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91_SB1326eng
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1 AN ACT to amend the Illinois Income Tax Act by changing
2 Section 201.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 changing Section 201 as follows:
7 (35 ILCS 5/201) (from Ch. 120, par. 2-201)
8 Sec. 201. Tax Imposed.
9 (a) In general. A tax measured by net income is hereby
10 imposed on every individual, corporation, trust and estate
11 for each taxable year ending after July 31, 1969 on the
12 privilege of earning or receiving income in or as a resident
13 of this State. Such tax shall be in addition to all other
14 occupation or privilege taxes imposed by this State or by any
15 municipal corporation or political subdivision thereof.
16 (b) Rates. The tax imposed by subsection (a) of this
17 Section shall be determined as follows, except as adjusted by
18 subsection (d-1):
19 (1) In the case of an individual, trust or estate,
20 for taxable years ending prior to July 1, 1989, an amount
21 equal to 2 1/2% of the taxpayer's net income for the
22 taxable year.
23 (2) In the case of an individual, trust or estate,
24 for taxable years beginning prior to July 1, 1989 and
25 ending after June 30, 1989, an amount equal to the sum of
26 (i) 2 1/2% of the taxpayer's net income for the period
27 prior to July 1, 1989, as calculated under Section 202.3,
28 and (ii) 3% of the taxpayer's net income for the period
29 after June 30, 1989, as calculated under Section 202.3.
30 (3) In the case of an individual, trust or estate,
31 for taxable years beginning after June 30, 1989, an
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1 amount equal to 3% of the taxpayer's net income for the
2 taxable year.
3 (4) (Blank).
4 (5) (Blank).
5 (6) In the case of a corporation, for taxable years
6 ending prior to July 1, 1989, an amount equal to 4% of
7 the taxpayer's net income for the taxable year.
8 (7) In the case of a corporation, for taxable years
9 beginning prior to July 1, 1989 and ending after June 30,
10 1989, an amount equal to the sum of (i) 4% of the
11 taxpayer's net income for the period prior to July 1,
12 1989, as calculated under Section 202.3, and (ii) 4.8% of
13 the taxpayer's net income for the period after June 30,
14 1989, as calculated under Section 202.3.
15 (8) In the case of a corporation, for taxable years
16 beginning after June 30, 1989, an amount equal to 4.8% of
17 the taxpayer's net income for the taxable year.
18 (c) Beginning on July 1, 1979 and thereafter, in
19 addition to such income tax, there is also hereby imposed the
20 Personal Property Tax Replacement Income Tax measured by net
21 income on every corporation (including Subchapter S
22 corporations), partnership and trust, for each taxable year
23 ending after June 30, 1979. Such taxes are imposed on the
24 privilege of earning or receiving income in or as a resident
25 of this State. The Personal Property Tax Replacement Income
26 Tax shall be in addition to the income tax imposed by
27 subsections (a) and (b) of this Section and in addition to
28 all other occupation or privilege taxes imposed by this State
29 or by any municipal corporation or political subdivision
30 thereof.
31 (d) Additional Personal Property Tax Replacement Income
32 Tax Rates. The personal property tax replacement income tax
33 imposed by this subsection and subsection (c) of this Section
34 in the case of a corporation, other than a Subchapter S
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1 corporation and except as adjusted by subsection (d-1), shall
2 be an additional amount equal to 2.85% of such taxpayer's net
3 income for the taxable year, except that beginning on January
4 1, 1981, and thereafter, the rate of 2.85% specified in this
5 subsection shall be reduced to 2.5%, and in the case of a
6 partnership, trust or a Subchapter S corporation shall be an
7 additional amount equal to 1.5% of such taxpayer's net income
8 for the taxable year.
9 (d-1) Rate reduction for certain foreign insurers. In
10 the case of a foreign insurer, as defined by Section 35A-5 of
11 the Illinois Insurance Code, whose state or country of
12 domicile imposes on insurers domiciled in Illinois a
13 retaliatory tax (excluding any insurer whose reinsurance
14 premiums from reinsurance assumed are 50% or more of its
15 total insurance premiums as determined under paragraph (2) of
16 subsection (b) of Section 304, except that for purposes of
17 this determination reinsurance premiums from reinsurance do
18 not include assumed premiums from inter-affiliate reinsurance
19 pooling arrangements), beginning with taxable years ending on
20 or after December 31, 1999 and ending with taxable years
21 ending on or before December 31, 2000, the sum of the rates
22 of tax imposed by subsections (b) and (d) shall be reduced
23 (but not increased) to the rate at which the total amount of
24 tax imposed under this Act, net of all credits allowed under
25 this Act, shall equal (i) the total amount of tax that would
26 be imposed on the foreign insurer's net income allocable to
27 Illinois for the taxable year by such foreign insurer's state
28 or country of domicile if that net income were subject to all
29 income taxes and taxes measured by net income imposed by such
30 foreign insurer's state or country of domicile, net of all
31 credits allowed or (ii) a rate of zero if no such tax is
32 imposed on such income by the foreign insurer's state of
33 domicile. For the purposes of this subsection (d-1), an
34 inter-affiliate includes a mutual insurer under common
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1 management.
