the
credit for state tax allowable under Section 2011 or Section
2604 of the Internal Revenue Code.
"Taxable transfer" means an event that gives rise to a
state tax credit, including any credit allowable as a result
of the imposition of an additional tax under Section 2032A(c)
of the Internal Revenue Code.
"Transferee" means a transferee within the meaning of
Section 2603(a)(1) and Section 6901(h) of the Internal
Revenue Code.
"Transferred property" means:
(1) With respect to a taxable transfer occurring at
the death of an individual that results in the imposition
of federal estate tax, the deceased individual's gross
estate as defined in Section 2031 of the Internal Revenue
Code.
(2) With respect to a taxable transfer occurring as
a result of a taxable termination as defined in Section
2612(a) of the Internal Revenue Code, the taxable amount
determined under Section 2622(a) of the Internal Revenue
Code.
(3) With respect to a taxable transfer occurring as
a result of a taxable distribution as defined in Section
2612(b) of the Internal Revenue Code, the taxable amount
determined under Section 2621(a) of the Internal Revenue
Code.
(4) With respect to an event which causes the
imposition of an additional estate tax under Section
2032A(c) of the Internal Revenue Code, the qualified real
property that was disposed of or which ceased to be used
for the qualified use, within the meaning of Section
2032A(c)(1) of the Internal Revenue Code.
"Trust" includes a trust as defined in Section 2652(b)(1)
of the Internal Revenue Code.
(Source: P.A. 86-737.)
(35 ILCS 405/3) (from Ch. 120, par. 405A-3)
Sec. 3. Illinois estate tax.
(a) Imposition of Tax. An Illinois estate tax is
imposed on every taxable transfer involving transferred
property having a tax situs within the State of Illinois.
(b) Amount of tax. The amount of the Illinois estate
tax shall be the maximum state tax credit, as defined in
Section 2 of this Act, allowable with respect to the taxable
transfer reduced by the lesser of:
(1) the amount of the state tax credit paid to any
other state or states; and
(2) the amount determined by multiplying the
maximum state tax credit allowable with respect to the
taxable transfer by the percentage which the gross value
of the transferred property not having a tax situs in
Illinois bears to the gross value of the total
transferred property.
(Source: P.A. 86-737.)
(35 ILCS 405/5) (from Ch. 120, par. 405A-5)
Sec. 5. Determination of tax situs and valuation.
(a) Illinois estate tax.
(1) For purposes of the Illinois estate tax, in the
case of a decedent who was a resident of this State at
the time of death, all of the transferred property has a
tax situs in this State, including any such property held
in trust, except real or tangible personal property
physically situated in another state.
(2) For purposes of the Illinois estate tax, in the
case of a decedent who was not a resident of this State
at the time of death, the transferred property having a
tax situs in this State, including any such property held
in trust, is only the real estate and tangible personal
property physically situated in this State.
(b) Illinois generation-skipping transfer tax.
(1) For purposes of the Illinois
generation-skipping transfer tax, all transferred
property from or in a resident trust has a tax situs in
this State, including any such property held in trust,
except real or tangible personal property physically
situated in another state on the date that the taxable
transfer occurs.
(2) For purposes of the Illinois
generation-skipping transfer tax, none of the transferred
property from or in a non-resident trust has a tax situs
in this State, except that portion of the transferred
property that is real or tangible personal property
physically situated in this State, including any such
property held in trust, on the date that the taxable
transfer occurs.
(c) Valuation. Except as otherwise expressly provided,
for purposes of this Act, the gross value of transferred
property shall be its value as finally determined for
purposes of the related federal transfer tax, undiminished by
any mortgages, liens or other encumbrances upon such
transferred property for which the decedent was personally
liable.
(Source: P.A. 86-737.)
(35 ILCS 405/6) (from Ch. 120, par. 405A-6)
Sec. 6. Returns and payments.
(a) Due Dates. The Illinois transfer tax shall be paid
and the Illinois transfer tax return shall be filed on the
due date or dates, respectively, including extensions, for
paying the related federal transfer tax and filing the
related federal return.