2 (1) For the purposes of subsection (d-1), in no
3 event shall the sum of the rates of tax imposed by
4 subsections (b) and (d) be reduced below the rate at
5 which the sum of:
6 (A) the total amount of tax imposed on such
7 foreign insurer under this Act for a taxable year,
8 net of all credits allowed under this Act, plus
9 (B) the privilege tax imposed by Section 409
10 of the Illinois Insurance Code, the fire insurance
11 company tax imposed by Section 12 of the Fire
12 Investigation Act, and the fire department taxes
13 imposed under Section 11-10-1 of the Illinois
14 Municipal Code,
15 equals 1.25% of the net taxable premiums written for the
16 taxable year, as described by subsection (1) of Section
17 409 of the Illinois Insurance Code. This paragraph will
18 in no event increase the rates imposed under subsections
19 (b) and (d).
20 (2) Any reduction in the rates of tax imposed by
21 this subsection shall be applied first against the rates
22 imposed by subsection (b) and only after the tax imposed
23 by subsection (a) net of all credits allowed under this
24 Section other than the credit allowed under subsection
25 (i) has been reduced to zero, against the rates imposed
26 by subsection (d).
27 (3) The provisions of this subsection (d-1) are
28 effective only through December 31, 2000 and cease to be
29 effective on January 1, 2001; but this does not affect
30 any claim or obligation based upon the use or application
31 of this subsection for tax years ending on December 31,
32 2000 or earlier.
33 This subsection (d-1) is exempt from the provisions of
34 Section 250.
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1 (e) Investment credit. A taxpayer shall be allowed a
2 credit against the Personal Property Tax Replacement Income
3 Tax for investment in qualified property.
4 (1) A taxpayer shall be allowed a credit equal to
5 .5% of the basis of qualified property placed in service
6 during the taxable year, provided such property is placed
7 in service on or after July 1, 1984. There shall be
8 allowed an additional credit equal to .5% of the basis of
9 qualified property placed in service during the taxable
10 year, provided such property is placed in service on or
11 after July 1, 1986, and the taxpayer's base employment
12 within Illinois has increased by 1% or more over the
13 preceding year as determined by the taxpayer's employment
14 records filed with the Illinois Department of Employment
15 Security. Taxpayers who are new to Illinois shall be
16 deemed to have met the 1% growth in base employment for
17 the first year in which they file employment records with
18 the Illinois Department of Employment Security. The
19 provisions added to this Section by Public Act 85-1200
20 (and restored by Public Act 87-895) shall be construed as
21 declaratory of existing law and not as a new enactment.
22 If, in any year, the increase in base employment within
23 Illinois over the preceding year is less than 1%, the
24 additional credit shall be limited to that percentage
25 times a fraction, the numerator of which is .5% and the
26 denominator of which is 1%, but shall not exceed .5%.
27 The investment credit shall not be allowed to the extent
28 that it would reduce a taxpayer's liability in any tax
29 year below zero, nor may any credit for qualified
30 property be allowed for any year other than the year in
31 which the property was placed in service in Illinois. For
32 tax years ending on or after December 31, 1987, and on or
33 before December 31, 1988, the credit shall be allowed for
34 the tax year in which the property is placed in service,
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1 or, if the amount of the credit exceeds the tax liability
2 for that year, whether it exceeds the original liability
3 or the liability as later amended, such excess may be
4 carried forward and applied to the tax liability of the 5
5 taxable years following the excess credit years if the
6 taxpayer (i) makes investments which cause the creation
7 of a minimum of 2,000 full-time equivalent jobs in
8 Illinois, (ii) is located in an enterprise zone
9 established pursuant to the Illinois Enterprise Zone Act
10 and (iii) is certified by the Department of Commerce and
11 Community Affairs as complying with the requirements
12 specified in clause (i) and (ii) by July 1, 1986. The
13 Department of Commerce and Community Affairs shall notify
14 the Department of Revenue of all such certifications
15 immediately. For tax years ending after December 31,
16 1988, the credit shall be allowed for the tax year in
17 which the property is placed in service, or, if the
18 amount of the credit exceeds the tax liability for that
19 year, whether it exceeds the original liability or the
20 liability as later amended, such excess may be carried
21 forward and applied to the tax liability of the 5 taxable
22 years following the excess credit years. The credit shall
23 be applied to the earliest year for which there is a
24 liability. If there is credit from more than one tax year
25 that is available to offset a liability, earlier credit
26 shall be applied first.