(b) Installment payments and deferral. In the event
that any portion of the federal transfer tax is deferred or
to be paid in installments under the provisions of the
Internal Revenue Code, the portion of the Illinois transfer
tax which is subject to deferral or payable in installments
shall be determined by multiplying the Illinois transfer tax
by a fraction, the numerator of which is the gross value of
the assets included in the transferred property having a tax
situs in this State and which give rise to the deferred or
installment payment under the Internal Revenue Code, and the
denominator of which is the gross value of all assets
included in the transferred property having a tax situs in
this State. Deferred payments and installment payments, with
interest, shall be paid at the same time and in the same
manner as payments of the federal transfer tax are required
to be made under the applicable Sections of the Internal
Revenue Code, provided that the rate of interest on unpaid
amounts of Illinois transfer tax shall be determined under
this Act. Acceleration of payment under this Section shall
occur under the same circumstances and in the same manner as
provided in the Internal Revenue Code.
(c) Who shall file and pay. The Illinois transfer tax
return (including any supplemental or amended return) shall
be filed, and the Illinois transfer tax (including any
additional tax that may become due) shall be paid by the same
person or persons, respectively, who are required to pay the
related federal transfer tax and file the related federal
return, or who would have been required to pay a federal
transfer tax and file a federal return if a federal transfer
tax were due.
(d) Where to file return. The executed Illinois
transfer tax return shall be filed with the Attorney General.
In addition, a copy of the Illinois transfer tax return shall
be filed with the county treasurer to whom the Illinois
transfer tax is paid, determined under subsection (e) of this
Section.
(e) Where to pay tax. The Illinois transfer tax shall
be paid to the treasurer of the county determined under the
following rules:
(1) Illinois Estate Tax. The Illinois estate tax
shall be paid to the treasurer of the county in which the
decedent was a resident on the date of the decedent's
death or, if the decedent was not a resident of this
State on the date of death, the county in which the
greater part, by gross value, of the transferred property
with a tax situs in this State is located.
(2) Illinois Generation-Skipping Transfer Tax. The
Illinois generation-skipping transfer tax involving
transferred property from or in a resident trust shall be
paid to the county treasurer for the county in which the
grantor resided at the time the trust became irrevocable
(in the case of an inter vivos trust) or the county in
which the decedent resided at death (in the case of a
trust created by the will of a decedent). In the case of
an Illinois generation-skipping transfer tax involving
transferred property from or in a non-resident trust, the
Illinois generation-skipping transfer tax shall be paid
to the county treasurer for the county in which the
greater part, by gross value, of the transferred property
with a tax situs in this State is located.
(f) Forms; confidentiality. The Illinois transfer tax
return shall be in all respects in the manner and form
prescribed by the regulations of the Attorney General. At
the same time the Illinois transfer tax return is filed, the
person required to file shall also file with the Attorney
General a copy of the related federal return. For individuals
dying after December 31, 2005, in cases where no federal
return is required to be filed, the person required to file
an Illinois return shall also file with the Attorney General
schedules of assets in the manner and form prescribed by the
Attorney General. The Illinois transfer tax return and the
copy of the federal return filed with the Attorney General or
any county treasurer shall be confidential, and the Attorney
General, each county treasurer and all of their assistants or
employees are prohibited from divulging in any manner any of
the contents of those returns, except only in a proceeding
instituted under the provisions of this Act.
(g) County Treasurer shall accept payment. No county
treasurer shall refuse to accept payment of any amount due
under this Act on the grounds that the county treasurer has
not yet received a copy of the appropriate Illinois transfer
tax return.
(Source: P.A. 86-737.)
(35 ILCS 405/7) (from Ch. 120, par. 405A-7)
Sec. 7. Supplemental returns; refunds.
(a) Supplemental returns. If the State tax credit is
increased after the filing of the Illinois transfer tax
return, the person or persons required to file the Illinois
transfer tax return and pay the Illinois transfer tax shall
file a supplemental Illinois transfer tax return. The
supplemental return shall be filed and the additional tax
shall be paid in the same place and manner as provided in
Section 6 of this Act. The due date for the supplemental
return and for the payment of the additional tax reported in
the supplemental return shall be no later than 3 months after
the earliest of:
(1) the date an amended, related federal return is
filed;
(2) the date an increase in the federal transfer
tax is paid or accepted in writing; or
(3) the date the Internal Revenue Service issues a
request for evidence of payment of the State tax credit;
or
(4) the date that any increase to the taxable
estate is discovered;
provided that if the related federal transfer tax may be
deferred or paid in installments, then part or all of the
additional Illinois transfer tax may be deferred or paid in
installments under rules consistent with subsection (b) of
Section 6 of this Act.
(b) Refunds. If the state tax credit is reduced after
the filing of the Illinois transfer tax return, the person
who paid the Illinois transfer tax (or the person upon whom
the burden of payment fell) shall file an amended Illinois
transfer tax return and shall be entitled to a refund of tax
or interest paid on the Illinois transfer tax. No interest
shall be paid on any amount refunded.
(Source: P.A. 86-737.)
(35 ILCS 405/8) (from Ch. 120, par. 405A-8)
Sec. 8. Penalties for failure to file tax return or to
pay tax.
(a) Failure to file return. In case of failure to file
any return required under this Act with the Attorney General
by the due date, unless it is shown that the failure to file
is due to a reasonable cause, there shall be added to the
amount required to be shown as tax on the return 5% of the
amount of that tax (or 5% of the additional tax due in the
case of a supplemental return) if the failure is for not more
than one month from the due date, with an additional 5% for
each additional month or fraction of a month thereafter
during which the failure to file continues, not exceeding in
the aggregate 25% of the tax or, in the case of a
supplemental return, 25% of the additional tax.
(b) Failure to pay tax. In the case of failure to pay
the amount of tax shown due on any return required under this
Act on or before the due date for payment of that tax, unless
it is shown that the failure to pay is due to reasonable
cause, there shall be added to the unpaid amount of the tax
0.5% of that unpaid amount if the failure is for not more
than one month from the due date, with an additional 0.5% for
each additional month or fraction of a month thereafter
during which the failure to pay continues, not exceeding in
the aggregate 25% of the unpaid amount.
(c) Extensions of Time.
(1) Internal Revenue Service Extensions. If the
date for filing the related federal return or the date
for payment of the related federal transfer tax is
extended by the Internal Revenue Service, the filing of
the return and payment of the tax imposed by this Act
shall be due on the respective date specified by the
Internal Revenue Service in granting a request for
extension. If the request for extension is granted by
the Internal Revenue Service, the person required to file
the Illinois transfer tax return shall furnish the
Attorney General with a copy of the request for extension
showing approval of the extension by the Internal Revenue
Service. If a request for extension of time to file the
federal return is denied by the Internal Revenue Service,
no penalty shall be due under this Act if the return
required by this Act is filed within the time specified
by the Internal Revenue Service for filing the federal
return. If a request for extension of time to pay the
federal transfer tax is denied by the Internal Revenue
Service, no penalty shall be due under this Act if the
tax is paid within the time specified by the Internal
Revenue Service for paying the federal transfer tax.
(2) Attorney General Extensions. The person or
persons required to file the Illinois transfer tax return
and to pay the Illinois transfer tax may apply to the
Attorney General for an extension of time to file the
Illinois transfer tax return or to pay the Illinois
transfer tax. The application must establish reasonable
cause why it is impossible or impractical to file a
reasonably complete return or to pay the full amount of
tax due by the due date. The Attorney General may for
reasonable cause extend the time for filing the return or
paying the tax for a reasonable period from the date
fixed for filing the return or paying the tax.
(d) Waiver of Penalties.
(1) Internal Revenue Service Waiver. If the
Internal Revenue Service waives the penalty provided in
the Internal Revenue Code for failure to timely file the
related federal return or the penalty for failure to
timely pay the related federal transfer tax liability,
such waiver or waivers shall be deemed to constitute
reasonable cause for purposes of this Section.
(2) Attorney General Waiver. The Attorney General
may waive the penalty or penalties for failure to file or
pay for reasonable cause, notwithstanding the failure of
the Internal Revenue Service to waive the penalty or
penalties for failure to timely file the federal transfer
tax return or to pay the federal transfer tax.