27 (2) The term "qualified property" means property
28 which:
29 (A) is tangible, whether new or used,
30 including buildings and structural components of
31 buildings and signs that are real property, but not
32 including land or improvements to real property that
33 are not a structural component of a building such as
34 landscaping, sewer lines, local access roads,
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1 fencing, parking lots, and other appurtenances;
2 (B) is depreciable pursuant to Section 167 of
3 the Internal Revenue Code, except that "3-year
4 property" as defined in Section 168(c)(2)(A) of that
5 Code is not eligible for the credit provided by this
6 subsection (e);
7 (C) is acquired by purchase as defined in
8 Section 179(d) of the Internal Revenue Code;
9 (D) is used in Illinois by a taxpayer who is
10 primarily engaged in manufacturing, or in mining
11 coal or fluorite, or in retailing; and
12 (E) has not previously been used in Illinois
13 in such a manner and by such a person as would
14 qualify for the credit provided by this subsection
15 (e) or subsection (f).
16 (3) For purposes of this subsection (e),
17 "manufacturing" means the material staging and production
18 of tangible personal property by procedures commonly
19 regarded as manufacturing, processing, fabrication, or
20 assembling which changes some existing material into new
21 shapes, new qualities, or new combinations. For purposes
22 of this subsection (e) the term "mining" shall have the
23 same meaning as the term "mining" in Section 613(c) of
24 the Internal Revenue Code. For purposes of this
25 subsection (e), the term "retailing" means the sale of
26 tangible personal property or services rendered in
27 conjunction with the sale of tangible consumer goods or
28 commodities.
29 (4) The basis of qualified property shall be the
30 basis used to compute the depreciation deduction for
31 federal income tax purposes.
32 (5) If the basis of the property for federal income
33 tax depreciation purposes is increased after it has been
34 placed in service in Illinois by the taxpayer, the amount
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1 of such increase shall be deemed property placed in
2 service on the date of such increase in basis.
3 (6) The term "placed in service" shall have the
4 same meaning as under Section 46 of the Internal Revenue
5 Code.
6 (7) If during any taxable year, any property ceases
7 to be qualified property in the hands of the taxpayer
8 within 48 months after being placed in service, or the
9 situs of any qualified property is moved outside Illinois
10 within 48 months after being placed in service, the
11 Personal Property Tax Replacement Income Tax for such
12 taxable year shall be increased. Such increase shall be
13 determined by (i) recomputing the investment credit which
14 would have been allowed for the year in which credit for
15 such property was originally allowed by eliminating such
16 property from such computation and, (ii) subtracting such
17 recomputed credit from the amount of credit previously
18 allowed. For the purposes of this paragraph (7), a
19 reduction of the basis of qualified property resulting
20 from a redetermination of the purchase price shall be
21 deemed a disposition of qualified property to the extent
22 of such reduction.
23 (8) Unless the investment credit is extended by
24 law, the basis of qualified property shall not include
25 costs incurred after December 31, 2003, except for costs
26 incurred pursuant to a binding contract entered into on
27 or before December 31, 2003.
28 (9) Each taxable year, a partnership may elect to
29 pass through to its partners the credits to which the
30 partnership is entitled under this subsection (e) for the
31 taxable year. A partner may use the credit allocated to
32 him or her under this paragraph only against the tax
33 imposed in subsections (c) and (d) of this Section. If
34 the partnership makes that election, those credits shall
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1 be allocated among the partners in the partnership in
2 accordance with the rules set forth in Section 704(b) of
3 the Internal Revenue Code, and the rules promulgated
4 under that Section, and the allocated amount of the
5 credits shall be allowed to the partners for that taxable
6 year. The partnership shall make this election on its
7 Personal Property Tax Replacement Income Tax return for
8 that taxable year. The election to pass through the
9 credits shall be irrevocable.
10 (f) Investment credit; Enterprise Zone.
11 (1) A taxpayer shall be allowed a credit against
12 the tax imposed by subsections (a) and (b) of this
13 Section for investment in qualified property which is
14 placed in service in an Enterprise Zone created pursuant
15 to the Illinois Enterprise Zone Act. For partners,
16 shareholders of Subchapter S corporations, and owners of
17 limited liability companies, if the liability company is
18 treated as a partnership for purposes of federal and
19 State income taxation, there shall be allowed a credit
20 under this subsection (f) to be determined in accordance
21 with the determination of income and distributive share
22 of income under Sections 702 and 704 and Subchapter S of
23 the Internal Revenue Code. The credit shall be .5% of the
24 basis for such property. The credit shall be available
25 only in the taxable year in which the property is placed
26 in service in the Enterprise Zone and shall not be
27 allowed to the extent that it would reduce a taxpayer's
28 liability for the tax imposed by subsections (a) and (b)
29 of this Section to below zero. For tax years ending on or
30 after December 31, 1985, the credit shall be allowed for
31 the tax year in which the property is placed in service,
32 or, if the amount of the credit exceeds the tax liability
33 for that year, whether it exceeds the original liability
34 or the liability as later amended, such excess may be
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1 carried forward and applied to the tax liability of the 5
2 taxable years following the excess credit year. The
3 credit shall be applied to the earliest year for which
4 there is a liability. If there is credit from more than
5 one tax year that is available to offset a liability, the
6 credit accruing first in time shall be applied first.
7 (2) The term qualified property means property
8 which:
9 (A) is tangible, whether new or used,
10 including buildings and structural components of
11 buildings;
12 (B) is depreciable pursuant to Section 167 of
13 the Internal Revenue Code, except that "3-year
14 property" as defined in Section 168(c)(2)(A) of that
15 Code is not eligible for the credit provided by this
16 subsection (f);
17 (C) is acquired by purchase as defined in
18 Section 179(d) of the Internal Revenue Code;
19 (D) is used in the Enterprise Zone by the
20 taxpayer; and
21 (E) has not been previously used in Illinois
22 in such a manner and by such a person as would
23 qualify for the credit provided by this subsection
24 (f) or subsection (e).
25 (3) The basis of qualified property shall be the
26 basis used to compute the depreciation deduction for
27 federal income tax purposes.
28 (4) If the basis of the property for federal income
29 tax depreciation purposes is increased after it has been
30 placed in service in the Enterprise Zone by the taxpayer,
31 the amount of such increase shall be deemed property
32 placed in service on the date of such increase in basis.
33 (5) The term "placed in service" shall have the
34 same meaning as under Section 46 of the Internal Revenue
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1 Code.
2 (6) If during any taxable year, any property ceases
3 to be qualified property in the hands of the taxpayer
4 within 48 months after being placed in service, or the
5 situs of any qualified property is moved outside the
6 Enterprise Zone within 48 months after being placed in
7 service, the tax imposed under subsections (a) and (b) of
8 this Section for such taxable year shall be increased.
9 Such increase shall be determined by (i) recomputing the
10 investment credit which would have been allowed for the
11 year in which credit for such property was originally
12 allowed by eliminating such property from such
13 computation, and (ii) subtracting such recomputed credit
14 from the amount of credit previously allowed. For the
15 purposes of this paragraph (6), a reduction of the basis
16 of qualified property resulting from a redetermination of
17 the purchase price shall be deemed a disposition of
18 qualified property to the extent of such reduction.
19 (g) Jobs Tax Credit; Enterprise Zone and Foreign Trade
20 Zone or Sub-Zone.
21 (1) A taxpayer conducting a trade or business in an
22 enterprise zone or a High Impact Business designated by
23 the Department of Commerce and Community Affairs
24 conducting a trade or business in a federally designated
25 Foreign Trade Zone or Sub-Zone shall be allowed a credit
26 against the tax imposed by subsections (a) and (b) of
27 this Section in the amount of $500 per eligible employee
28 hired to work in the zone during the taxable year.
29 (2) To qualify for the credit:
30 (A) the taxpayer must hire 5 or more eligible
31 employees to work in an enterprise zone or federally
32 designated Foreign Trade Zone or Sub-Zone during the
33 taxable year;
34 (B) the taxpayer's total employment within the
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1 enterprise zone or federally designated Foreign
2 Trade Zone or Sub-Zone must increase by 5 or more
3 full-time employees beyond the total employed in
4 that zone at the end of the previous tax year for
5 which a jobs tax credit under this Section was
6 taken, or beyond the total employed by the taxpayer
7 as of December 31, 1985, whichever is later; and
8 (C) the eligible employees must be employed
9 180 consecutive days in order to be deemed hired for
10 purposes of this subsection.