(Source: P.A. 86-737.)
(35 ILCS 405/10) (from Ch. 120, par. 405A-10)
Sec. 10. Liens and Personal Liability.
(a) Lien for Illinois transfer tax. Unless the Illinois
transfer tax is sooner paid in full, the Illinois transfer
tax shall be a lien in favor of this State upon the
transferred property having a tax situs within this State for
10 years from the date of the taxable transfer, or, in the
case of Illinois transfer tax subject to deferral or payable
in installments, the later of 10 years from the date of the
taxable transfer or one year after the last deferred or
installment payment may become due. The lien imposed by this
Section on the transferred property shall not be valid as
against any purchaser, mortgagee, pledgee, or other holder of
a security interest for a full and adequate consideration in
money or money's worth; provided, however, that any property,
consideration or proceeds received as a result of any sale,
mortgage, pledge or granting of a security interest shall
remain subject to the lien imposed by this Section. In
addition, the lien imposed by this Section on the transferred
property shall be subject to the exceptions set forth in
Section 6324(c)(i) of the Internal Revenue Code as if the
lien were a lien imposed by that Section. In no event shall
the issuance by the Attorney General of a release of the lien
imposed by this subsection be required with respect to the
sale, mortgage, pledge, granting of a security interest in,
transfer or distribution of transferred property.
(b) Special lien for property valued under Section 2032A
of the Internal Revenue Code. In the event the Illinois
estate tax is reduced as a result of an election under
Section 2032A of the Internal Revenue Code, then an amount
equal to the additional Illinois estate tax that would be due
in the absence of such an election shall be a lien in favor
of this State on the transferred property that has a tax
situs in this State and is subject to such election. The
lien imposed by this subsection shall arise at the time an
election is filed under Section 2032A of the Internal Revenue
Code and shall continue with respect to such transferred
property:
(1) until the liability for the Illinois estate tax
with respect to such transferred property has been
satisfied or has become unenforceable by reason of lapse
of time or otherwise; or
(2) until it is established to the satisfaction of
the Attorney General that no further tax liability may
arise under this Act with respect to such transferred
property.
The lien imposed by this subsection shall not be valid as
against any purchaser, mortgagee, pledgee, other holder of a
security interest, mechanic's lien, or judgment lien creditor
until notice of such lien has been filed as provided by the
laws of this State. In regulations prescribed in accordance
with Section 16 of this Act, the Attorney General may require
that the qualified heir file such notice of lien. Even
though notice of said lien has been filed as provided in the
preceding sentence, such lien shall be subject to the rules
set forth in paragraph (3) of Section 6324A(d) of the
Internal Revenue Code as if the lien were a lien imposed by
that Section.
(c) Personal liability. If the Illinois transfer tax is
not paid when due, then the person required to file the
related federal return and the transferee of any transferred
property having a tax situs within this State shall be
personally liable for the Illinois transfer tax, to the
extent of such transferred property originally received,
controlled or transferred to that person or transferee, less
the amount of any expenses or charges against the transferred
property, related to the taxable transfer, which have a
higher priority of payment under applicable law than the
Illinois transfer tax.
(d) Collection. The Attorney General shall have the
right to sue for collection of the Illinois transfer tax for
3 years after the date of the actual filing of the related
Illinois transfer tax return with the Attorney General, or,
if later, the last date upon which application for refund of
the Illinois transfer tax could be filed with the State
Treasurer.
(e) Waiver of lien and personal liability. If the
Attorney General is satisfied that no liability for Illinois
transfer tax exists or that the Illinois transfer tax has
been fully discharged or provided for, the Attorney General
shall issue a certificate releasing all of the transferred
property having a tax situs within the State of Illinois from
the lien imposed by this Section. Issuance of such
certificate shall discharge the person required to file the
Illinois related federal return and any transferee from
personal liability for the Illinois transfer tax.
(Source: P.A. 86-737.)
Section 99. Effective date. This Act takes effect upon
becoming law.
Effective Date: 6/20/2003
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