11 (3) An "eligible employee" means an employee who
12 is:
13 (A) Certified by the Department of Commerce
14 and Community Affairs as "eligible for services"
15 pursuant to regulations promulgated in accordance
16 with Title II of the Job Training Partnership Act,
17 Training Services for the Disadvantaged or Title III
18 of the Job Training Partnership Act, Employment and
19 Training Assistance for Dislocated Workers Program.
20 (B) Hired after the enterprise zone or
21 federally designated Foreign Trade Zone or Sub-Zone
22 was designated or the trade or business was located
23 in that zone, whichever is later.
24 (C) Employed in the enterprise zone or Foreign
25 Trade Zone or Sub-Zone. An employee is employed in
26 an enterprise zone or federally designated Foreign
27 Trade Zone or Sub-Zone if his services are rendered
28 there or it is the base of operations for the
29 services performed.
30 (D) A full-time employee working 30 or more
31 hours per week.
32 (4) For tax years ending on or after December 31,
33 1985 and prior to December 31, 1988, the credit shall be
34 allowed for the tax year in which the eligible employees
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1 are hired. For tax years ending on or after December 31,
2 1988, the credit shall be allowed for the tax year
3 immediately following the tax year in which the eligible
4 employees are hired. If the amount of the credit exceeds
5 the tax liability for that year, whether it exceeds the
6 original liability or the liability as later amended,
7 such excess may be carried forward and applied to the tax
8 liability of the 5 taxable years following the excess
9 credit year. The credit shall be applied to the earliest
10 year for which there is a liability. If there is credit
11 from more than one tax year that is available to offset a
12 liability, earlier credit shall be applied first.
13 (5) The Department of Revenue shall promulgate such
14 rules and regulations as may be deemed necessary to carry
15 out the purposes of this subsection (g).
16 (6) The credit shall be available for eligible
17 employees hired on or after January 1, 1986.
18 (h) Investment credit; High Impact Business.
19 (1) Subject to subsection (b) of Section 5.5 of the
20 Illinois Enterprise Zone Act, a taxpayer shall be allowed
21 a credit against the tax imposed by subsections (a) and
22 (b) of this Section for investment in qualified property
23 which is placed in service by a Department of Commerce
24 and Community Affairs designated High Impact Business.
25 The credit shall be .5% of the basis for such property.
26 The credit shall not be available until the minimum
27 investments in qualified property set forth in Section
28 5.5 of the Illinois Enterprise Zone Act have been
29 satisfied and shall not be allowed to the extent that it
30 would reduce a taxpayer's liability for the tax imposed
31 by subsections (a) and (b) of this Section to below zero.
32 The credit applicable to such minimum investments shall
33 be taken in the taxable year in which such minimum
34 investments have been completed. The credit for
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1 additional investments beyond the minimum investment by a
2 designated high impact business shall be available only
3 in the taxable year in which the property is placed in
4 service and shall not be allowed to the extent that it
5 would reduce a taxpayer's liability for the tax imposed
6 by subsections (a) and (b) of this Section to below zero.
7 For tax years ending on or after December 31, 1987, 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
11 it exceeds the original liability or the liability as
12 later amended, such excess may be carried forward and
13 applied to the tax liability of the 5 taxable years
14 following the excess credit year. The credit shall be
15 applied to the earliest year for which there is a
16 liability. If there is credit from more than one tax
17 year that is available to offset a liability, the credit
18 accruing first in time shall be applied first.
19 Changes made in this subdivision (h)(1) by Public
20 Act 88-670 restore changes made by Public Act 85-1182 and
21 reflect existing law.
22 (2) The term qualified property means property
23 which:
24 (A) is tangible, whether new or used,
25 including buildings and structural components of
26 buildings;
27 (B) is depreciable pursuant to Section 167 of
28 the Internal Revenue Code, except that "3-year
29 property" as defined in Section 168(c)(2)(A) of that
30 Code is not eligible for the credit provided by this
31 subsection (h);
32 (C) is acquired by purchase as defined in
33 Section 179(d) of the Internal Revenue Code; and
34 (D) is not eligible for the Enterprise Zone
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1 Investment Credit provided by subsection (f) of this
2 Section.
3 (3) The basis of qualified property shall be the
4 basis used to compute the depreciation deduction for
5 federal income tax purposes.
6 (4) If the basis of the property for federal income
7 tax depreciation purposes is increased after it has been
8 placed in service in a federally designated Foreign Trade
9 Zone or Sub-Zone located in Illinois by the taxpayer, the
10 amount of such increase shall be deemed property placed
11 in service on the date of such increase in basis.
12 (5) The term "placed in service" shall have the
13 same meaning as under Section 46 of the Internal Revenue
14 Code.
15 (6) If during any taxable year ending on or before
16 December 31, 1996, any property ceases to be qualified
17 property in the hands of the taxpayer within 48 months
18 after being placed in service, or the situs of any
19 qualified property is moved outside Illinois within 48
20 months after being placed in service, the tax imposed
21 under subsections (a) and (b) of this Section for such
22 taxable year shall be increased. Such increase shall be
23 determined by (i) recomputing the investment credit which
24 would have been allowed for the year in which credit for
25 such property was originally allowed by eliminating such
26 property from such computation, and (ii) subtracting such
27 recomputed credit from the amount of credit previously
28 allowed. For the purposes of this paragraph (6), a
29 reduction of the basis of qualified property resulting
30 from a redetermination of the purchase price shall be
31 deemed a disposition of qualified property to the extent
32 of such reduction.
33 (7) Beginning with tax years ending after December
34 31, 1996, if a taxpayer qualifies for the credit under
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1 this subsection (h) and thereby is granted a tax
2 abatement and the taxpayer relocates its entire facility
3 in violation of the explicit terms and length of the
4 contract under Section 18-183 of the Property Tax Code,
5 the tax imposed under subsections (a) and (b) of this
6 Section shall be increased for the taxable year in which
7 the taxpayer relocated its facility by an amount equal to
8 the amount of credit received by the taxpayer under this
9 subsection (h).
10 (i) A credit shall be allowed against the tax imposed by
11 subsections (a) and (b) of this Section for the tax imposed
12 by subsections (c) and (d) of this Section. This credit
13 shall be computed by multiplying the tax imposed by
14 subsections (c) and (d) of this Section by a fraction, the
15 numerator of which is base income allocable to Illinois and
16 the denominator of which is Illinois base income, and further
17 multiplying the product by the tax rate imposed by
18 subsections (a) and (b) of this Section.
19 Any credit earned on or after December 31, 1986 under
20 this subsection which is unused in the year the credit is
21 computed because it exceeds the tax liability imposed by
22 subsections (a) and (b) for that year (whether it exceeds the
23 original liability or the liability as later amended) may be
24 carried forward and applied to the tax liability imposed by
25 subsections (a) and (b) of the 5 taxable years following the
26 excess credit year. This credit shall be applied first to
27 the earliest year for which there is a liability. If there
28 is a credit under this subsection from more than one tax year
29 that is available to offset a liability the earliest credit
30 arising under this subsection shall be applied first.
31 If, during any taxable year ending on or after December
32 31, 1986, the tax imposed by subsections (c) and (d) of this
33 Section for which a taxpayer has claimed a credit under this
34 subsection (i) is reduced, the amount of credit for such tax
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1 shall also be reduced. Such reduction shall be determined by
2 recomputing the credit to take into account the reduced tax
3 imposed by subsection (c) and (d). If any portion of the
4 reduced amount of credit has been carried to a different
5 taxable year, an amended return shall be filed for such
6 taxable year to reduce the amount of credit claimed.
7 (j) Training expense credit. Beginning with tax years
8 ending on or after December 31, 1986, a taxpayer shall be
9 allowed a credit against the tax imposed by subsection (a)
10 and (b) under this Section for all amounts paid or accrued,
11 on behalf of all persons employed by the taxpayer in Illinois
12 or Illinois residents employed outside of Illinois by a
13 taxpayer, for educational or vocational training in
14 semi-technical or technical fields or semi-skilled or skilled
15 fields, which were deducted from gross income in the
16 computation of taxable income. The credit against the tax
17 imposed by subsections (a) and (b) shall be 1.6% of such
18 training expenses. For partners, shareholders of subchapter
19 S corporations, and owners of limited liability companies, if
20 the liability company is treated as a partnership for
21 purposes of federal and State income taxation, there shall be
22 allowed a credit under this subsection (j) to be determined
23 in 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 Any credit allowed under this subsection which is unused
27 in the year the credit is earned may be carried forward to
28 each of the 5 taxable years following the year for which the
29 credit is first computed until it is used. This credit shall
30 be applied first to the earliest year for which there is a
31 liability. If there is a credit under this subsection from
32 more than one tax year that is available to offset a
33 liability the earliest credit arising under this subsection
34 shall be applied first.
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1 (k) Research and development credit.
2 Beginning with tax years ending after July 1, 1990, a
3 taxpayer shall be allowed a credit against the tax imposed by
4 subsections (a) and (b) of this Section for increasing
5 research activities in this State. The credit allowed
6 against the tax imposed by subsections (a) and (b) shall be
7 equal to 6 1/2% of the qualifying expenditures for increasing
8 research activities in this State. For partners, shareholders
9 of subchapter S corporations, and owners of limited liability
10 companies, if the liability company is treated as a
11 partnership for purposes of federal and State income
12 taxation, there shall be allowed a credit under this
13 subsection to be determined in accordance with the
14 determination of income and distributive share of income
15 under Sections 702 and 704 and subchapter S of the Internal
16 Revenue Code.
17 For purposes of this subsection, "qualifying
18 expenditures" means the qualifying expenditures as defined
19 for the federal credit for increasing research activities
20 which would be allowable under Section 41 of the Internal
21 Revenue Code and which are conducted in this State,
22 "qualifying expenditures for increasing research activities
23 in this State" means the excess of qualifying expenditures
24 for the taxable year in which incurred over qualifying
25 expenditures for the base period, "qualifying expenditures
26 for the base period" means the average of the qualifying
27 expenditures for each year in the base period, and "base
28 period" means the 3 taxable years immediately preceding the
29 taxable year for which the determination is being made.
30 Any credit in excess of the tax liability for the taxable
31 year may be carried forward. A taxpayer may elect to have the
32 unused credit shown on its final completed return carried
33 over as a credit against the tax liability for the following
34 5 taxable years or until it has been fully used, whichever
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1 occurs first.
2 If an unused credit is carried forward to a given year
3 from 2 or more earlier years, that credit arising in the
4 earliest year will be applied first against the tax liability
5 for the given year. If a tax liability for the given year
6 still remains, the credit from the next earliest year will
7 then be applied, and so on, until all credits have been used
8 or no tax liability for the given year remains. Any
9 remaining unused credit or credits then will be carried
10 forward to the next following year in which a tax liability
11 is incurred, except that no credit can be carried forward to
12 a year which is more than 5 years after the year in which the
13 expense for which the credit is given was incurred.
14 Unless extended by law, the credit shall not include
15 costs incurred after December 31, 2004, except for costs
16 incurred pursuant to a binding contract entered into on or
17 before December 31, 2004.
18 No inference shall be drawn from this amendatory Act of
19 the 91st General Assembly in construing this Section for
20 taxable years beginning before January 1, 1999.
21 (l) Environmental Remediation Tax Credit.
22 (i) For tax years ending after December 31, 1997
23 and on or before December 31, 2001, a taxpayer shall be
24 allowed a credit against the tax imposed by subsections
25 (a) and (b) of this Section for certain amounts paid for
26 unreimbursed eligible remediation costs, as specified in
27 this subsection. For purposes of this Section,
28 "unreimbursed eligible remediation costs" means costs
29 approved by the Illinois Environmental Protection Agency
30 ("Agency") under Section 58.14 of the Environmental
31 Protection Act that were paid in performing environmental
32 remediation at a site for which a No Further Remediation
33 Letter was issued by the Agency and recorded under
34 Section 58.10 of the Environmental Protection Act. The
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1 credit must be claimed for the taxable year in which
2 Agency approval of the eligible remediation costs is
3 granted. The credit is not available to any taxpayer if
4 the taxpayer or any related party caused or contributed
5 to, in any material respect, a release of regulated
6 substances on, in, or under the site that was identified
7 and addressed by the remedial action pursuant to the Site
8 Remediation Program of the Environmental Protection Act.
9 After the Pollution Control Board rules are adopted
10 pursuant to the Illinois Administrative Procedure Act for
11 the administration and enforcement of Section 58.9 of the
12 Environmental Protection Act, determinations as to credit
13 availability for purposes of this Section shall be made
14 consistent with those rules. For purposes of this
15 Section, "taxpayer" includes a person whose tax
16 attributes the taxpayer has succeeded to under Section
17 381 of the Internal Revenue Code and "related party"
18 includes the persons disallowed a deduction for losses by
19 paragraphs (b), (c), and (f)(1) of Section 267 of the
20 Internal Revenue Code by virtue of being a related
21 taxpayer, as well as any of its partners. The credit
22 allowed against the tax imposed by subsections (a) and
23 (b) shall be equal to 25% of the unreimbursed eligible
24 remediation costs in excess of $100,000 per site, except
25 that the $100,000 threshold shall not apply to any site
26 contained in an enterprise zone as determined by the
27 Department of Commerce and Community Affairs. The total
28 credit allowed shall not exceed $40,000 per year with a
29 maximum total of $150,000 per site. For partners and
30 shareholders of subchapter S corporations, there shall be
31 allowed a credit under this subsection to be determined
32 in accordance with the determination of income and
33 distributive share of income under Sections 702 and 704
34 of subchapter S of the Internal Revenue Code.
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1 (ii) A credit allowed under this subsection that is
2 unused in the year the credit is earned may be carried
3 forward to each of the 5 taxable years following the year
4 for which the credit is first earned until it is used.
5 The term "unused credit" does not include any amounts of
6 unreimbursed eligible remediation costs in excess of the
7 maximum credit per site authorized under paragraph (i).
8 This credit shall be applied first to the earliest year
9 for which there is a liability. If there is a credit
10 under this subsection from more than one tax year that is
11 available to offset a liability, the earliest credit
12 arising under this subsection shall be applied first. A
13 credit allowed under this subsection may be sold to a
14 buyer as part of a sale of all or part of the remediation
15 site for which the credit was granted. The purchaser of
16 a remediation site and the tax credit shall succeed to
17 the unused credit and remaining carry-forward period of
18 the seller. To perfect the transfer, the assignor shall
19 record the transfer in the chain of title for the site
20 and provide written notice to the Director of the
21 Illinois Department of Revenue of the assignor's intent
22 to sell the remediation site and the amount of the tax
23 credit to be transferred as a portion of the sale. In no
24 event may a credit be transferred to any taxpayer if the
25 taxpayer or a related party would not be eligible under
26 the provisions of subsection (i).
27 (iii) For purposes of this Section, the term "site"
28 shall have the same meaning as under Section 58.2 of the
29 Environmental Protection Act.
30 (m) Education expense credit.
31 Beginning with tax years ending after December 31, 1999,
32 a taxpayer who is the custodian of one or more qualifying
33 pupils shall be allowed a credit against the tax imposed by
34 subsections (a) and (b) of this Section for qualified
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1 education expenses incurred on behalf of the qualifying
2 pupils. The credit shall be equal to 25% of qualified
3 education expenses, but in no event may the total credit
4 under this Section claimed by a family that is the custodian
5 of qualifying pupils exceed $500. In no event shall a credit
6 under this subsection reduce the taxpayer's liability under
7 this Act to less than zero. This subsection is exempt from
8 the provisions of Section 250 of this Act.
9 For purposes of this subsection;
10 "Qualifying pupils" means individuals who (i) are
11 residents of the State of Illinois, (ii) are under the age of
12 21 at the close of the school year for which a credit is
13 sought, and (iii) during the school year for which a credit
14 is sought were full-time pupils enrolled in a kindergarten
15 through twelfth grade education program at any school, as
16 defined in this subsection.
17 "Qualified education expense" means the amount incurred
18 on behalf of a qualifying pupil in excess of $250 for
19 tuition, book fees, and lab fees at the school in which the
20 pupil is enrolled during the regular school year.
21 "School" means any public or nonpublic elementary or
22 secondary school in Illinois that is in compliance with Title
23 VI of the Civil Rights Act of 1964 and attendance at which
24 satisfies the requirements of Section 26-1 of the School
25 Code, except that nothing shall be construed to require a
26 child to attend any particular public or nonpublic school to
27 qualify for the credit under this Section.
28 "Custodian" means, with respect to qualifying pupils, an
29 Illinois resident who is a parent, the parents, a legal
30 guardian, or the legal guardians of the qualifying pupils.
31 (Source: P.A. 90-123, eff. 7-21-97; 90-458, eff. 8-17-97;
32 90-605, eff. 6-30-98; 90-655, eff. 7-30-98; 90-717, eff.
33 8-7-98; 90-792, eff. 1-1-99; 91-9, eff. 1-1-00; 91-357, eff.
34 7-29-99; 91-643, eff. 8-20-99; 91-644, eff. 8-20-99; revised
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1 8-27-99.)
2 Section 99. Effective date. This Act takes effect upon
3 becoming law.
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